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Increasing access to medicines 147
Taxes and tariffs
Many governments of lower-income countries compound the
problem of weak healthcare systems by imposing a range of taxes
on medicines, including port charges, central, regional and local
taxation, as well as import tariffs and VAT. Other governmentimposed
measures or regulations may include pre-shipment and
inspection costs, and pharmacy board fees. Taken together, these
add significantly to a drug’s retail price, with negative consequences
for access to medicines, especially for the poorest.
In a survey of nine countries, Levison and Laing found that that
costs resulting from government policy or regulation added an
average of 68.6 per cent to the cost of imported pharmaceuticals
(Levison & Laing, 2003).
Why Do Governments Tax Medicines?
Given the massive negative impact of local price inflators on
the cost of medicines for the poor, it must be asked why
governments choose to implement such policies. There are
two main reasons: to protect local industry and to raise
revenue.
Protection of local industry. In some cases, policies are
designed to protect domestic industry, without little if any
regard for how this may affect citizens. Both Levison (2003)
and the European Commission (2003) observe that Nigeria,
Pakistan, India and China all have significant local industries
and are included in the group of countries with the highest
import duties. Opponents of tariff removal support this
policy, suggesting that reducing or abolishing tariffs could
undermine the domestic industry which relies on high
import barriers to survive. This argument is somewhat
tenuous, as very few low-income countries – other than
those listed above – have indigenous pharmaceutical
industries of any significance. At any rate, industry