Politicians responsible for affordable health care should investigate pharmaceutical tax exemptions. 

The 2021 World Health Organization study found that tax exemptions cut pharmaceutical product taxes. This method should also save money for customers (both patients and buyers). 

Pharmaceutical products no longer pay customs fees in many countries, especially wealthier ones. These states joined in the 1995 Zero-for-Zero campaign and the World Trade Organization’s reciprocal Pharmaceutical Tariff Elimination Agreement (WTO). 

However, many low-income countries still charge 10% import taxes on pharmaceuticals. Pharmaceutical products are becoming subject to the 25% value-added tax. Pharmaceutical items or funded medicines may be taxed at a lower rate in various countries. 

Long-term tax exemptions and reduced rates should make items more affordable, especially for low-income patients. Tax exemptions may reduce government revenue, although it’s likely to be minimal. 

The WHO advises member states to investigate tax-free status for essential medications and active pharmaceutical components. 

The WHO advises member states to consider tax exemptions and initiatives to cut drug prices for patients and buyers. 

The WHO Guideline on Country Pharmaceutical Pricing Policies states that affordable pharmaceuticals are essential to global efforts to offer universal health coverage. SDG Target 3.8 of the UN Sustainable Development Goals (SDGs) guarantees financial risk protection, excellent necessary health-care services, and safe, effective, quality, and affordable critical pharmaceuticals and immunizations for all. All levels of government in Member States and the international community are responsible for achieving this SDG. 

Pharmaceutical prices have hurt both high- and low-income countries. Pharmaceutical prices have often caused financial hardship for individuals and hindered healthcare systems’ ability to offer necessary medicines to the public. 

Pharmaceutical pricing policies must be carefully established, implemented, and monitored and adjusted to market changes. Strong, well-thought-out rules can lead well-informed and balanced decision-making to provide inexpensive vital health items. 

The latest WHO recommendation on country pharmaceutical price policy recognizes unique countries’ pricing experiences. 

It’s encouraging to see a commitment to making essential medicines affordable worldwide. Despite this commitment, pharmaceutical prices continue to cause problems in both high- and low-income countries. It’s well known that the high cost of pharmaceuticals has limited many healthcare systems’ ability to serve a diverse population. Without insurance to cover pharmaceutical supplies, patients and their families might face considerable, if not catastrophic, financial difficulties. Pharmacological therapy may be denied to low-income patients. 

Health care systems could increase access to pharmaceutical items at lower rates and ensure supplies by developing suitable pricing regulations and other system-wide measures. 

Bangladesh is adopting new policies to reach its aims in this area. As part of the government’s goal to stimulate local manufacturing of active pharmaceutical ingredients (APIs) to minimize imports and increase exports, raw material manufacturers will receive a tax exemption until 2032. 

As of July 1, 2016, manufacturers of active pharmaceutical ingredients (APIs) and laboratory reagents that already produce raw materials were eligible for the tax credit, according to the National Board of Revenue. 

The NBR requires enterprises to create at least five APIs and laboratory reagents annually to qualify for the tax break starting in July 2022. Less than five APIs and reagents reduce the benefit. Drug firms who produce more than three novel APIs and reagents annually will be taxed 7.5% by the NBR starting in July 2022. 

Government performance is commendable. Mr. Shafiuzzaman, secretary-general of the Bangladesh Association of Pharmaceutical Industries, which represents 250 local drugmakers, said the tax incentive will encourage investment and increase API production. Association stated this. Additionally, API molecule and reagent makers must invest at least 1% of their yearly revenue in research and development and steadily increase their partnership with academic and research groups. 

Local enterprises are building plants at Munshiganj’s API industrial park to manufacture raw materials and meet some of the pharmaceuticals industry’s $3 billion 2020 need. 

Bangladesh imports most of its raw materials and reagents from China, Korea, and India due to a lack of local manufacture. Drug raw material imports cost about one trillion taka, according to industry experts. 

