South Africa’s NAPM calls for elimination of VAT on medicines

South African trade group the National Association of Pharmaceutical Manufacturers (NAPM) has proposed a zero Value Added Tax (VAT) rating of medicines in its submission to the Davis Tax Committee, tasked with assessing the country’s tax policy framework and its role in supporting the objectives of inclusive growth, employment, development and fiscal sustainability in South Africa.

Although the proposed Zero VAT rating requested consideration for all medicines, it particularly targets Schedule 3 to Schedule 6 medicines, which are prescribed for serious illnesses. As indicated by the latest World Health Organizations WHO/HAI Global Pharmaceutical Policy Brief 5, taxes levied on medicines commonly make up 20%–30% of the final price consumers pay for medicines.

The NAPM, which represents the county’s generic drug manufacturers and distributors, strongly believes that reducing or removing taxes will reduce prices and greatly improve access to medicines for the vast majority of our population. In a country such as South Africa where less than 20% of the population have access to private health care, the WHO report states that up to a staggering 48% of household budgets are spent on out-of pocket health care expenses.