KARACHI: Anomalies in list of drugs exempted from GST
By Bahzad Alam Khan
KARACHI, May 22: The government has failed to remove anomalies from the list of those 256 drugs which have been exempted from general sales tax.
Market sources told Dawn on Wednesday that pharmacy owners took advantage of the ambiguities in the list of the drugs exempted from general sales tax. Quite often they charged general sales tax even on those drugs which were exempted.
The government imposed a 15 per cent general sales tax on drugs, even life-saving ones, on March 21. Human-rights organizations, consumer-watch groups and stake-holders poured scorn on the government decision. On April 4, the government exempted 256 life-saving drugs from general sales tax. On the recommendation of federal health ministry the Central Board of Revenue issued a list of drugs exempted from general sales tax.
The chairman of the Pakistan Chemists and Druggists Association (Sindh), Haji Mohammad Hanif Blue, admitted that some pharmacy owners overcharged unsuspecting buyers taking advantage of the ambiguities in the list of drugs exempted from general sales tax.
“There are actually a number of anomalies in the list which have confused even those seasoned druggists who have been in the trade for years. Sometimes they also inadvertently charge general sales tax on those drugs which are exempted. The buyers, by and large, do not know which drugs are exempted from general sales tax and which are not.” He demanded that general sales tax be lifted from all drugs.
The list of 256 drugs exempted from general sales tax is divided into 26 categories, including anaesthetics, analgesics and non-steroidal anti-inflammatory, antiallergics and drugs used in anaphyleasics, anti-epileptics, anti-infective, antiparkinsonism, haematinics, anticoagulants, vitamin-K derivatives, blood products and plasma substitutes, anti- haemophiliac factors, cardio vascular drugs, dermatological (topical), diuretics, gastrointestinal, electrolytes supplements, hormones and other endocrine drugs and contraceptives, immumnologicals, oplithalmological preparators, oxytecics and antioxytocics, peritoneal dialysis solution, psychotherapeutic drugs, drugs acting on the respiratory tract, solution correcting water electrolyte and acid base disturbances, antidotes and other substances used in poisoning and anti-neoplastics immunosuppressive and drugs used in palliative care.
The market sources say that Atenol (generic name) has been exempted by the government from sales tax. It is an anti- hypertensive drug used mainly by patients having high blood pressure. Interestingly, they point out, 50 milligram and 100 milligram Atenol are exempted but 25 milligram Atenol is not exempted from general sales tax. The retail price of 14-tablet 50-milligram Atenol is around Rs85 and that of 14-tablet 25- milligram Atenol is a little over Rs84.
“Those who prepared the list of 256 drugs exempted from general sales tax did not take into consideration the elementary rule of economics that 25 milligram and 50 milligram of a drug cannot sell at the same price. Besides, at the start of treatment most cardiovascular patients use Atenol of lower potency which is not exempted from general sales tax.”
The market sources add that while the tablets and syrup of paracetamol (generic name) are exempted from general sales tax, the drops and injections are not. “Drops are basically used for infants who cannot take the drug in any other way. The drops, therefore, should be exempted from general sales tax.”
They point out that of a large number of anti-biotics, doxycyclin (generic name) and oxytetracilline (generic name) are inexpensive and are mostly prescribed by general practitioners to poor patients. Both doxcyclin and oxytetracilline are not exempted from general sales tax.
They add that Tamoxifen (generic name) and Paclitexol (generic name) are both anti-cancer drugs. While the former is exempted from general sales tax, the latter is not. Similarly, the vaccines used for prevention of hepatitis-B are exempted from general sales tax, but drugs used for treatment of hepatitis-B are not exempted from general sales tax.
They say that anti-diarrhoea, anti-fungus and cough syrup are profusely used in households on a daily basis. They add that all these drugs are not exempted from general sales tax.
The market sources maintain that the ministry of health has not removed defects from the pricing mechanism. For instance, Amoxicillin (generic name) which is exempted from general sales tax. The retail price of 100 capsules of 250 milligram Amoxicillin is around Rs310. The retail price of 500 milligram Amoxicillin is around Rs749.
“The retail price of 500 milligrams of a drug should be double the retail price of 250 milligrams. But in the case of Amoxicillin, the retail price of 500 milligrams is more than double the retail price of 250 milligrams. The higher potency of a drug does not increase its size. Therefore, same packets are used for 250 milligram drugs and 500 milligram drugs. There is no reason why the retail price of 500 milligrams of a drug should be more than double the retail price of 250 milligrams.”