Around ten pharmaceutical businesses, including Active Fine Chemicals, Square, Eskayef, and Beximco, produce raw ingredients. Some companies are launching production lines. 

API manufacturers are excluded from paying income tax advances while importing molecules. They can also import duty-free. 

The NBR said the permission will last until 2032. The government uses the Trade-Related Aspects of Intellectual Property Rights patent waiver to strengthen the pharmaceutical industry and boost exports (TRIPS). 

Regional firms produced 41 API compounds and reagents in 2017. The commerce ministry’s 2018 API and reagent production and export policy is to reach 370 by 2032. 

The government wants to employ domestic manufacturing to cut API and reagent imports to 80% of the total. 

A senior NBR official stated that the tax exemption allows domestic pharmaceutical producers to profit from the TRIPS waiver. 

Due to tax and other incentives, Bangladesh expects API exports to produce approximately 5.5 lakh new employment and nearly one million dollars by 2032. 

A director of global business development, believes that local production will lower drug prices and boost the company’s international competitiveness. Beacon Pharmaceuticals predicts active pharmaceutical ingredient manufacture soon. 

He thinks global firms may set up API manufacturing factories in Bangladesh due to its cheaper production costs. This supports the premise of foreign investment opportunities. 

According to World Health Assembly resolutions WHA61.21 and WHA62.16 on a global strategy and plan of action on public health, innovation, and intellectual property, the WHO must provide Member States with policy guidance on pharmaceutical product pricing. These resolutions called for competition to increase the availability and affordability of health products that meet public health demands. 

The World Health Assembly’s Resolution WHA71 (8), which addressed the global shortage of medicines and vaccines and access to them, requested a road plan report outlining the WHO’s programming for 2019–2023. This route map lists pricing policy guidelines as a major milestone. In particular, suggestions for better pricing practices to make important health products more affordable for health systems and customers. 

World Health Assembly resolution WHA72(8) asked the Director-General to continue helping Member States, particularly LMICs7, in formulating and implementing national policies to improve the transparency of markets for medicines, vaccines, and other health products. 

It’s also important to note that WHO regional committee reports, resolutions, and decisions on access to medicines have all stressed the need for strong pricing rules for various health items (2–7). 

Tariffs and taxes may be trade obstacles that limit market access and competitiveness. Patients may bear a disproportionate share of tax incidence, which will affect affordability. 

The WHO advises member states to investigate tax-free status for essential medications and active pharmaceutical components. 

The WHO advises member states to consider tax exemptions and initiatives to cut drug prices for patients and buyers. 

The WHO explains that the GDG considered several countries’ pharmaceutical tax exemption or reduction experiences. These experiences needed stakeholder support and practicality. 

The GDG knew that tax exemptions on pharmaceutical products might cut patients’ out-of-pocket costs without affecting government revenue. 

In health care systems with high public funding for medications, a pharmaceutical product tax exemption would have little influence on government revenue and patient out-of-pocket expenditures, according to the GDG. 

The following grounds support the tax exemption under the WHO guideline: 

Consistently applying the tax exemption would lower patient healthcare costs, improving equity. Inequity may result from irregular tax exemption application and the fact that tax exemption savings are not directly transmitted to service providers or patients. 

Some governments may not want to lose money by decreasing or removing pharmaceutical product levies. There is evidence that the value-added tax contributes less than one percent of total public revenue, but it can make it impossible for patients to pay their drugs (117, 118). 

The tax exemption requires resources. This inclusion into the taxation framework would limit long-term resources. Implementation is likely since the policy eliminates or modifies an existing policy. Countries also manage more complex tax regimes. 

Pharmaceutics tax incentives, such as exemptions, may not impact health care systems in the long run. However, they may eventually lower patient care costs. 

In conclusion, special patient access initiatives and locally made active medicinal ingredients can be tax exempted. However, selective tax strategies must consider equality, feasibility, and administration expenses.


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