GST: "Zero-rated" for all Medicines?

Malaysia will be implementing the Goods and Services Tax (GST) wef 1st April 2015.

The GST is a consumption tax which supersedes the existing Sales and Service Tax (SST). Currently, the SST is 10% and GST will be 6%

Theoretically, and simplistically, existing goods which are currently taxed at 10% will be "cheaper" to the consumers when the GST, which is at 6% kicks-in.

However, all is not that simple. The critics and consumers are bracing for higher products and services pricings effective 1st April 2015

As for the pharmaceuticals, prices will be expected to increase as these products are "not taxed" prior to GST implementation. Realising this, the Government had decided to have medicines listed under the National Essential Drug List (NEML) be "zero-rated".

However, under the NEML List only about 320 chemical entities are "zero-rated" which translates into, about 4,500 registered brand names or medicines in the language of the lay person, as these chemical entities are manufactured by different manufacturers with various brand names. For example, Paracetamol, is counted as 17 brands or medicines instead as one medicine.

In fact, the NEML (4th Edition) List, which are "zero-rated", represents only about 10% of the total 43,000 registered medicines in Malaysia. The majority of these "zero-rated" medicines are prescribed in the Government hospitals. The medicines outside the NEML List are widely prescribed and used in the private sector ie private hospitals, clinics and pharmacies, which are paid-out-of-pocket expenses by the patients.

This being the case, if these medicines are not "zero-rated", any price increase for these medicines will increase the financial burden and hardship, and possibly make them unaffordable to patients who are on long term therapy.

The Pharmaceutical Industry Associations together with Professional Bodies, like the Malaysian Pharmaceutical Society (MPS) are working together to seek the support of the Ministry of Finance to have all pharmaceuticals (medicines) "zero-rated" for the benefit and welfare of the patients.

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