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Increasing access to medicines 149
Table 2 Duties and taxes on retail medicines
Country Combined total duties and taxes
India 55%
Sierra Leone 40%
Nigeria 34%
Pakistan 33%
Bolivia 32%
Bangladesh 29%
China 28%
Jamaica 27%
Morocco 25%
Georgia 25%
Mexico 24%
Table adapted from European Commission, 2003.
They are regressive because they adversely affect the poor and the
sick. Such government policies effectively impose a wedge between
the demand for drugs and their supply. In markets where profit
margins are already low, drug companies have fewer incentives to
supply their existing products, much less to innovate new products
specifically aimed at these markets. As Levison (2003) observes:
“Economically…tariffs impede the action of a competitive market
where the best drug will achieve the best price and [they] protect
inefficient [local] producers who charge high drug prices.”
(Appendix Figure 2 shows how taxes restrict the demand for medicines.)
Non-tariff barriers
Beyond visible barriers such as tariffs, manufacturers wishing to
export to overseas markets often face significant hurdles and complexity
in registering their products. These tend to emanate from local
drug approval agencies, and often appear to be designed to protect
local industry rather than achieving better outcomes for patients.