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Health Ministry Moves to Remove Increased VAT on Medicines
The Ministry of Health and Family Welfare is taking steps to remove the newly imposed value-added tax (VAT) on medicines sold at local pharmacies and drugstores.
Dr. Sayedur Rahman, Special Assistant at the Ministry, confirmed to The Business Standard, "An initiative has been launched to withdraw the VAT on medicines, and we are optimistic about resolving the issue." The ministry is focused on ensuring the continued availability of essential medicines, he added.
The VAT increase, which raised the rate from 2.4% to 3%, was announced on January 9 through government ordinances that also imposed higher VAT and supplementary duties on over 100 products and services, including medicines.
In response, the Bangladesh Association of Pharmaceutical Industries (BAPI) has decided to formally appeal to the Ministry of Health and the chief adviser for the removal of the VAT on medicines.
Despite the VAT hike taking effect on January 9, pharmacies in Dhaka have not yet raised prices. A visit to drugstores in the capital's Eskaton area on Tuesday revealed that medicines were still being sold at previous prices. Staff at the stores noted they had not received any guidance from pharmaceutical companies about adjusting prices.
Abdul Muktadir, President of BAPI and Managing Director of Incepta Pharmaceuticals, stated, "We will appeal to the Ministry of Health and the chief adviser to withdraw the VAT on medicines."
Health economists argue that medicines should be exempt from VAT due to their essential nature. Dr. Syed Abdul Hamid, Professor at the Institute of Health Economics at Dhaka University, told TBS, "Medicines should be considered life-saving commodities and exempt from VAT. Otherwise, ordinary citizens will bear an undue burden."
The Health Ministry’s efforts to reverse the VAT increase have been welcomed. Dr. Hamid also called on the Ministry of Finance to revoke the VAT on medicines.
According to 2022 estimates by the World Health Organization, 72.5% of healthcare expenses in Bangladesh are paid out of pocket by citizens, with a significant portion spent on medicines. The burden of these costs pushed 6.1 million people into poverty, according to the Bangladesh Institute of Development Studies (BIDS).