Move to raise duty on medicine raw materials

Government's revenue authority has moved to raise the import duty on raw materials of some essential drugs, in an extra-budgetary fiscal measure which pharmacists fear would make lifesaving medicines dearer.       
Officials said the National Board of Revenue (NBR) move, with the consent of government high-ups, is to protect local industry manufacturing the materials for the pharmaceutical industries operating in the country.
The revenue board recently took the initiative following a proposal from the Bangladesh Tariff Commission (BTC) and the Ministry of Industries.
The raw materials are: Azithromycin (Micronized or compacted), Erythromycin Ethyl Succinate, Erythromycin stearate, Metformin HCL, Acetonitrile HPLC, and Methanol HPLC.
A lone local producer, Active Fine Chemical Limited (AFCL), made the plea to the government for levying increased import duty on the essential drug ingredients.
However, pharmaceutical industry sources fear a substantial increase in prices of those drugs with the upward revision of the duty on the raw materials as most of the renowned pharmaceutical industries use imported raw materials for maintaining international standards.
The customs wing of the NBR recently sent a proposal to the finance ministry to take initiative in line with the proposals of the BTC and the ministry of Industries.
Both the finance minister and the state minister for finance and planning gave their consent to the NBR proposal for considering the matter.  
The BTC and the ministry proposed to raise the import duty on Azithromycin and Erythromycin, raw materials of widely used anti-biotic, to 25 per cent from the existing 10 per cent. Import duty for Metformin HCL, a drug used for treatment of diabetes, has been proposed to double at 10 per cent.
The commission and the ministry also proposed to impose 5.0 per cent Regulatory Duty (RD) on import of Acetonitrile and Methanol.
Raw materials for pharmaceuticals enjoy a reduced duty structure under Statutory Regulatory Orders (SROs) of the customs wing under the NBR.
The customs wing found a 12 per cent gap in the tax incidence of imported finished drugs and raw materials of the aforesaid medicines.
In the current budget for fiscal year (FY) 2015-16, Finance Minister AMA Muhith vowed to offer at least 30 to 40 per cent protection to the local industry by keeping the gap between imported products and its raw materials.
The customs wing of the NBR feels that the local industry should enjoy some more protection as per the finance minister's assurance. Bangladesh Association of Pharmaceutical Industries (BAPI) is not in favour of the decision on duty hike on raw materials.
"Increase in duty will lead to rise in the prices of the medicines on the local market. Common people have to shoulder the price burden," said one industry source.
Many of raw materials of that local company failed to qualify in the laboratory test of pharmaceutical companies, he pointed out.
Country's pharmaceutical companies are forced to import raw materials for manufacturing medicine, he said.
"We are exporting drugs alongside producing for the local market. It is not possible to use two types of raw materials--imported and locally produced-for pharmaceutical products," he said. Earlier in a meeting, representatives from Square and Incepta pharmaceutical firms had urged the government not to increase the duty on raw materials and examine the quality of the raw materials of Active Fine Chemicals.
Hamiuzzaman, Managing Director and Chief Executive Officer (CEO) of Health Care Pharma and also treasurer of the BAPI, said patients would have to bear the brunt of upward price revision of raw materials.
It will not be a wise decision to increase duty for the sake of facilitating one company which will affect a large number of people, he added.
The government has kept import duty on drugs at the lowest level to make the lifesaving drugs available for people, he said. "We appreciate raw material production by the local companies but the quality must be ensured," he said.
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