[Ip-health] New taxes on medicines set to hit hard on poor

[Alec van Gelder]

Going back to my original e-mail and the article I forwarded below, I'm not
able to find any reference to Italy, Italians or their less than illustrious
track record on economic growth.  Nor am I responsible for what is written
in the "mainstream media".  With regards to Jagdish Bhagwati, one of the
world's eminent experts on trade, I'm fairly confident that he would
disagree with the outrageous tariff levied on medicines in Tanzania.  And he
would be correct: the tariff amounts to an unnecessary tax on the sick.

-----Original Message-----
From: ip-health-admin@lists.essential.org
[mailto:ip-health-admin@lists.essential.org] On Behalf Of Riaz K. Tayob
Sent: 31 July 2007 17:44
To: ip-health@lists.essential.org
Subject: Re: [Ip-health] New taxes on medicines set to hit hard on poor

I am, however, surprised that WHO articulates a 0 tariff policy when
countries face ridiculously inflated prices for many imported medicines,
face currency volatility that affects prices and are proscribed by
intellectual property rules from developing local supply capacity especially
in a sector where "learning by doing" is not an option - you just have to
get it right the first time... has WHO consulted on this?
Is it so obvious that developing countries must only be consumers and not
producers?

I agree that the measure needs to be taken to secure supply to patients, but
to "simply" call this policy outrageous is outrageous - especially when
contextualised in 1) the WHO stance on this, 2) the fact that Italy can use
compulsory licenses without a whimper from the mainstream press but when
other countries use it they are slated for "breaking patents"
and threatening the innovation system - are Italians more equal than
Tanzanians?

Funny that an organisation peddling the virtues of the Free Market supports
monopoly IPRs? Perhaps we could check the views of Jagdish Baghwati on this
as he is a pre-eminent free trade theorist?

rt (pers)

Alec van Gelder wrote:
> This is a multi-part message in MIME format.
> --
> [ Picked text/plain from multipart/alternative ] I am somewhat
> surprised this outrageous policy in Tanzania hasn't been discussed.
>
> http://www.ippmedia.com/ipp/guardian/2007/07/26/95148.html
>
> New taxes on medicines set to hit hard on poor
>
> 2007-07-26 09:44:43
> By Perege Gumbo
> Fears are emerging that the poor are likely to be crowded out of access to
some basic medication as newly announced taxes tend to make them more
expensive.
>
> A lump sum 10 percent import duty was imposed by the government on all
pharmaceutical products outside the so called ?essential drugs?. Industry
dealers have said this would automatically translate itself into higher
market prices for patients.
>
> These concerns are now the subject of dialogue between the pharmaceutical
products` dealers and the Tanzania Private Sector Foundation (TPSF) as they
seek audience with responsible government authorities to discuss this matter
of public interest.
>
> The matter has brought two business lobby groups at logger heads. The
Confederation of Tanzania Industries (CTI) is said to have urged the
government the impose 10 percent import duties on pharmaceutical products,
hoping this would protect infant domestic medicine industries.
>
> ``We asked the government to impose the 10 percent duty to capacitate our
local pharmaceutical industries grow as they now have big production
capacity to sufficiently cater for the local market demand`` the CTI
Director of Policy and Research Hussein S. Kamote said.
>
> He refuted the notion that the duty was going to affect poor people saying
that the essential drugs, anti-retrovirals (ARVs), anti-malaria, and
anti-tuberculosis medicines would be exempted from the duty.
>
> But Kamote`s arguments have vehemently been countered by the
pharmaceutical importers who claim that the local pharmaceutical industry
was still far behind from meeting the local market demand.
>
> Their side of view is apparently supported by the Tanzania Private Sector
Foundation (TPSF) who jointly said that about 80 percent of the drugs
circulating in the local market were being imported.
>
> The Tanzania Association of Pharmaceutical Industries (TAPI) chairman
Harish Dhutia said the Tanzania?s medication market was experiencing ``a cut
throat competition whose 10 percent import duty addition would adversely
affect the poor``.
>
> He argued that from simple economic principles, the end buyers of the drug
are the sick people who have no alternatives when it comes to getting
medication that is not manufactured locally.
>
> The imposition of duty on medics would just worsen the matter bearing in
mind that the two partner states in the framework of East African
Community-Kenya and Uganda, have decided to level zero percent on the same
products.
>
> Kenya decided to zero-rate the imported pharmaceutical drugs despite the
fact that it has the largest production capacity as well as numerous
industries as when compared Tanzania.
>
> There are ranges of imported medical products that are not being
manufactured by the local pharmaceutical industries.
>
> TAPI and TPSF are of the view that the government should reconsider the
issue by waiving value added tax (VAT) on local pharmaceutical industries,
or even better lower income tax rates or other export incentives if it were
serious about protecting local drug industries.
>
> In a recent breakfast meeting organized by the Tanzania Food and Drugs
Authority (TDFA), participants unanimously agreed to seek consultations with
responsible government authorities over the matter.
>
> The President of the Tanzania Chamber of Commerce, Industries and
Agriculture (TCCIA) who is also one of the executives of the TPSF took the
responsibilities to lead the dialogue process.
>
> Two years ago, pharmaceutical industries lobbied for the 10 percent
imposition as import duty in vain.
>
> The then Minister for Finance Basil Mramba rejected the request on the
grounds that the important person was the patient and not the pharmaceutical
companies.
> *	SOURCE: Guardian
>
> Alec van Gelder
> Research Fellow
> International Policy Network
>
> 3rd Floor, Bedford Chambers
> The Piazza, Covent Garden
> London WC2E 8HA
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>
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