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Published on November 24, 2007

Scrapping taxes on pharmaceuticals will take money out of the national health security, Government Pharmaceutical Organisation (GPO) chairman Dr Vichai Chokewiwat warned yesterday.

He was reacting to demands from the Pharmaceutical Research and Manufacturers Association of Thailand (Prema), which issued newspaper advertisements yesterday, calling for removal of taxes on drugs. Vichai said the government would lose revenue if taxes were scrapped, which would leave it with insufficient funds to spend on the national health security of 48 million universal healthcare users.

About Bt100 billion is allocated to the National Health Security Office for spending on care of these patients.

If taxes on drugs were removed, the state would lose between Bt3.6 billion and Bt4.5 billion.

Prema advertised in several local newspapers yesterday, telling people in an open letter that removal of taxes would make drugs cheaper, and more people could afford them. The group wanted all taxes scrapped - import duties, value-added taxes and local maintenance taxes.

Prema president Teera Chakajnarodom said consumers and patients would be the beneficiaries. Local and international manufacturers paid the state 18 per cent of drug prices in tax and that is why drugs in this country are too expensive, Teera said.

"If we could remove taxes, the price will decrease and people can access cheaper drugs," he said. He believed drug prices would fall at least 10 per cent.

However, Vichai said the high prices were not because of taxes, but expensive advertising by manufacturers.

He said drug prices would not fall if taxes were removed and there is no guarantee that manufacturers will cut prices if taxes are scrapped.

"Drug companies could claim they have to increase prices because they invest a lot of money in research and development," he said.

A Chulalongkorn University faculty member, who asked to remain anonymous, agreed with the Prema proposal.

The academic added it would be pointless if drug companies did not cut prices to reflect it. Most drug companies charged 30 per cent more than real costs, the academic said.

Health advocate Jon Ungpakorn said removing taxes would not improve access, because drugs would remain too expensive for many.

He said the imposition of compulsory licensing of drugs - especially essential drugs to fight HIV/Aids, malaria and cancer treatments - however, did benefit patients.

Pongphon Sarnsamak

 The Nation