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Pharmaceutical Tariffs: What is their effect on prices, protection of local industry and revenue generation?

Authors:
Pharmaceutical Tariffs: What is their effect on prices, protection of local
industry and revenue generation?
By
Müge Olcay and Richard Laing
Prepared for:
The Commission on Intellectual Property Rights,
Innovation and Public Health
May 2005
* This paper should be read in reference to original data tables which can be found at
www.who.int/intellectualproperty/studies/tariffs_data
Contact details
Müge Olcay
Secretariat for the Commission on Intellectual
Property Rights, Innovation and Public Health
World Health Organization
E-mail: muge_olcay@yahoo.co.uk
Richard Laing
Policy, Access and Rational Use
Medicine Policy and Standards
World Health Organization
E-mail laingr@who.int
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ABSTRACT
The objective of this study was to examine tariffs levied on medicines. This paper provides
data on the tariff rates levied and revenue generated by over 150 countries around the world
on different categories of pharmaceutical products. These categories include active
pharmaceutical ingredients, finished products and vaccines for human medicines. Data for
selected sub-categories of pharmaceutical products is also provided.
The analysis has shown that many countries (41% for active pharmaceutical ingredients and
39% for finished products) for which data are available do not levy duties on pharmaceutical
products. Fifty-nine percent of countries for which data are available levy tariffs on
pharmaceutical active ingredients. Sixty-one percent of countries levy tariffs on finished
pharmaceutical products. A total of 35% of countries still levy import duties on vaccine
imports. Ninety percent of countries apply less than 10% tariff rates on medicines.
Pharmaceutical tariffs generate less than 0.1% of Gross Domestic Product (GDP) in 92% of
countries for which data is available. Furthermore, pharmaceutical tariffs generally do not
appear to be structured to protect local pharmaceutical industries.
Factors other than tariffs such as manufacturer’s prices, sales taxes including value-added tax
(VAT), mark-ups and other charges are likely to impact the price of medicines more than
tariffs do. Nonetheless tariffs are a regressive form of taxation which target the sick. We
conclude that pharmaceutical tariffs could be eliminated without adverse revenue or
industrial policy impacts.
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THE COMMISSION ON INTELLECTUAL PROPERTY RIGHTS,
INNOVATION AND PUBLIC HEALTH
The Commission was established by the World Health Assembly in 2003:
“…to collect data and proposals from the different actors involved and produce an analysis
of intellectual property rights, innovation, and public health, including the question of
appropriate funding and incentive mechanisms for the creation of new medicines and other
products against diseases that disproportionately affect developing countries…”
Intellectual property rights are important for innovation relevant to public health and are one
factor in determining access to medicines. But neither innovation nor access depend on just
intellectual property rights. The work of the Commission focuses on the intersections
between intellectual property rights, innovation and public health.
This study was undertaken as part of the Commission’s work to look at the factors that
determine access to medicines, tariffs being one of them. For more information on the work
of the Commission, please visit www.who.int/intellectualproperty.
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TABLE OF CONTENTS
INTRODUCTION....................................................................................................................................................6
HEALTH EXPENDITURE AND PHARMACEUTICALS ..................................................................................................7
FACTORS AFFECTING DRUG PRICES........................................................................................................................8
EXEMPTIONS ..........................................................................................................................................................8
IMPORT TARIFFS ..................................................................................................................................................10
GATT, WTO AND URUGUAY ROUND .................................................................................................................11
PRICE COMPONENTS .............................................................................................................................................12
PRIOR STUDIES .....................................................................................................................................................13
Bale (2001).....................................................................................................................................................13
Woodward (2001)...........................................................................................................................................13
Levison (2002)................................................................................................................................................14
Simon et al (2002) ..........................................................................................................................................16
The European Commission 2003...................................................................................................................17
Bate, Tren and Urbah (2005).........................................................................................................................18
METHODS .............................................................................................................................................................21
RESULTS................................................................................................................................................................24
DISTRIBUTIONAL RATES.......................................................................................................................................24
Active pharmaceutical ingredients ................................................................................................................24
Finished products...........................................................................................................................................26
APIs and finished products containing other antibiotics..............................................................................28
APIs and finished productions containing insulin.........................................................................................29
Vaccines on human medicines .......................................................................................................................30
DIFFERENCES IN TARIFF RATES WITHIN COUNTRIES ............................................................................................31
TARIFFS AND GOVERNMENT REVENUE ................................................................................................................32
DISCUSSION .........................................................................................................................................................34
Strengths of the data.......................................................................................................................................34
Weakness of Data...........................................................................................................................................34
KEY FINDINGS AND IMPLICATIONS ......................................................................................................................35
TARIFF RATIONALE FOR GOVERNMENTS .............................................................................................................36
TARIFFS, PRICES AND ACCESS TO MEDICINES ......................................................................................................36
RECOMMENDATION..............................................................................................................................................37
CONCLUSIONS ....................................................................................................................................................38
REFERENCES.......................................................................................................................................................39
ANNEXES...............................................................................................................................................................45
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Tables and Annexes
Table 1: Financing, delivery, and other constraints still limit access to essential medicines.................................6
Table 2: Private and government-funded expenditure on pharmaceuticals, 1990 and 2000..................................7
Table 3: Percentage additions to manufacturers’ CIF price on pharmaceuticals in 10 countries.......................16
Table 4: Range of duties and taxes applied to medicinal products used in the treatment of communicable
diseases.....................................................................................................................................................................18
Table 5: Distribution of tariff rates by country groups for all active pharmaceutical ingredients.......................24
Table 6: Distribution of tariff rates by country groups for all finished products ..................................................26
Table 7: Distribution of tariff rates by country groups for active pharmaceutical ingredients and finished
products containing antibiotics other than penicillin .............................................................................................27
Table 8: Distribution of tariff rates by country groups for active pharmaceutical ingredients and finished
products containing insulin......................................................................................................................................29
Table 9: Distribution of tariff rates by country groups for vaccines for human medicine ....................................30
Table 10: Distribution of differences in tariff rates by number of countries .........................................................31
Table 11: Government revenue and tariff rates ......................................................................................................33
Annex 1: Definitions of HS categories ....................................................................................................................45
Annex 2: Distribution tariff rates by country group ...............................................................................................47
Annex 3: Country groups based on economy..........................................................................................................51
Annex 4: Difference between finished products and active ingredients tariff rates...............................................54
Annex 5: Revenue from tariffs on finished products as a percentage of GDP.......................................................58
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INTRODUCTION
One third of the world's population lacks reliable access to the medicines they need primarily
because they cannot afford to purchase them (The World Medicines Situation, 2004)1.
According to the WHO Medicines Strategy, there are several challenges involved with
meeting essential medicine needs which limit access to effective pharmaceutical treatment.
These include irrational use of medicines, inequitable health financing mechanisms,
unreliable medicines supply, problems associated with the quality of medicines and
unaffordable medicine prices. The high prices of medicines in resource-poor settings can
significantly restrict access to medicines, which in developing countries can account for 25%-
70% of overall health care expenditure, compared to less than 15% in most high-income
countries (The World Medicines Situation, 2004). Moreover, most medicines in developing
countries are purchased privately, in contrast to developed countries. Table 1 shows the
percentage of the population with regular access to essential medicines in different regions.
Table 1: Financing, delivery, and other constraints still limit access to essential
medicines
WHO region
Percentage of population with regular access to essential
medicines
Very low
access
(<50%)
Low to
medium
access
(50%-80%)
Medium to
high
access
(81%-95%)
Very high
access
(>95%)
Number of
countries
Number of
countries
Number of
countries
Number of
countries
Total
countries
Africa 14 23 5 3 45
Americas 7 14 7 7 35
Eastern Mediterranean 2 7 5 8 22
European 3 12 6 25 46
South-East Asian 2 4 3 0 9
Western Pacific 1 8 8 9 26
Total countries 29 68 34 52 183
Source: World Medicines Situation (2004)
1 Pg. 61
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Health expenditure and pharmaceuticals
In most low-income countries, the private sector is the main source of spending in the health
sector and in almost all these countries individual, out-of-pocket expenditure is very high,
with Burkina Faso reaching a 97.4 percentage according to 2001 figures (World Health
Report, 2004). Table 2 illustrates government and private spending on pharmaceuticals in
1990 and 2000. For both years, private sector spending is higher than government spending;
at the global level, private spending increased while government spending on
pharmaceuticals fell. In all country income groups and for both years, private spending on
pharmaceuticals is higher than government spending and the main source of pharmaceutical
expenditure in 2002 is 57.8% in high-income, 70.9% in middle-income and 71.6% in low-
income countries. The impact of the fact that households account for the majority of
pharmaceutical expenditure may have a varying impact depending on countries. "While in the
high-income countries, a prominent concern is lengthy waiting lists for elective surgery, the
poor in low-income countries are more likely to be preoccupied with how many items on a
prescription they can afford to buy…" (The World Medicines Situation, 2004).
The countries where out-of-pocket expenditure is slightly lower are those with insurance
schemes or other prepaid programmes (Grant & Grant, 2002). High-income countries usually
intervene much more than low-income countries in delivery, financing and regulation (World
Health Report 2002). Furthermore, a major proportion of this expenditure is on
pharmaceuticals. In low- and middle-income countries, 50% to 90% of medicines are paid for
by patients themselves (WHO Policy Perspectives on Medicine 2004).
