The imposition of 20% customs duty on imported drugs is counter-productive as costs of accessing medicare have gone up writes OBIDIKE JERRY.
When President Muhammadu Buhari, flagged-off the ‘Revitalization of Primary Health-Care Centres’ project at the Kuchigoro Community in the Federal Capital Territory (FCT) Abuja, on January 10, 2017, he clearly declared his resolve to deliver affordable and available health-care to Nigerians.
“Our goal of revitalizing the primary health-care centres is to ensure that quality basic health-care services are delivered to majority of Nigerians irrespective of their location in the country,” said the President.
He further said that “we shall focus more on people living in the rural areas and vulnerable population in our society such as women, children under five years of age and the elderly in collaboration with national and international partners.”
The President also added that “out-of-pocket payment for health constitutes over 70% of the total health-care expenditure,” adding that “this is more than the globally recommended 30-40%.”
According to the President, “only less than 5% of the total population are covered by any kind of health insurance or risk protection mechanism,” which he said “is against the recommended 90% coverage by the World Health Organization,” (WHO).
In conclusion, President Buhari said that “our vision is to reverse this unsatisfactory situation and provide better care for the poor and needy.”
Incidentally, Prof. Isaac Adewole, minister of health accompanied President Buhari on that trip. Interestingly, the minister said that his goal among other things, was to revitalize the 10,000 PHC’s across the country.
However, a recent circular from the ministry of finance on payment of 20% customs duty on imported drugs would definitely inhibit the Administration’s resolve to provide affordable and available health-care to the populace.
The circular signed by the Federal Minister of Finance Mrs. Kemi Adeosun, titled “Import Adjustment Tax.”, ordered the introduction of 20% tax on imported medicament by the pharmaceutical sector.
This means that for every imported drug and allied products, the importer pays a minimum duty of 20% to the government coffers through the Nigerian Customs Service (NCS).
This extra payment, analysts insist, will result in more than proportional increases in prices of drugs - a burden that would ultimately be borne by the common man in the street - the very people the government vowed to give affordable and available health care.
Moreover, the policy directive is even contrary to World Trade Organization (WTO) recommendation which the government of the immediate past President Goodluck Jonathan adopted.
Consequently the ECOWAS Committee on Health, having taken cognizance of paucity of drug manufacturing firms in the sub-region, further recommended a waiver on the duty and recommended 0% duty on imported medicament.
For now, the prices of medical services and drugs have gone haywire partly as a result of the policy on payment of 20% duty on imported medicament.
According to the ministry of finance, this directive was necessitated by the need to ramp up revenue
generation and to support local drug manufacturers.
However, Nigeria currently has less than 300 drugs manufacturing companies of which less than 5% are WHO certified. Available records show that the 300 companies can only produce 20 percent of our national drug needs.
“The implication is that the bulk of drugs consumed in the country are imported, and when you pay 20% duty on imported drugs, you end up forcing end-users to pay more on drugs,” said public health officer who spoke on condition of anonymity.
According to the Managing Director/Chief Executive Officer, May and Baker Plc, Mr. Nnamdi Okafor, the pharmaceutical sector is in dire need of foreign exchange to import raw materials to manufacture drugs and vaccines for the health-care system.
He said that his company and others in the pharmaceutical business did not benefit from CBN’s forex allocation to the manufacturing sector.
His words: “Unfortunately, over 98 percent of raw materials used for vaccines production locally are imported into the country. But I can tell you that what is happening to importers of finished products is also happening to us.
“You have heard the pronouncement by government that manufacturers got some special forex allocations for importation of raw materials; that did not happen in our sector;
“I can assure you that we have not been able to bring in our packaging materials into the country for many months because of forex challenges and in fact, that we survived last year was a miracle to most of us in this country.
“I can tell you that we cannot survive anymore. It’s not something we can live with any longer. By the first quarter of this year, most factories that are still standing will begin to shut down operations because the situation with forex is getting worse daily.
“For the past six months, it has been challenging to cope with manufacturing. It was a bit better in the first half of last year; because you could get forex allocations, may be 20% of your requirements. But in the past six months, we have not gotten anything from the banks.
“As I speak to you, we have not been able to order for raw materials that normally by now should be in Nigeria for this year.”
This revelation from Mr. Okafor shows that even the payment of 20% duty on imported medicament to support local manufactures of drugs will not yield the intended results as the realities on ground would frustrate that policy.
A market survey conducted by a Non-Governmental Organization (NGO), known as ‘I CARE’ shows astronomical increases in prices of drugs commonly used in the treatment and or management of some of the health challenges prevalent in Nigerians especially in the rural areas.
For instance, co-dovan, an anti- hypertensive drug, currently sells for N10,000 per pack against N3,000 before the imposition of the 20 percent duty on imported drugs. Also, meropenem injection, a life-saving anti – biotic, normally used for complicated infections, now sells for N18,000 for one injection instead of N4,600 for one injection.
The National Coordinator of ‘I CARE’ Mr. Toritsheju Aghofofo-Kete, said the organization carried out the survey to highlight the combined negative effects of shortage of forex and the 20% tax on imported medicaments.
Mrs. Mercy Okeke (not her real name) a diabetic patient who is on daily insulin injection, says almost all her income as a petty trader has been spent on buying insulin Injection.
Moreover, her medical history, a hitherto private matter has become a subject of discussion among relatives and close friends, as she regularly besiege them with requests for financial assistance to supplement her income.
She said she now spends close to N65,000 monthly as against the N25,000-N30,000 she used to spend on insulin, partly due to the imposition of 20% customs duty on imported drugs.
Yet, according to the federal ministry of health, the idea behind setting up primary health-care centres in virtually all the 774 local government areas of the country was to drastically reduce out-of-pocket expenses on health-care.
Ironically, the reality on the ground is that the masses of the people are paying more to access health-care.