Financial Daily from THE HINDU group of publications
Monday, May 23, 2005
Industry & Economy - Health
Vaccine prices go up in some States post-VAT
New Delhi , May 22
THE prices of some essential vaccines for diphtheria, pertusis (whooping cough), tetanus, polio, tuberculosis and measles have gone up in certain States after the Government implemented value-added tax (VAT) at 4 per cent.
According to Mr S.K. Garg, Chairman of the All-India Vaccine Dealers' Association, "In Maharashtra, Kerala, Delhi, West Bengal, Karnataka, Andhra Pradesh and Tamil Nadu, prices of some of these vaccines have already gone up."
Earlier, some State Governments had exempted certain vaccines from sales tax. Maharashtra, for instance, exempted polio and anti-rabies vaccines from sales tax, while Delhi exempted BCG, polio and Hepatitis A and B vaccines from the same.
Industry representatives felt that this could have an impact on the immunisation programme. While a large portion of the vaccines are administered through Government programmes, those accessing them through the private sector would have to bear the additional burden.
Industry officials pointed out that when international and national agencies like UNICEF are donating money for mass immunisation campaigns, what is the rationale behind taxing vaccines? "Instead, the Government could have a separate classification of drugs for medicines required under the National Health Programme and these could be exempted from taxes," an official said.
Currently, a host of companies, including GlaxoSmithKline, Aventis and Chiron-Panacea, are manufacturing various vaccines. Meanwhile, the initial apprehensions surrounding the implementation of value-added tax (VAT) seem to be easing with retailers and distributors once again stocking drugs.
"There aren't too many grey areas left. In fact, States which did not implement VAT are also veering towards it," said the CFO of a pharma company.
The Government had recently clarified that VAT would not be built into the maximum retail price of drugs and medicines. Some State Governments have already sent out notices to traders clarifying this.
Speaking to Business Line, Mr Sandeep Nangia, President, Retailers & Distributors Chemists Association (RDCA), said, "Chemists and pharma retailers have started giving consumers bills, which will include the 4 per cent VAT. The Delhi State Government has recently notified it." During the end of March, the uncertainty surrounding VAT had led to traders deferring purchases.
However, the retail and distribution trade, which has been busy coping with the price-driven problems, has not yet started seeking compensation from the Government or industry on the loss due to purchase of medicines at a higher sales tax before the implementation of VAT. The Government has promised to make good the loss retailers have incurred.
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