Table 2: Private and government-funded expenditure on pharmaceuticals, 1990 and
2000
(Percentage of total expenditure on pharmaceuticals)
Income clusters 1990 2000
Private Public Private Public
WHO Member States 57.8 42.2 60.6 39.4
High-income 54.2 45.8 57.8 42.2
Middle-income 72.6 27.4 70.9 29.1
Low-income 71.4 28.6 71.6 28.4
Source: The World Medicines Situation, 2004
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Factors affecting drug prices
There are a number of determinants affecting prices of internationally traded goods: these
include manufacturer or importer prices, price differences arising from inter-country
differences in import tariffs and non-tariff barriers and differences in procurement costs such
as transport, delivery costs, wholesaling, domestic taxes and other mark-up costs which can
differ considerably from one country to another. There are additional factors which
specifically affect pharmaceutical products such as price discrimination by suppliers of
patented products according to market conditions in different countries or the presence of a
domestic pharmaceutical industry with the capacity to produce generic substitutes.
An import tariff is a customs duty imposed by importing countries on the value of goods
brought in from foreign countries. Tariffs are a vital determinant of prices as they can
considerably increase the prices of imported goods or locally produced goods incorporating
imported inputs. Tariffs may play a role in protecting the financial position of domestic
producers and generating government revenue. They vary greatly from one country to
another. This paper focuses only on tariffs.
Recently as part of negotiations on the implementation of TRIPS by the World Trade
Organization (WTO), medicines were recognized to be a special category of goods in the
Doha Agreement. This study focuses on tariffs as one component of medicine prices which
may be amenable to international agreements.
Exemptions
This paper analyzes tariff rates for different categories of pharmaceutical finished products,
active ingredients and vaccines for over 150 countries. It is important to note that tariffs on
pharmaceutical products are typically subject to a range of national exemptions, waivers or
reductions which differ significantly between countries, products and sectors. Krasovec and
Connor (1998) surveyed tax treatment of public health commodities in 22 developing
countries and found that purchases of contraceptives, vaccines and oral rehydration salts were
exempt from import taxes or subject to waivers for public sector buyers in 69-77% of
countries, for private non-profit buyers in 42-57% of countries, and for private-for-profit
buyers in 28-43% of countries, depending on the product in question. Partial reliefs or
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reductions were available in up to a further 20% of countries. However, it is important to
stress that the survey was sent to 50 countries but only 22 responded.
There is currently no centralized international source for extracting data on tariff exemptions
for pharmaceutical products. Health Action International (HAI) and the World Health
Organization (WHO) are currently undertaking a project to look at the various costs
associated with the prices of medicines in different countries, including tariffs. However, data
is currently available for only a small selection of countries although not all of the countries
have collected price component data and much of the data is for patent prices and
availability.2 (HAI/ WHO web database on drug prices:
http://www.haiweb.org/medicineprices/). This is further discussed in the price components
section of this paper.
The scope of this paper therefore did not allow for further research at a country level on
exemptions or waivers on tariffs on pharmaceutical products. However, where available,
these exemptions are discussed in the subsequent sections of the study.
2 Currently the survey contains data from Armenia (Nov. 2001), Brazil (Rio de Janeiro State) (Nov. 2001),
Cameroon (May 2002), Ghana (May 2002), India (Rajasthan) (Jun. 2003), Kenya (Nov. 2001), Peru (May 2002),
Philippines (Jun 2002), South Africa (KwaZulu Natal State) (Sept. 2001), Sri Lanka (Oct. 2001), Lebanon (Mar.
2004) and Chad (May 2004). The data and reports from the 9 surveys (Ethiopia, Ghana, Kenya, Mozambique,
Nigeria, South Africa, Tanzania, Uganda and Zimbabwe) will also be available soon.
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BACKGROUND
Prices of medicines is determined by a combination of variables, including national and
individual income, government policy, degree of competition in the public and private
markets, health system capacity, public policies, intellectual property protection, non-tariff
barriers and import tariffs.
In developing countries, pharmaceutical costs are the largest health-related expenditures after
staffing costs, comprising 40-60% of total health costs (World Bank 1993). The cost of
medicines incorporates several added costs prior to reaching patients and includes the base
prices (i.e. its price as sold from the manufacturer) as well as all costs for transportation,
storage, import tariffs and taxes, wholesale and retail mark-ups, staff salaries, stock losses
and procurement practices. These hidden costs can often more than double the manufacturer's
price (Perez-Casas, Herranz & Ford 2001).
From the government's standpoint, the purpose of tariffs can be divided into two categories;
as a revenue generating mechanisms or to protect the local pharmaceutical industry (Pindyck
& Rubinfeld 1998). From the point of view of the consumer, tariffs raise the domestic price
of the good, and hence lower the demand (Bollinger, 2002).
Tariffs on medicines are essentially a regressive form of taxation since a smaller
proportion of the payers’ income is affected by the tariff as income rises. This regressive
“tax” on medicines targets the poor and the sick.
Import Tariffs
An import tariff is a customs duty imposed by importing countries on the value of goods
brought in from foreign countries. They are usually levied either on an ad valorem basis
(percentage of value) or on a specific basis (e.g. $7 per 100 kgs.). Tariffs on finished products
give a price advantage to similar locally-produced goods and raise revenues for the
government (World Trade Organization online glossary). Tariffs on imported inputs (e.g.
active pharmaceutical ingredients) also raise revenue, but can adversely affect local
production costs.
This study will refer solely to tariffs rather than other indirect taxes such as value added tax
(VAT), which may also be levied on medicines following their import into a country.
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GATT, WTO and Uruguay Round
Before 1995, in the absence of a permanent institutional framework for the multilateral
trading system, the expression "the GATT" tended to be used to refer to both the actual
General Agreement on Tariffs and Trade and to the framework in which the multilateral trade
negotiations took place. Since 1 January 1995, the World Trade Organization constitutes the
permanent institutional framework for the multilateral trading system. The GATT, however,
survives, as an Agreement: the General Agreement on Tariffs and Trade as it resulted from
the Uruguay Round negotiations is referred to as "GATT 1994". It embodies a modified and
updated version of the original General Agreement on Tariffs and Trade, now referred to as
"GATT 1947".
The Uruguay Round of the GATT was the most recent round of the GATT, which was
completed in 1994 after nearly 8 years of negotiations. It included for the first time,
protections for trade-related intellectual property rights under the TRIPS agreement in all
fields of technology, including drugs (Declaration on the TRIPS Agreement and Public
Health, 2001).3 It also created the World Trade Organization (WTO) to improve the process
of settling trade disputes.
The World Trade Organization (WTO) provides the common institutional framework for the
conduct of trade relations among its members in matters related to the agreements negotiated
during the Uruguay Round. It monitors and oversees, through its various bodies, the
implementation, operation and administration of the various agreements. It also administers
the trade policy review mechanism and the dispute settlement mechanism. In addition, the
WTO provides the forum for further negotiations between its Members, in matters dealt with
under the Agreements and also more generally concerning their multilateral trade relations.4
The WTO is the legal and institutional basis of the multilateral trading system. It embodies
the main contractual obligations which determine how governments must formulate and
apply their laws and regulations relating to trade. It is also the framework for the conduct of
trade relations among its Members, through a collective process of discussions, negotiations
and decisions.
3 WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), negotiated in the 1986-
94 Uruguay Round, introduced intellectual property rules into the multilateral trading system for the first time.
4 WTO web site accessed on 10/ 02/ 2005 (www.wto.org/english/thewto_e/whatis_e/tif_e/agrm2_e.htm)
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The current round of WTO negotiations agreed at the Doha Ministerial Conference in
November 2001, were notable for the Declaration on the TRIPS Agreement and Public
Health. It confirmed that the Agreement can and should be interpreted and implemented in a
manner supportive of WTO members' right to protect public health and, in particular, to
promote access to medicines for all (Doha WTO Ministerial Declaration, 2001). This
recognition of medicines being a "special category of goods" under the TRIPS Agreement
justifies this study focusing on tariffs on medicines as a special issue.
Price components
In May 2004, Health Action International (HAI) and the World Health Organization
Department of Essential Drugs and Medicines Policy published a working draft of a manual
to collect and analyse the prices paid for a selection of essential medicines, as well as
identifying price components (taxes, mark-ups etc...) and the affordability and availability of
key medicines. The manual was developed as a result of several World Health Assembly
Resolutions5 which had expressed concern by WHO's member states over the prices of
medicines and which had urged WHO to increase its efforts in providing support to countries
on price information. Governments, NGOs and others who wish to be involved in the process
undertook a survey using the methodology which was provided in the manual. Currently,
survey results are available for a total of 12 countries with preliminary results available for a
further five countries (HAI web database on drug prices:
http://www.haiweb.org/medicineprices/).6 It is envisaged that the methodology will develop
further over time as more surveys are undertaken. The approach also contains guidelines on
how to collect data on taxes and duties that are levied on medicines and the level of various
mark-ups which contribute to the final price (Medicine Prices, WHO 2001-2002).
There are three key factors which characterize pharmaceutical procurement: quality, supplier
reliability and price (Management Sciences for Health, 1997). While the assured quality of
the product and supplier reliability are prerequisites to procurement, price on the other hand
5 See World Health Assembly documents A55/12, WHA55/14 and WHA54/11 for more information.
6 Currently the survey contains data from Armenia (Nov. 2001), Brazil (Rio de Janeiro State) (Nov. 2001),
Cameroon (May 2002), Ghana (May 2002), India (Rajasthan) (Jun. 2003), Kenya (Nov. 2001), Peru (May 2002),
Philippines (Jun 2002), South Africa (KwaZulu Natal State) (Sept. 2001), Sri Lanka (Oct. 2001), Lebanon (Mar.
