Villar Files Bill Removing VAT On Medicine

Sen. Manny Villar this week filed a bill that seeks to remove value-added tax on medicines.

Villar, chairman of the Quality Affordable Medicine Oversight Committee authored 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 the coverage of Republic Act 8424 or the National Internal Revenue Code.

Las Pinas Rep. Mark Villar authored House Bill 6051, a counterpart bill filed at the House of Representatives.

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

The Family Income and Expenditure Survey of the National Statistics Office shows, drugs and medicines account for 46 percent of the total medical out-of-pocket expenses of households. An average person spends P1,136 or around US$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 higher.

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

Villar, also chairman of the Senate Committee on Trade and Commerce, said additional legislation is needed to lower the price of medicine especially 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 revealed that medicines remain to be one of the most expensive commodities in the country.

Presently, 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. In addition, 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, medication becomes more unreachable to the ordinary Filipino. /MP