State removes tax on key costly drugs

Doctors and Nurses at Nairobi Women's Hospital. The cost of healthcare is driven up by drugs, which constitute about 40 per cent of a patient’s bill. [Jonah Onyango, Standard]

Patients suffering from lifestyles diseases should start enjoying cheaper drugs after the Government removed value-added tax (VAT) charged on four medicaments.

Through the Finance Act 2018, drugs containing substances used to treat high blood pressure, asthma, obesity, colds and allergies have been added into the zero-rating schedule.

However, drugs containing alkaloids including morphine and nicotine have been removed from the zero-rating schedule, probably because they have been abused.

The drugs that have been zero-rated include those containing ephedrine, a medication and stimulant used to prevent low-blood pressure during spinal anesthesia.

The medication can also be used to treat asthma, narcolepsy, and obesity.

Drugs containing norephedrine, another medicament, used to treat life-threatening low-blood pressure that can occur with certain medical conditions or surgical procedures, has also been zero-rated.

Medicaments containing pseudoephedrine which is used as a nasal or sinus decongestant have also been zero-rated.

“The Finance Act has removed medicaments of tariff 3004.40.00 from zero rating. However, the following medicaments have been added to the zero rating schedule: 3004.41.00, 3004.42.00, 3004.43.00 and 3004.49.00,” read a report by audit firm PWC.

Almost all prescriptive drugs and most other healthcare products do no attract VAT. From the thin tube inserted into a patient’s vein to administer medication to material that dentists use to restore a patient’s loose tooth to the millions of antibiotic pills that will be popped by end of today, healthcare is just a tax-free business.

It is estimated that the cost of healthcare is driven up by drugs, which constitute about 40 per cent of a patient’s medical bill.

The Government has said it is working on a way the high prices of drugs. The Cabinet Secretary for Health Sicily Kariuki is said to have vouched for price control.

The Government has also waived taxes on post-retirement medical cover products, in what is aimed at saving the old people from the rising cost of medical bills.