2004) and Chad (May 2004). The data and reports from the 9 surveys (Ethiopia, Ghana, Kenya, Mozambique,
Nigeria, South Africa, Tanzania, Uganda and Zimbabwe) will also be available soon.
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is variable. Many hidden components of the price, including tariffs, could safely be
eliminated without sacrificing quality or reliability.
Prior studies
To date, there has been little research on tariffs implemented on pharmaceutical products and
on their relative importance in terms of the “hidden costs” of pharmaceutical products and the
direct impact on access to medicines.
Bale (2001)
This paper, prepared for the Commission on Macroeconomics and Health, looked at tariffs as
one of the barriers to access to essential medicines. Bale indicates that access to medicines is
largely due to the following factors: "financing, infrastructure, lack of political will,
corruption and counterfeiting" (Bale, 2001). He states that,
Developing countries, which have three-quarters of the world's population, produce less than
10% of the world's total pharmaceutical output and account for less than a quarter of the
annual global expenditure on drugs […] Thus, trade in pharmaceuticals among developing
countries […], as well as between industrialized countries and developing countries, is a very
important part of the access issue. (Bale, 2001).
The paper also draws interesting conclusions from the data regarding high tariffs as an
incentive to strengthen internal markets.
Unfortunately, Bale does not provide a breakdown of medicament and ingredient data into
different pharmaceutical products categories which is important as different rules may apply
to different substances. Moreover, he does not consider vaccine tariff data which is essential
in giving a more complete picture of tariff profiles.
Woodward (2001)
Woodward’s paper considers how import tariffs and other trade barriers determine the price
of essential health sector inputs, both pharmaceutical and non-pharmaceutical, necessary for
prevention and treatment objectives. Generally, tariffs increase the prices of imported inputs
directly, by levying a tax on them, while non-tariff barriers create an artificial scarcity,
driving up prices in the local market. At the same time however, there are costs associated
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with the lowering of trade barriers. In particular, the reduced protection worsens the financial
position of domestic producers, potentially causing loss of employment and income and
lower receipts from tariffs reduce overall government revenues. This said, Woodward argues
that these assumptions may not necessarily apply to pharmaceuticals. In particular, he states,
that border prices vary considerably between countries as a result of price discrimination by
suppliers and due to the presence of a domestic pharmaceutical industry. On top of this, there
may also be price discrimination within countries, e.g. to charge lower prices to the public
and/or non-profit sectors than for the private-for-profit sector.
Woodward suggests that this may be because prices are held down by the availability of low-
cost domestic production and that tariffs help to maintain the viability of domestic
pharmaceutical producers. The author concludes that:
1) “reducing tariffs on pharmaceuticals and the active ingredients required for their
production appears more likely to increase final pharmaceutical prices than to reduce
them overall by undermining low-cost domestic producers;
2) both for pharmaceuticals and ITNs, other domestic and international factors affecting
prices are likely to be of substantially greater significance than tariffs as price
determinants;
3) even where tariff reduction has the potential to reduce prices, the associated revenue
loss may have a significant impact on public sector recurrent health spending, at least
in some Sub-Saharan countries, so that the trade-off between price reduction (and the
associated effect on utilisation) and government revenue losses needs to be taken into
account” (Woodward, 2001).
Woodward’s conclusions are surprising and call for a better understanding of the relative
importance of tariffs in government revenue. Moreover, the data cannot account for countries
which do not fit into the same pattern, which may have a thriving domestic industry yet low
tariffs like South Africa or countries with no industry.
Levison (2002)
This paper investigated the hidden costs inherent in the procurement process that diminish
purchasing power, looking at tariffs as but one component. The data was collected and
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presented from ten countries. The author saw evidence that the protectionist strategy for local
manufacturers (discussed earlier) is reflected in the fact that Nigeria, Pakistan, India and
China-which all have local industry-, are included in the group of countries with the highest
import duties on finished products. Some countries also do not levy tariffs for certain drugs or
for certain institutions. For instance, India excludes life-saving drugs -e.g. for cancer and HIV.
The high prices of medicines are due to a combination of manufacturer's price and hidden
costs incurred during procurement. The paper identifies nine options available to
governments and pharmaceutical procurement offices to lower the cost of medicines. One
action point for governments is to "develop an equitable tariff and tax policy that aims to
remove taxes and tariffs on essential medicines". Another action point concerns the
establishment and enforcement of price controls for brand name medicines for which there
does not exist a therapeutic equivalent in the market. Levison considers the comparative
import and export rates of pharmaceuticals both to and from developing countries in order to
elucidate the disparities between custom duties. The study also provides the differences in
tariff rates for active pharmaceutical ingredients and finished products for a selection of
countries. Unfortunately there is too little raw data to follow up on.
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Table 3: Percentage additions to manufacturers’ CIF price on pharmaceuticals in 10
countries
Source: Levison (2002)
Simon et al (2002)
Simon et al proposed a framework to examine the extent to which reform of tariff and tax
policy could be expected to increase insecticide-treated bednets (ITN) purchases, focusing on
a small selection of case studies including Zambia, Burkina Faso and Nigeria.
To do so they considered the following questions:
1) How much does the retail price of ITNs change if tariffs and taxes are reduced or
eliminated?
2) How responsive is consumer demand to changes in the retail prices of ITNs?
The authors found little data on the price elasticity of demand for ITNs, untreated nets and
retreatment. They did find that price reduction or the distribution of free nets can reduce
willingness to pay in certain instances but that nonetheless, ITN demand was not highly
Sri Lanka
2000
Kenya 2000
Tanzania
2000
South Africa
2000
Brazil 2000
Armenia
Kosovo
Nepal
Mauritius
Import tariff 0% 0% 10% 11.70% 0% 1% 4% 5%
Port charges 4% 8% 1% 4%
Clearance and
freight
1% 2% 1.50% 5%
Pre-shipment
inspection
2.75% 1.20%
Pharmacy board
fee
2%
Importer's
margins
25% 15% 10%
VAT 14% 18% 20% 0%
Central govt tax
State govt tax 6%
Local town duty
Wholesaler 8.50% 15% 0% 21.20% 7% 25% 15% 10% 14%
Retail 16.25% 20% 50% 50% 22% 25% 25% 16% 27%
Total cumulative
mark-up
64% 54% 74% 74% 82% 87.50% 74% 48% 59%
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responsive to lower prices so long as household preferences remain constant. The results led
them to conclude that the reduction in retail prices associated with the removal of tariffs and
taxes depends on the structure of the market in individual countries and that “the reduction of
tariffs and taxes can contribute to the expansion of ITN utilization” (Simon et al, 2002). It is
thus difficult to conclude from this paper what the potential effects of tariff reduction or
elimination might have on the price of or access to essential medicines.
The European Commission 2003
Between 2001 and 2003, The European Commission carried out a study to assess the duties
and taxes applied to pharmaceutical products used in the treatment of the major
communicable diseases to lend support to Programme for Action: Accelerated action on
HIV/AIDS, malaria and TB in the context of poverty reduction. The study covered 57
countries and looked at the range, the average and the distribution of the different rates of
custom duties, VAT and “other duties” (European Commission, 2003). The study
distinguished between duties and taxes on four categories of product: compounds (molecules),
bulk manufactured medicaments, retail manufactured medicaments and vaccines. The study
also looked at the value of EU exports to developing countries as a basis for estimating the
value of duties and taxes collected. Within this framework, the study provided a review of
country trends. The findings highlighted the large disparities in custom duties between
countries but also that in general, few developing countries applied peak tariffs and that the
least developed countries had the lowest rates of duties and taxes (See Table 4). The findings
also indicated that customs duties represent one third of the total taxes and duties applied to
pharmaceutical products and that applied total duties and taxes on compounds were usually
higher than on manufactured medicaments. Finally, the study concluded that, "taxes and
duties collected on pharmaceutical products represent 17% of the public health expenditure of
least developed countries and 9% on average for the countries covered by the study".
(European Commission, 2003).
The overall picture led them to suggest that large disparities between countries point to a lack
of direct correlation between the volume of imports and rates of customs duties.
Unfortunately, the study did not attempt to give an explanation as to why this may be.
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Table 4: Range of duties and taxes applied to medicinal products used in the treatment
of communicable diseases
Source: European Commission, 2003
Bate, Tren and Urbah (2005)
A recent paper titled "Taxed to Death" by Bate, Tren and Urbach has reviewed the effect of
tariffs, taxes and regulatory requirements on access to medicines (Bate et al., 2005). As this
paper covered some of the same areas as our study and their paper is not fully referenced, we
sent detailed queries to the authors to which they have replied. In our review of their paper,
we focus our comments only on aspects related to tariffs, their choice of products and their
subsequent regression analysis.
Bate, Tren and Urbach have used the 1999 WHO Model List as the basis for selecting
products for study. This is unfortunate as the 2002 and 2003 revisions include antiretrovirals
for the treatment of AIDS and artemesinin containing antimalarials.
