Leading multinational pharmaceutical companies have proposed a flat customs duty rate of 10 percent or below on the import of raw materials and pharmaceutical active ingredients subjected to higher rate of duty under the tariff rationalisation during the upcoming budget 2012-13, it is learnt.
Dr Sadia Moazam, Executive Director of Pharma Bureau, a representative body of multinational pharmaceutical companies while talking with journalists said that pharmaceutical companies are operating in a unique kind of tax regime where taxes have been paid at the input stage whereas the burden of the paid taxes are not recovered from consumers. This shows that taxes paid on the import of raw materials and at other stages of production cannot be recovered from patients using the medicines in which customs duty and sales tax paid raw materials have been consumed. Dr Ahmed Faraz, Managing Director of Roche and Shehryar Ansari, Managing Director of Eli Lilly were also present on the occasion.
"There is no sales tax on medicines and drugs, but the pharmaceutical companies have to pay sales tax on raw materials and inputs are liable to customs duty above 10 percent. For example, amber glass, a raw material used in manufacturing of bottles, is subjected to 25 percent customs duty along with 16 percent sales tax. At the time of selling of medicines in the said bottles, this 25 percent duty and 16 percent sales tax cannot be refunded from the consumers due to distortion in the taxation regime. However, the manufacturers cannot recover the cost from the consumers as there is no sales tax on the sale of medicines/drugs. The input cost of the pharmaceutical companies has been increased as the refund of the sales tax paid at the import stage cannot be recovered from the consumers. The same is the situation with the packing material and other inputs used in the manufacturing of pharmaceutical products", Dr Sadia added.
When this scribe asked why the government has sent a show cause notice to Roche Pharmaceutical for selling Peginterferon on the basis of buy one get one free, Dr Ahmed said, "Peginterferon, used for the treatment of the hepatitis, is being sold in Pakistan more cheaply than in other regional countries. In Pakistan it is sold at Rs 13,000 on the basis of buy one get one free. The show cause notice is not sent to us by the government but by a medicine company that is also manufacturing this medicine and wants this medicine to be sold at the international market rates", Dr Ahmed Faraz said.
He added, "The case of contaminated medicines that caused the death of over 100 patients in Punjab Institute of Cardiology Lahore led to Afghanistan and Sri Lanka banning imports of Pakistani pharmaceutical products but now this ban is removed".
About the ongoing issue of ephedrine, when asked by this scribe, Shehryar Ansari said, "It is right that the government has reduced the issuance of quota of ephedrine to the pharmaceutical companies due to the ongoing case of Ali Musa Gilani but there are some medicine companies that are reluctant to get the quota of this compound from the government. The multinational medicine companies have been provided a small quota of ephedrine since the last twenty years but this year only 20-40 percent of the total quota has been issued to the multinational companies that would lead to the shortage of the medicines manufactured from this product in the domestic market". Shehryar said, "Due to the shortage of medicines having ephedrine as active compound, some chemists have themselves increased the prices of these medicines in domestic market".
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