Remove VAT on medicine, Villar says

MANILA, Philippines - Sen. Manny Villar has filed a bill seeking to remove value-added tax (VAT) on medicine. 

“It is an added burden to our poor people who are sick. They don’t have enough money to buy food and they cannot afford expensive medicine,’’ he said.

Villar, chairman of the Quality Affordable Medicine Oversight committee, filed Senate Bill 3163 which seeks to exempt the sale and importation of drugs, medicines, pharmaceutical products and related raw materials and pharmaceutical equipment and instruments used for drug manufacturing from coverage of Republic Act 8424 or the National Internal Revenue Code. 

A counterpart bill authored by the senator’s son, Las Piñas Rep. Mark Villar, was also filed at the House of Representatives.

In filing House Bill 6051, the younger Villar said tax on medicine is regressive and becomes more burdensome to the poor who are less likely to have access to medicines.

The lawmakers cited the Family Income and Expenditure Survey of the National Statistics Office (NSO), which showed that drugs and medicines account for 46 percent of the total medical out-of-pocket expenses of households.

An average person spent P1,136 or around $22 on medical care totaling 3.2 percent of the total expenditures per person.

For the low-income group, expenditure on drugs and medicine is about 50 percent more. 

“The removal of tariffs and VAT on medicines will lead to significant savings for our people and makes healthcare more affordable to every Filipino,” said the elder Villar. 

Villar, also chairman of the Senate Committee on Trade and Commerce, said additional legislation is needed to lower the price of medicines because RA 9502 or the Cheaper Medicines Act fails to bring affordable quality medicine to the poor.

During public hearings held by Villar, it was learned that medicines remain one of the most expensive commodities in the country. At present, pharmaceutical companies import basic active ingredients, raw and other auxiliary materials for the manufacture of medicines.

Upon importation, these products are already burdened with duties and tariffs and a 12 percent VAT is imposed on their sales.

On top of that, the sale of manufactured drugs is subject to another 12 percent VAT and sales tax by local governments.

With all these fees and taxes, the senator lamented that medication becomes more unreachable to the ordinary Filipino.