Further, they also do not describe how they matched the various Harmonised System codes to
specific medicines as these codes are rather broad. They have chosen to study all products in
Customs duties VAT Other Duties Sum of Duties and Taxes
Minimum Maximum (1) Minimum Maximum (2) Minimum Maximum (1) Minimum Maximum (1)
Compounds 0% 35% 0% 20% 0% 15%
0.0%
Tanzania
55%
India
Medicaments
(bulk and
retail)
0% 35% 0% 20% 0% 15%
0,0%
Gabon,
Iran,
Malaysia,
Nicaragua,
Uganda
55%
India
Vaccines 0% 35% 0% 20% 0% 15%
0,0%
Cuba,
Gabon,
Iran,
Malaysia,
Nicaragua,
Uganda
40%
Sierra Leone
(1) India
(2) Georgia, Kyrgyz Republic, Moldova, Morocco, Turkmenistan, Uzbekistan
Pharmaceutical Tariffs
Olcay & Laing May 2005
19
both Chapter 29 (Organic Chemicals) and Chapter 30 which are manufactured
pharmaceutical products. Chapter 30 includes both raw materials and finished products. In
our paper, we chose only to use those sections of Chapter 30 (Sections 3003 and 3004) which
describe either pharmaceutical raw materials (APIs) or finished product pharmaceuticals. We
excluded sections for bandages, first aid boxes etc which Bate et al chose to include. Bate et
al did not use the UNCTAD World Bank TRAINS database which we used for our study.
Due to the limitations of the data base which they used, they were obliged to calculate tariffs
as simple averages. We were able to calculate weighted average tariffs which better reflect
reality as a weighted average is indicative of what is actually being charged and not just what
is listed on a tariff schedule.
An innovation in the Bate et al. paper was the use of regression analysis to attempt to relate
tariffs and taxes with access. However the validity of such methods depends on the reliability
of the data that is used to construct the regression equation. In this case, the dependent
variable “Access to essential drugs % 1999” is obtained from UNDP Human Development
Report 2004, 2002 (incorrectly cited as UNDP World Development Report). In Table 2 of the
Bate et al paper, this statistic is given as a single number. For example, Ghana is reported to
have 44% access but in the actual source table in both the 2002 and 2004 UNDP Human
Development Reports the figure is quoted as a range 0-49%.7 In both the 2002 and 2004
tables is the foot note which reads:
The data on access to essential drugs are based on statistical estimates received from
World Health Organization (WHO) country and regional offices and regional advisers
and through the World Drug Situation Survey carried out in 1998-99. These estimates
represent the best information available to the WHO Department of Essential Drugs and
Medicines Policy to date and are currently being validated by WHO member states. The
department assigns the estimates to four groupings: very low access (0-49%), low access
(50-79%), medium access (80-94%) and good access (95-100%). These groupings, used
here in presenting the data, are often employed by the WHO in interpreting the data, as
the actual estimates may suggest a higher level of accuracy than the data afford.
7 Human Development Report 2004 Cultural Liberty in Today’s Diverse World
http://hdr.undp.org/reports/global/2004/ and Human Development Report 2002
Deepening democracy in a fragmented world http://hdr.undp.org/reports/global/2002/en/
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20
It is not clear how the single numbers for “Access to essential Drugs %, 1999” were
actually calculated or estimated. But if the data on which the regression analysis is so
questionable, the subsequent analysis cannot be relied upon. Thus this aspect of the paper
must be disregarded.
In the paper Bate et al. also make a number of questionable statements. For example they
state "Poor and developing country governments often raise a considerable portion of their
budget from import tariffs." However, they do not provide a reference or data to support this
statement. They also state "The high import tariffs that India keeps in place bring little
benefit to most Indian consumers, but they do protect and enrich the highly successful
generics drug industry." In reality, there is no difference in India for tariff rates between
pharmaceutical raw materials and finished products. Also, Indian generics in India are among
the cheapest in the world despite the tariffs levied.8 Without these tariffs the Indian generics
industry would be even more successful.
In summary, the paper by Bate et al. attempts to assess the affect of duties, taxes and
regulatory barriers on access to medicines. We have not commented on their work on VAT,
other taxes or other duties as that is not the focus of our paper. Unfortunately, the analysis on
tariffs appears to be fatally flawed in their overbroad use of Harmonized System codes, their
use of simple rather than weighted tariff rates and their dependence on access data which was
presented as a number when in fact the source data was given as a range.
Previous studies undertaken in the area of tariffs on pharmaceutical products have been a
useful resource in conducting this study but there remains a lack of data to further our
understanding of the reasons for the variability of tariff rates between countries. Based on all
of these articles we decided to investigate what the level of tariffs on pharmaceuticals
actually were in as many countries as possible, whether these tariffs did in fact protect local
industry or generate substantial revenue. In contrast to all of the above referenced papers, we
have provided the raw data and detailed summary tables for reviewers and other researchers
to utilize. These data tables are available at
www.who.int/intellectualproperty/studies/tariffs_data.
8 Health Action International Europe Medicine Prices http://www.haiweb.org/medicineprices/
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21
METHODS
The data for the tariff rates for the study were based on the World Integrated Trade Solution
(WITS) which accesses and retrieves information on trade and tariffs compiled by The
United Nation Statistical Division (UNSD) Commodity Trade (COMTRADE), The
United Nations Conference on Trade and Development (UNCTAD) Trade Analysis
Information System (TRAINS), The World Trade Organization (WTO) Integrated Data
Base (IDB) and the Consolidated Tariff Schedule Data Base (CTS). (WITS Database
http://wits.worldbank.org/witsweb/default.aspx)
More specifically, the TRAINS database was used which is a computerized information
system at the HS-based tariff line level covering tariff and non-tariff measures as well as
import flows by origin for countries. The Harmonized System (HS) is an international
nomenclature developed by the World Customs Organization, which is arranged in six digit
codes allowing all participating countries to classify traded goods on a common basis.
Beyond the six digit level, countries are free to introduce national distinctions for tariffs and
many other purposes. The data are available at the most detailed commodity level of the
national tariffs (i.e., at the tariff line level).
“Bound” tariffs are those resulting from World Trade Organization negotiations or accession
agreements that countries negotiate upon becoming WTO members or through Free Trade
Agreements (FTA), which are the maximum tariffs a country agrees to levy on imported
goods. They represent commitments not to increase tariffs above the listed rates — the rates
are “bound”. For developed countries, the bound rates are generally the rates actually charged.
Most developing countries have bound the rates somewhat higher than the actual rates
charged, so the bound rates serve as ceilings.
“Applied” tariffs are those that are actually levied on imported goods. For the purposes of this
study, applied tariffs have been used.9 There is no legally binding agreement that sets out the
targets for tariff reductions (e.g. by what percentage they were to be cut as a result of the
Uruguay Round). Instead, individual countries listed their commitments in schedules annexed
9 WTO web site accessed on 22/ 02/ 2005 (www.wto.org/english/thewto_e/whatis_e/tif_e/agrm2_e.htm)
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22
to the Marrakesh Protocol to the General Agreement on Tariffs and Trade 1994. This is the
legally binding agreement for the reduced tariff rates.
In order to base the analysis on the most precise available data, the data used from the WITS
database was based on the applied tariffs rates of countries. Furthermore, the weighted
average was used rather than simple averages. The weighted average measures tariff rates by
the share of total imports by value in the category (in this case the category for
pharmaceutical products). Thus if a country imports most of its pharmaceuticals in a single
product category with very low tariffs, but has high tariffs in many low-import product
categories, then the trade-weighted average tariff would indicate a low level of overall tariff
protection.
The study is based on research founded on an extensive range of references including print
materials and other sources from the Internet. The search terms used for the research included
such terms as ”tariffs”, “taxes”, “import duties”, “access to medicines”, “pricing of
medicines”, “tariff exemptions” for particular countries and “mark-up costs”. A range of
economic and scientific journals were searched in addition to the web sites of different
Ministries of Health or Trade and Finance as well as international institutions or
organizations such as the International Trade Centre, World Trade Organization and
UNCTAD. Unfortunately, there does not exist a centralized database for global tariff rates on
medicines or other products at the present time. The tariff rates reported in this paper are the
last rates reported to the UN system and range from 1992 to 2003.
The analysis of the data on tariff rates for each country is presented in the form of summary
tables for a range of analyses. A weighted average figure has been used to display the tariff
rates of all active pharmaceutical ingredients and all finished products for each country. In
addition data for finished products and active pharmaceutical products containing insulin and
antibiotics are presented, which are displayed in separate tables.
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23
It was also found that differences may exist between different categories of pharmaceutical
products, namely between active pharmaceutical ingredients, finished products and vaccines
for human medicine. This data is presented in the results section of this study. 10
For the purposes of this study, HS-based category 30 for pharmaceutical products was used
and more specifically, categories 3003 for active ingredients, 3004 for finished products and
their corresponding tariff lines (See Annex 1). An active pharmaceutical ingredient is a
substance or compound that is intended to be used in the manufacture of a pharmaceutical
product as a therapeutically active compound (ingredient). In addition, information pertaining
to category 300220 for human vaccines is also presented. Chapter 29 items of the HS
classification system (organic chemicals) have not been considered because these cannot be
considered as pharmaceutical products though some items may be used in pharmaceutical
production.
10 The raw data tables for all the categories compiled for this study can be found on the CIPIH web site at
www.who.int/intellectualproperty/studies/tariff/data
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24
RESULTS
In this section we present the data collated for tariffs on pharmaceutical active ingredients
and finished products for countries, which will be discussed further in the next section.
Distributional rates
This section allocates countries to a range of tariff rates and presents the percentage of
countries which fall into those ranges. Furthermore, countries are allocated into four different
groups depending on their economic development (See Annex 3). Table 6 presents
information pertaining specifically to all active ingredients (HS-code 3003). Breakdowns for
all the categories are presented in Annex 2.
