* This is my article in BusinessWorld last September 19, 2019.
Among the ironies of government health policies regardless of administration is their cry for “cheaper medicines” — and then they impose various tariff and taxes on medicines that make these products more expensive.
I checked the tariff and duties for imported pharmaceutical products at the World Trade Organization (WTO) and I was surprised to see that zero tariff in medicines is imposed by a number of our neighbors in the region while the Philippines imposes a nearly 3% tariff, aside from 12% VAT on medicines (See Table 1).
Other countries have higher medicine tariffs: Nepal has 14%, Pakistan 11%, Laos 10%.
This coming Monday, Sept. 23, there will be a UN High-Level Meeting (UN HLM) on Universal Health Coverage (UHC). Their theme is “Universal Health Coverage: Moving Together to Build a Healthier World.”
The UN and WHO send this virtue signaling to member-country governments to further raise taxes, impose more prohibitions and restrictions on “unhealthy” products to achieve a “healthier world.” So that the Philippines’ Department of Health, Department of Finance, other agencies create new legislations and regulations to implement this signaling.
But people around the world have been living healthier and longer, even before UHC was coined and before various taxes or tax hikes on alcohol, tobacco, sugary drinks and food were imposed (See Table 2).
Related to this, a new report was released this week, “Accelerating access to medicines: Policy recommendations for achieving the health-related Sustainable Development Goals.” It was produced and co-signed by 15 independent and non-government think tanks from 14 countries including the Geneva Network (UK), Minimal Government Thinkers (Philippines), and four others from Asia.
The report has noted that government itself is among the causes of expensive medicines and thus recommended three ways to reduce medicine costs: reduce taxes, abolish tariffs, and eradicate other trade barriers. In particular, it recommended that “Non-members should join the WTO Pharmaceutical Tariff Elimination Agreement (‘Zero for Zero’ initiative). If this is not possible, countries that still levy tariffs should unilaterally abolish them.” Yes, the Philippines should reduce its double talk by cutting its pharmaceutical tariffs of 2.8% to zero (See Table 1 again).
Regarding improving access to medicines, the report also noted that government itself creates regulations that in the process delay or limit access to medicines by the people. Thus, the report made four recommendations: Speed up patent examination, simplify the drug approval process, modernize government medicine reimbursement decision-making, and promote open trade in medicines.
Open trade in medicines means allowing more market competition via: (1) a stronger role for the WTO in enforcing existing laws vs. mandatory local content requirements; (2) instead of protectionism, developing country governments should make their economies more attractive to foreign investment by among others, investing in human capital and physical infrastructure; and, (3) public procurement of medicines should be transparent, ensure best interests of the taxpayers.
As this column has repeatedly argued, cheaper products like energy, rice, transportation, healthcare and medicines is possible if government steps back via less taxes and tariff, less mandates and prohibitions, have more competition among producers and sellers of these goods and services. Government should only ensure good quality commodities from competing players by heavily penalizing producers of fake, counterfeit, substandard, and unreliable products.