Table 5: Distribution of tariff rates by country groups for all active pharmaceutical
ingredients
Active pharmaceutical ingredients (HS Code 3003) (All active ingredients)
Tariffs rate (%)
**
Number of
countries
(n=151) Percentage of all
countries * Low-income
countries Lower-middle-
income countries Upper-middle-
income countries High-income
countries
0 62 41% 21 14 9 18
0-5 40 26% 15 15 6 4
5.1-10 33 22% 8 10 12 3
10.1-20 13 9% 311 4
12 6
13 0
> 20 3 2% 114 2
15 0 0
*MEAN= 5.04%; MEDIAN= 3%
*Note: The percentages have been rounded
** All rates based on weighted average and applied tariffs
Active pharmaceutical ingredients
An analysis of the data pertaining to active ingredients has shown that many countries do not
levy duties on these products. Sixty two countries out of the 151 countries for which data was
11 Burundi, Nepal, Nigeria.
12 Suriname, Guyana, Peru, Tunisia.
13Argentina, Grenada, Uruguay, Barbados, Seychelles, Mexico.
14 India
15 Morocco, Islamic Republic of Iran
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25
available have zero average tariffs rates which correspond to 41% of all countries reporting.
Twenty-six percent of all countries are in the 0-5% tariffs range, 22% of all countries in the
5.1-10% tariff range and only 9% are in the 10.1-20% tariff range. Two percent of countries
apply tariffs greater than 20%. The distribution of country groups based on income shows
that the majority of countries with high tariff rates i.e. > 10% are in the upper-middle income
group. The overall mean rate is 3%.
According to the data extracted from the TRAINS database on 20th February 2005 (see
Annex 4), India is the only low-income country with active ingredients tariffs above 20%,
although more recent data from the Indian Ministry of Finance indicates that tariffs levied on
active ingredients are now 16%. Morocco and the Islamic Republic of Iran also fall above the
20% range with tariff rates of 23.74% and 100% respectively. Again, both countries produce
finished products from imported active ingredients. The high tariff rates could be a factor for
generating additional revenue for governments in these countries, however further research is
required since it is difficult to understand why governments would want to levy duties on
products needed to produce finished products locally, when the overall gain is likely to be
small. India is an exception since it can make APIs from “scratch” so they can levy import
duties on APIs and finished product to protect the local API industry.
There would be some industrial logic in applying tariffs to active pharmaceutical ingredients
if one produces them like India, however, it is not necessarily the case that all countries that
apply high tariffs on active pharmaceutical ingredients use them to produce finished products.
There is also no industrial logic for a country to import active pharmaceutical ingredients on
which high tariffs are charged, in order to incorporate them in finished products.
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Table 6: Distribution of tariff rates by country groups for all finished products
Finished products (HS Code 3004) (All finished products)
Tariffs rate (%) Number of
countries
(n=153)
Percentage of all
countries * Low-income
countries Lower-middle-
income countries Upper-middle-
income countries High-income
countries
0 60 39% 22 14 8 16
0-5 39 25% 13 13 9 4
5.1-10 32 21% 8 11 9 4
10.1-20 20 13% 616 7
17 7
18 0
> 20 2 1% 119 1
20 0 0
*MEAN= 4.95%; MEDIAN= 3.93%
*Note: The percentages have been rounded
** All rates based on weighted average and applied tariffs
Finished products
An analysis of tariff rates on finished products illustrates, as in the case for active ingredients,
that many countries, 39%, do not levy tariffs on finished pharmaceutical products. But 46%
have tariffs between 0% and 10% and 13% of countries have tariff rates between 10.1-20%,
the majority of which are in the lower-middle income and upper-middle income bracket.
Only 1% of countries impose tariff rates of higher than 20% on finished products which are
India and the Islamic Republic of Iran. All countries with tariff rates of 10.1-20% in the
lower-middle income group have capacity for producing finished products with the exception
of Suriname which does not have a local pharmaceutical industry. Seven of the twenty
countries with tariff rates of 10.1-20% are in the upper-middle income category. The overall
mean rate is 4.95%.
Among the higher tariff percentile countries are India, Morocco and the Islamic Republic of
Iran. Morocco and the Islamic Republic of Iran both have local finished products industry
developed from imported ingredients. The latter has rates of 100% for both active ingredients
and finished products. Morocco on the other hand applies 12% tariffs on imported finished
products and a 24% tariff rate on active ingredients.
16 Paraguay, Pakistan, Burundi, Congo Democratic Republic, Nigeria, Zimbabwe
17Brazil, Suriname, Guyana, Peru, Morocco, Tunisia, Thailand
18 Argentina, Belize, Uruguay, Trinidad and Tobago, Grenada, Barabados, Seychelles
19 India
20 Islamic Republic of Iran
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27
India, which is considered to be among those countries with a sophisticated pharmaceutical
industry with significant research capabilities, had 35% tariff rates on both active ingredients
and finished products. The high tariff rates on both categories may be explained by the fact
that India is an important producer of both active pharmaceutical ingredients and finished
products, both for the domestic market and for export. More than half of the exported active
pharmaceutical ingredients are destined for developing country markets, although the US is
the largest market for pharmaceutical exports, receiving 10-12% of the total.
Table 7: Distribution of tariff rates by country groups for active pharmaceutical
ingredients and finished products containing antibiotics other than penicillin
b) Finished products containing other antibiotics (300420)
Tariffs rate (%) Number of
countries
(n=148)
Percentage of
countries Low-income
countries Lower-middle-
income countries Upper-middle-
income countries High-income
countries
0 64 43% 21 14 12 17
0-5 35 24% 11 14 7 3
5.1-10 34 23% 10 10 10 4
10.1-20 13 9% 326 7
27 3
28 0
> 20 2 1% 129 1
30 0 0
*MEAN- 5.14%; MEDIAN- 3.5%
*Note: The percentages have been rounded off
** All rates based on weighted average and applied tariffs
21 Burundi, Nepal, Nigeria
22 Guyana, Peru, Suriname, Tunisia
23 Barbados, Seychelles, Mexico
24 India
25 Morocco, Islamic Republic of Iran
26 Burundi, Nepal, Nigeria
27 Guyana, Jamaica, Peru, Suriname, Russian Federation, Tunisia, Morocco
28 Barbados, Trinidad and Tobago, Grenada
29 India
30 Islamic Republic of Iran
a) Active pharmaceutical ingredients containing other antibiotics (300320)
Tariffs rate (%) Number of
countries
(n=140)
Percentage of all
countries Low-income
countries Lower-middle-
income countries Upper-middle-
income countries high-income
countries
0 70 50% 22 18 13 17
0-5 28 20% 9 11 6 2
5.1-10 29 21% 8 9 10 2
10.1-20 10 7% 321 4
22 3
23 0
> 20 3 2% 124 2
25 0 0
*MEAN- 4.46%; MEDIAN- 0.50%
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APIs and finished products containing other antibiotics
The tariff rates on pharmaceutical products containing antibiotics other than penicillin show
similar data for both active pharmaceutical ingredients and finished products. Fifty percent of
the 140 countries for which data are available do not apply tariff rates on APIs containing
other antibiotics. Of these, 22 countries are low-income countries and include mostly
countries from Sub-Saharan Africa. On the other hand, of the 140 countries, only three of
them apply tariffs above 20%, with India - a low-income country - reaching 35%, Morocco -
a lower-middle-income country - 32.5% and the Islamic Republic of Iran - also a lower-
middle-income country- 52%. Twenty percent of the countries apply tariff rates in the range
of 0-5% and include Cameroon (low-income country), Lebanon (lower-middle-income
country) and Qatar (an upper-middle-income country).
Data for tariffs on finished products show that 43% of countries, which accounts for a total of
64 countries, out of the 148 countries for which data was available, do not levy taxes on
finished products. Of these 21 countries are low-income countries. Only two countries, India
- a low-income country- and the Islamic Republic of Iran - a lower-middle income country-
apply tariff rates higher than 20% with rates at 35% and 100% respectively. Nine percent of
countries apply tariffs rates in the range of 10.1-20% which includes Burundi, Nepal and
Nigeria in the low-income country group, Guyana, Jamaica, Peru, Suriname, Russian
Federation, Tunisia and Morocco in the lower-middle-income country group and Grenada,
Trinidad and Tobago and Barbados in the upper-middle income group.
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29
Table 8: Distribution of tariff rates by country groups for active pharmaceutical
ingredients and finished products containing insulin
a) Active pharmaceutical ingredients containing insulin (300331)
Tariffs rate (%) Number of
countries
(n=63)
Percentage of all
countries * Low-income
countries Lower-middle-
income countries Upper-middle-
income countries high-income
countries
0 40 63% 11 9 10 10
0-5 8 13% 2 5 1 0
5.1-10 6 9% 3 0 2 1
10.1-20 7 11% 331 3
32 1
33 0
> 20 2 3% 134 1
35 0 0
*MEAN- 4.25%; MEDIAN 0%
b) Finished products containing insulin (300431)
Tariffs rate (%) Number of
countries
(n=126)
Percentage of all
countries * Low-income
countries Lower-middle-
income countries Upper-middle-
income countries high-income
countries
0 75 60% 19 19 20 17
0-5 25 20% 9 10 4 2
5.1-10 17 13% 6 5 3 3
10.1-20 6 5% 0 336 3
37 0
> 20 3 2% 138 2
39 0 0
*MEAN- 4.05%; MEDIAN 0%
*Note: The percentages have been rounded off
** All rates based on weighted average and applied tariffs
APIs and finished productions containing insulin
The tariff rates for active pharmaceutical ingredients containing insulin was available for 63
countries and shows that 63% of countries have tariff rates of 0%. For finished products the
percentage of countries with no tariffs is 60% of the total of 126 countries for which data was
available. The number of countries decreases as tariff rates increase. Seven countries, which
accounts for 11% of countries studied, impose tariff rates between 10.1-20% for insulin
31 Burundi, Nepal, Nigeria
32 Tunisia, Brazil Paraguay
33 Mexico
34 India
35 Islamic Republic of Iran
36 Peru, Brazil, Tunisia
37 Argentina, Mexico, Uruguay
38 India
39 Morocco, Islamic Republic of Iran
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30
containing active pharmaceutical ingredients. These countries are Burundi, Nepal, Nigeria,
Tunisia, Brazil, Paraguay and Mexico. For finished products containing insulin, 5% of
countries apply tariffs in the 10.1-20% range. These countries are Peru, Brazil, Tunisian,
Argentina, Mexico and Uruguay. Only 2% of countries, which are India, Morocco and the
Islamic Republic of Iran, apply tariffs above 20% for these finished products. For active
pharmaceutical ingredients containing insulin, only India and the Islamic Republic of Iran
apply tariffs above 20%.
Table 9: Distribution of tariff rates by country groups for vaccines for human medicine
Vaccines for human medicine (300220)
Tariffs rate (%) Number of
countries
(n=147)
Percentage of all
countries * Low-income
countries Lower-middle-
income countries Upper-middle-
income countries High-income
countries
0 96 65% 28 28 21 19
0-5 31 21% 12 11 7 1
5.1-10 15 10% 5 6 3 1
10.1-20 4 3% 240 1
41 1
42 0
> 20 1 1% 143 0 0 0
*MEAN= 2.39%; MEDIAN= 0%
*Note: The percentages have been rounded off
** All rates based on weighted average and applied tariffs
Vaccines on human medicines
The tariff rates on vaccines for human medicine show that for the majority of countries, 65%
of the 14 countries for which data are available have tariff rates set at 0%. India, which
according to the TRAINS database has tariff rates of 30%, does not apply tariffs on vaccines
on human medicines according to the Ministry of Finance.44 Burundi and Nigeria apply tariff
rates of 15% and 20% respectively and are both categorized as low-income countries
according to the World Bank. The two other countries that are in this higher rate range are
Peru, at 12%, and the Seychelles at 15%.
40 Burundi, Nigeria
41 Peru
42 Seychelles
43 India
44 Indian Ministry of Finance (http://finmin.nic.in/) Accessed 29-02-2005
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Differences in tariff rates within countries
Table 10: Distribution of differences in tariff rates by number of countries 45
ACTIVE INGREDIENTS-MEDICAMENTS
Difference rate Number of countries Percentage of countries
(-15) - (-5) % 7* 4.64%
(ingr.<med.)
Protects local industry (-5.1) - (0) % 29 19.21%
(ingr.=med.) 0 % 91 60.26%
0 - 5 % 17 11.26%
(ingr.>med.)
Hurts local industry
Unless local industry
can make their own
APIs .
>5 % 7** 4.64%
Total number of countries 151
* Zimbabwe, Slovenia, Thailand, Vietnam, Congo Dem. Rep., Ukraine, El Salvador
** Croatia, Poland, Ghana, Nepal, Mexico, Morocco, Islamic Republic of Iran
This section analyzes the differences that exist in countries between tariff rates for active
pharmaceutical ingredients and finished products. We used the same method as Levison
(2002).
Annex 4 lists the 151 countries for which data was available. This table sorts countries by the
difference in tariff rates between finished products and active pharmaceutical ingredients. For
Morocco, the difference is 11.62%. A total of 24 countries levy higher tariffs on ingredients
than on finished products. These include large countries such as China and Egypt and many
small countries such as Iceland, St. Lucia and Montserrat. Such a differential in tariffs would
seem to hurt local producers unless the intention is to protect active pharmaceutical
ingredients producers. Conversely at the other end of the table, there are 36 countries which
levy higher tariffs on finished products than on active pharmaceutical ingredients. These
tariffs would tend to protect local industry. The countries with the greatest differential are
Zimbabwe, Slovenia, Thailand, Vietnam, Democratic Republic of Congo, Ukraine and El
45 These tables have been created by subtracting the tariff rates for two categories of pharmaceutical products at
a time from one another.
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Salvador. Many of these countries do have active local industries although it is difficult to
explain the presence of the Democratic Republic of Congo in this group.
Finally, the most significant finding of this table is that 91 countries have no difference in
tariff rates. This includes many with zero rates but also includes 35 countries where equal
tariffs are levied on both raw materials and finished products. In these cases the tariffs can be
considered as a revenue generating tax without any industrial policy significance.
Tariffs and government revenue
Government revenue46 generation is often quoted as being one of the two main explanations
for tariffs on pharmaceutical products. Table 11 presents summary data relating to
government pharmaceutical tariffs revenue as a percentage of Gross Domestic Product (GDP)
(See Annex 5 for detailed results). The data in this annex presents the average country
weighted tariff rates for all active ingredients and finished products and revenue generated
from pharmaceutical import tariffs as a percentage of GDP for a total of 145 countries.
What this table shows is that for 92% of the 145 countries, revenue generated by
pharmaceutical import tariffs amounts to less than 0.1% of national GDP. This can be
considered to be an insignificant amount in national economies. If these tariffs were
eliminated, there would appear to be a minimal impact on government revenues and national
economies.
46 Government revenue includes all revenue to the central government from taxes and nonrepayable receipts
(other than grants), measured as a share of GDP. Data are shown for central government only.
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Table 11: Government revenue and tariff rates
(See Annex 5 for a breakdown of countries)
Total pharmaceutical import
tariff revenue as a % of GDP
Number of
countries
Percentage of
countries
Cumulative percentage
of countries
0% 56 38.62% 38.62%
0.01 - 0.025 % 31 21.38% 60.00%
0.0251 - 0.05% 26 17.93% 77.93%
0.051 – 0.075% 17 11.72% 89.66%
0.0751 – 0.1% 4 2.76% 92.41%
0.101 – 0.125% 247 1.38% 93.79%
0.126 – 0.5% 748 4.83% 98.62%
> 0.5% 249 1.38% 100.00%
TOTAL 145 100% 100%
Sources: Tariff Revenue from TRAINS database,GDP data retrieved from World
Development Indicators database (WBDI) 2005 http://www.worldbank.org/data/wdi2005/
47 Grenada, Islamic Republic of Iran
48 Djibouti, Guyana, Slovak Republic, Costa Rica, Seychelles, Belarus, Bolivia
49 Brazil, Chile
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DISCUSSION
This study has raised a number of issues related to both the amount of research associated
with tariffs on pharmaceutical products and the implications of that data. These are discussed
in the following sections.
Strengths of the data
The TRAINS database is an important resource in analyzing tariff rates for all products. The
database provides data for all countries for up to 6 digits of the HS-code classification system,
which provided for a detailed presentation of data on tariff rates. The database also provided
bound tariffs, applied tariffs and preferential rates where regional trade agreements may exist.
Although not within the scope of this study, the database provides tariff data for each country
based on a partner country basis. Information pertaining to total value of imports is also
available. This allows weighted tariffs rates to be calculated. Therefore the database was a
vital part of this study and a valuable resource.
Weakness of Data
This study relied primarily on tariff data extracted from the UNCTAD TRAINS database
which is based on the harmonized system. However, no data was found on exemptions on
the applications of import tariffs on pharmaceutical products either directly through the web
site of various organizations or through interviews with staff from these organizations,
including the WTO, UNCTAD or the International Trade Centre. Some studies in the past
have indicated that certain countries exempt tariffs on life-saving drugs or drugs used in the
treatment of certain diseases such as HIV/AIDS, however no data or references were found to
this effect. A search of data from most national institutions did not provide any data on tariffs
on individual pharmaceutical products nor exemptions on these products. Research was done
on various web sites including those of Ministries of Trade and Commerce, Customs Unions,
national statistics offices or national Commissions set up to advise governments. Furthermore
books dedicated to schedules were also looked at however no data pertaining to exemptions
of specific pharmaceutical products was found. The research however was limited since most
web sites are in national languages. It was also found that some discrepancies could exist
between the data provided in TRAINS and that of governmental web sites. By its very nature
the data is always retrospective and there is a time lag between national changes and these
Pharmaceutical Tariffs
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35
being reported. This was found in the case of India, which according to the TRAINS database,
levies tariff rates of 35% both on finished products and active ingredients and 30% on
vaccines for human medicines. However, according to data presented on the Indian Ministry
of Finance web site, 16% tariff rates are levied on finished products and active ingredients
and no tariffs are applied on vaccines. Therefore, exemptions are clearly an area for further
research.
Furthermore it was found that the HS-code categorization system can pose limitations for the
analysis of medicines. The categorization is based on certain ingredients found in medicines
such as antibiotics, insulin or penicillin. However no data is provided to understand how a
particular medicine containing several ingredients would be taxed i.e. whether the tariff rate
would be levied on an average rate or whether the tariff rate corresponding to the highest
chemical component would be levied. Therefore, there are difficulties associated with
defining the exact amount tariff levied on specific medicines.
Key findings and implications
1. Many countries have 0% tariff rates- 38% of countries for finished products and 41%
of countries for active pharmaceutical ingredients (APIs). Variations were found in
some categories such as APIs and finished products containing insulin or for vaccines
for human medicines. Most countries did not apply tariffs for insulin and vaccines-
59% of countries for APIs containing insulin, 63% of countries for finished products
containing insulin and 66% of countries for vaccines containing human medicines.
2. Those countries with tariffs usually levy rates of less than 10%. Only 12% of
countries levy tariff rates of more than 10% on finished products and only 10% of
countries on active pharmaceutical ingredients.
3. There often seems to be little industrial policy logic in the tariff structure. With the
exception of a few countries, it is not possible to link the tariff structure to protection
of the local pharmaceutical production.
4. Pharmaceutical tariffs generate an insignificant amount of revenue when compared
with national GDP. Ninety-two percent of countries generate less than 0.1% of GDP
through pharmaceutical tariffs.
5. Tariffs on pharmaceutical products while only a small proportion of the total cost of
medicines add to the price of medicines paid by consumers because multiple
Pharmaceutical Tariffs
Olcay & Laing May 2005
36
percentage mark ups are based on the base price which includes tariffs. Thus a 10%
tariff may add 20% to the price of a medicine when markups double the total cost as
reported by Perez-Cases et al. (2003). For this reason governments need to control
excessive markups, remove additional taxes such as VAT and require manufacturers
to differentially price their products to ensure access based on ability to pay.
6. From a policy perspective, for most countries tariffs are not a principal reason why
medicines are not accessible. Having said that however, there are NO good reasons
why those countries should retain tariffs. Tariffs on medicines target the sick which
cannot be good public policy.
Tariff Rationale for governments
Ultimately the purpose of duties and taxes is to provide sufficient revenue for required
government services through the accumulation of government revenue resulting from these
duties as a tool for protecting the local industry for a given product. For medicines these
practices, be it in the form of import tariffs or other add-on costs, the burden inevitably falls
on the end-user i.e. the sick, patients or individuals in countries where there is limited or no
national health insurance system paid by the government, are especially affected.
Government revenue from pharmaceutical tariffs constitutes a small share of GDP in most
countries. In real terms these product tariffs do not amount to a significant source of
governmental income. If one looks at the use of tariffs from a protectionist point of view,
past studies have shown that tariffs have an effect that limits free competition where the best
drug will achieve the best price, hence protecting often inefficient local producers who may
be charging high prices for their drugs (Levison, 2003).
Tariffs, prices and access to medicines
Although there are a number of other determinants such as health system infrastructure or
poverty, prices are a vital impediment in accessing medicines for the poor and the sick. In
many developing countries, medicines are the largest health related expenditure of
households (World Health Report, 2004). Several components make up the final prices of
medicines including production costs, import tariffs, value-added tax, port charges, pre-
shipment inspection or wholesale markup and an analysis of data is required of all these
components. These markups can have a compounding effect on the prices of medicines.
(Levison & Laing, 2003).
Pharmaceutical Tariffs
Olcay & Laing May 2005
37
Box 1
Tariffs do matter!
It should be noted that at the time of preparing this paper, the tariff rates
for Kenya were at 0% for all pharmaceutical products. Recently as part
of an East African harmonization exercise the East African Community
Customs Union has imposed a 10% duty on goods imported into Uganda,
Tanzania and Kenya. Although all medicines containing insulin will be
zero-rated, antiretroviral (ARV) drugs and other essential medicines
have not been excluded from the tariff agreement. HIV-positive Kenyans
using the cheapest generic ARV combination, which cost around 1,500
Kenyan shillings (US $20) a month would now be expected to pay 2,000
shilling (US$ 25) for the same medicines. There are 220,000 people
currently in need of ARVs in Kenya and currently of the 24,000 people
who receive ARVs, half of them are subsidized by the government. These
harmonizing changes result in increased costs of ARVs in Kenya and can
have a direct effect on access to these products by patients who need
them (UN Integrated Regional Information Networks, 10-02-2005).The
10% duty has, as of May 2005, been suspended by the EAC Customs
Union (The EastAfrican, 19-05-2005).
Access can be affected by several factors including "rational use of medicines, affordable
prices, sustainable financing and reliable health and supply systems" (The World Medicines
Situation, 2004). However, prices themselves are affected by factors such as industry pricing
policies, government price regulation, national health policies, excessive patent extensions on
certain medicines or lack of competition resulting from the monopolization of the production
of certain medicines.
Recommendation
The Uruguay Round demonstrated the international communities' willingness to address the
issue of high tariff rates. The Doha negotiations about the public health implications of the
TRIPS agreement have shown that medicines have a special status and should be treated
differently from other products and services. For the first time, health sector commodities
have been brought into the international trade negotiations arena. Tariffs on pharmaceutical
products not only constitute an international trade issue but are also a public health issue,
especially for the populations of those few countries that continue to levy high tariff rates on
both active ingredients and finished products imports. Negotiations during the Sixth WTO
Ministerial Conference which will be held in Hong Kong, People’s Republic of China in
December 2005 should continue efforts to address the issue of tariffs levied on
pharmaceutical products.
Pharmaceutical Tariffs
Olcay & Laing May 2005
38
CONCLUSIONS
Based on our analysis of the available data, we conclude that tariffs have a very limited
impact on pharmaceutical prices in most countries, that tariffs do not appear to be used
substantially for industrial policy objectives of protecting local industry and that very little
revenue is actually generated from these tariffs. Other measures related to pricing, taxes,
mark-ups and financing are likely to have far greater impact on access to medicines.
Nonetheless, tariffs on medicines may prevent some individuals in some countries having
access to affordable medicines. In this context, tariffs may play a role in contributing to the
high price of medicines. While governments may generate some revenue and may protect
local industries, the public policy implications of exclusively levying duties on the sick must
be considered. It is vital that policymakers, both at a national and international level,
address the issue of tariffs on medicines and recognize the regressive nature of these
duties, which ultimately tax the sick without regard for their economic status or ability
to afford these medicines. Pharmaceutical tariffs could be eliminated without adverse
revenue or industrial policy impacts.
Pharmaceutical Tariffs
Olcay & Laing May 2005
39
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Pharmaceutical Tariffs
Olcay & Laing May 2005
45
ANNEXES
Annex 1: Definitions of HS categories
3003- Medicaments (excluding goods of 3002, 3005 or 3006) consisting of two or more
constituents which have been mixed together for therapeutic or prophylactic uses, not put up
in measured doses or in forms or packings for retail sale.
300310- Containing penicillins or derivatives , with a penicillanic acid structure, or
streptomycins or their derivatives.
300320- Containing other antibiotics
300331- Containing insulin
300339- Other
300340- Containing alkaloids or derivatives thereof but not containing hormones or other
products of 2937 or antibiotics
300390- Other
3004- Medicaments (excluding goods of 3002, 3005 or 3006) consisting of mixed or unmixed
products for therapeutic or prophylactic uses, put up in measured doses (including those in
the form of transdermal administration systems) or in forms or packings for retails sale.
300410- Containing penicillins or derivatives thereof, with a penicillanic acid structure, or
streptomycins or their derivatives.
300420- Containing other antibiotics
300431- Containing insulin
300432- Containing adrenal corticosteroid hormones, their derivatives and structural
analogues
300439- Other
300440- Containing alkaloids or derivatives thereof but not containing hormones, other
products of 2937 or antibiotics
300450- Other medicaments containing vitamins or other products of 2936
300490- Other
300220- Vaccines for human medicine
Pharmaceutical Tariffs
Olcay & Laing May 2005
46
* The following HS-codes were not included in this analysis:
3001 and all sub-categories- Glands and other organs for organo-therapeutic uses, dried,
whether or not powered …
3002 and all sub-categories- Human blood; animal blood prepared for therapeutic
prophylactic or diagnostic uses…
3005 and all sub-categories- Wadding, gauze, bandages and similar articles, impregnated or
coated with pharmaceutical substances or put in forms of packing for retail sale for medical,
surgical, dental or veterinary purposes.
3006 and all sub-categories- Pharmaceutical goods specified in Note 4 to Chapter 30.
29 including all categories and sub-categories- Organic chemicals
Pharmaceutical Tariffs
Olcay & Laing May 2005
47
Annex 2: Distribution tariff rates by country group
Active Ingredients (HS Code 3003) (All active ingredients)
Tariffs rate
(%) **
Number of
countries
(n=151) Percentage of
countries *
Low-
income
countries
Lower-middle-
income
countries Upper-middle-
income countries
high-
income
countries
0 62 41% 21 14 9 18
0-5 40 26% 15 15 6 4
5.1-10 33 22% 8 10 12 3
10.1-20 13 9% 350 4
51 6
52 0
> 20 3 2% 153 2
54 0 0
MEAN= 5.04%; MEDIAN= 3%
Containing penicillins or derivatives thereof (300310)
Tariffs rate
(%)
Number of
countries
(n=121) Percentage of
countries
0 51 42%
0-5 28 23%
5.1-10 31 26%
10.1-20 7 6%
> 20 4 3%
MEAN- 5.44%; MEDIAN- 4%
Containing other antibiotics (300320)
Tariffs rate
(%)
Number of
countries
(n=140) Percentage of
countries
Low-
income
countries
Lower-middle
income
countries Upper-middle
income countries
High-
income
countries
0 70 50% 22 18 13 17
0-5 28 20% 9 11 6 2
5.1-10 29 21% 8 9 10 2
10.1-20 10 7% 3 4 3 0
> 20 3 2% 1 2 0 0
*MEAN- 4.46%; MEDIAN- 0.50%
Containing insulin (300331)
Tariffs rate
(%)
Number of
countries
(n=63) Percentage of
countries
Low-
income
countries
Lower-middle-
income
countries Upper-middle-
income countries
high-
income
countries
0 40 63% 11 9 10 10
0-5 8 13% 2 5 1 0
5.1-10 6 9% 3 0 2 1
10.1-20 7 11% 355 3
56 1
57 0
> 20 2 3% 158 1
59 0 0
*MEAN- 4.25%; MEDIAN-0%
50 Burundi, Nepal, Nigeria.
51 Suriname, Guyana, Peru, Tunisia.
52Argentina, Grenada, Uruguay, Barbados, Seychelles, Mexico.
53 India
54 Morocco, Islamic Republic of Iran
55 Burundi, Nepal, Nigeria
56 Tunisia, Brazil Paraguay
57 Mexico
58 India
59 Islamic Republic of Iran
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48
Other (300339)
Tariffs rate
(%)
Number of
countries
(n=128) Percentage of
countries
0 69 54%
0-5 34 27%
5.1-10 19 15%
10.1-20 3 2%
> 20 2 2%
MEAN- 3.95%; MEDIAN- 0%
Containing alkaloids or derivatives thereof (300340)
Tariffs rate
(%)
Number of
countries
(n=93) Percentage of
countries
0 53 57%
0-5 20 22%
5.1-10 13 14%
10.1-20 5 5%
> 20 2 2%
MEAN- 3.46%; MEDIAN- 0%
Other than alkaloids (300390)
Tariffs rate
(%)
Number of
countries
(n=147) Percentage of
countries
0 62 42%
0-5 36 24%
5.1-10 32 22%
10.1-20 13 9%
> 20 4 3%
MEAN- 5.30%; MEDIAN- 4%
Medicaments (HS Code 3004) (All finished products)
Tariffs rate
(%)
Number of
countries
(n=153) Percentage of
countries
Low-
income
countries
Lower-middle-
income
countries Upper-middle-
income countries
high-
income
countries
0 60 39% 22 14 8 16
0-5 39 25% 13 13 9 4
5.1-10 32 21% 8 11 9 4
10.1-20 20 13% 6 7 7 0
> 20 2 1% 1 1 0 0
MEAN- 4.95%; MEDIAN- 3.93%
Containing penicillins or derivatives thereof (300410)
Tariffs rate
(%)
Number of
countries
(n=149) Percentage of
countries
0 64 43%
0-5 34 23%
5.1-10 35 23%
10.1-20 14 9%
> 20 2 1%
MEAN- 5.36%; MEDIAN- 4%
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49
Containing other antibiotics (300420)
Tariffs rate
(%)
Number of
countries
(n=148) Percentage of
countries
Low-
income
countries
Lower-middle-
income
countries Upper-middle-
income countries
High-
income
countries
0 64 43% 21 14 12 17
0-5 35 24% 11 14 7 3
5.1-10 34 23% 10 10 10 4
10.1-20 13 9% 3 7 3 0
> 20 2 1% 1 1 0 0
MEAN- 5.14%; MEDIAN- 3.5%
Containing insulin (300431)
Tariffs rate
(%)
Number of
countries
(n=126) Percentage of
countries
Low-
income
countries
Lower-middle-
income
countries Upper-middle-
income countries
High-
income
countries
0 75 60% 19 19 20 17
0-5 25 20% 9 10 4 2
5.1-10 17 13% 6 5 3 3
10.1-20 6 5% 0 360 3
61 0
> 20 3 2% 162 2
63 0 0
MEAN- 4.05%; MEDIAN- 0%
Other (300439)
Tariffs rate
(%)
Number of
countries
(n=144) Percentage of
countries
0 73 51%
0-5 37 26%
5.1-10 26 18%
10.1-20 6 4%
> 20 2 1%
MEAN-4.26%; MEDIAN- 0%
Containing alkaloids or derivatives thereof (300440)
Tariffs rate
(%)
Number of
countries
(n=146) Percentage of
countries
0 70 48%
0-5 39 27%
5.1-10 26 18%
10.1-20 9 6%
> 20 2 1%
MEAN- 4.46%; MEDIAN- 1.59%
Other medicaments containing vitamins (300450)
Tariffs rate
(%)
Number of
countries
(n=147) Percentage of
countries
0 58 39%
0-5 35 24%
5.1-10 31 21%
10.1-20 19 13%
> 20 4 3%
MEAN- 5%; MEDIAN- 5.88%
60 Peru, Brazil, Tunisia
61 Argentina, Mexico, Uruguay
62 India
63 Morocco, Islamic Republic of Iran
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50
Other (300490)
Tariffs rate
(%)
Number of
countries
(n=152) Percentage of
countries
0 60 39%
0-5 38 25%
5.1-10 32 21%
10.1-20 20 13%
> 20 2 1%
MEAN- 5.53%; MEDIAN- 5%
Vaccines for human medicine (300220)
Tariffs rate
(%)
Number of
countries
(n=147) Percentage of
countries
Low-
income
countries
Lower-middle-
income
countries Upper-middle-
income countries
high-
income
countries
0 96 65% 28 28 21 19
0-5 31 21% 12 11 7 1
5.1-10 15 10% 5 6 3 1
10.1-20 4 3% 264 1
65 1
66 0
> 20 1 1% 167 0 0 0
MEAN= 2.39%; MEDIAN= 0%
*Note: The percentages have been rounded off
** All rates based on weighted average
64 Burundi, Nigeria
65 Peru
66 Seychelles
67 India
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51
Annex 3: Country groups based on economy
Low-income economies (61)
Afghanistan Guinea-Bissau Pakistan
Angola Haiti Papua New Guinea
Bangladesh India Rwanda
Benin Kenya Sao Tome and Principe
Bhutan Korea, Dem Rep. Senegal
Burkina Faso Kyrgyz Republic Sierra Leone
Burundi Lao PDR Solomon Islands
Cambodia Lesotho Somalia
Cameroon Liberia Sudan
Central African Republic Madagascar Tajikistan
Chad Malawi Tanzania
Comoros Mali Timor-Leste
Congo, Dem. Rep Mauritania Togo
Congo, Rep. Moldova Uganda
Cote d'Ivoire Mongolia Uzbekistan
Equatorial Guinea Mozambique Vietnam
Eritrea Myanmar Yemen, Rep.
Ethiopia Nepal Zambia
Gambia, The Nicaragua Zimbabwe
Ghana Niger
Guinea Nigeria
Lower-middle-income economies (56)
Albania Georgia Philippines
Algeria Guatemala Romania
Armenia Guyana Russian Federation
Azerbaijan Honduras Samoa
Belarus Indonesia Serbia and Montenegro
Bolivia Iran, Islamic Rep. South Africa
Pharmaceutical Tariffs
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Bosnia and Herzegovina Iraq Sri Lanka
Brazil Jamaica Suriname
Bulgaria Jordan Swaziland
Cape Verde Kazakhstan Syrian Arab Republic
China Kiribati Thailand
Colombia Macedonia, FYR Tonga
Cuba Maldives Tunisia
Djibouti Marshall Islands Turkey
Dominican Republic Micronesia, Fed. Sts. Turkmenistan
Ecuador Morocco Ukraine
Egypt, Arab Rep. Namibia Vanuatu
El Salvador Paraguay West Bank and Gaza
Fiji Peru
Upper-middle-income economies (37)
American Samoa Grenada Panama
Antigua and Barbuda Hungary Poland
Argentina Latvia Saudi Arabia
Barbados Lebanon Seychelles
Belize Libya Slovak Republic
Botswana Lithuania St. Kitts and Nevis
Chile Malaysia St. Lucia
Costa Rica Mauritius St. Vincent and the
Grenadines
Croatia Mayotte Trinidad and Tobago
Czech Republic Mexico Uruguay
Dominica Northern Mariana Islands Venezuela, RB
Estonia Oman
Gabon Palau
High-income economies (54)
Andorra Germany Netherlands
Aruba Greece Netherlands Antilles
Pharmaceutical Tariffs
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Australia Greenland New Caledonia
Austria Guam New Zealand
Bahamas, The Hong Kong, China Norway
Bahrain Iceland Portugal
Belgium Ireland Puerto Rico
Bermuda Isle of Man Qatar
Brunei Israel San Marino
Canada Italy Singapore
Cayman Islands Japan Slovenia
Channel Islands Korea, Rep. Spain
Cyprus Kuwait Sweden
Denmark Liechtenstein Switzerland
Faeroe Islands Luxembourg United Arab Emirates
Finland Macao, China United Kingdom
France Malta United States
French Polynesia Monaco Virgin Islands (U.S.)
Source: World Bank
Pharmaceutical Tariffs
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54
Annex 4: Difference between finished products and active ingredients tariff rates
Medicaments Ingredients
Reporter Name Tariff Year Weighted average Tariff Year Weighted Average Difference
Zimbabwe 2002 17.6 2001 2.76 -14.84
Slovenia 2003 8.9 2003 0 -8.9
Thailand 2003 18.01 2001 10 -8.01
Vietnam 2004 5.71 2002 0.08 -5.63
Congo, Dem. Rep. 2003 15.45 2003 10 -5.45
Ukraine 2002 7.02 2002 1.92 -5.1
El Salvador 2004 5 2002 0 -5
Jordan 2003 4.18 2003 0 -4.18
Bosnia and Herzegovina 2001 3.93 2001 0 -3.93
Trinidad and Tobago 2003 12.36 2003 8.55 -3.81
Pakistan 2004 13.63 2003 10 -3.63
Ethiopia(excludes Eritrea) 2002 8.56 2002 5 -3.56
Tunisia 2004 13.79 2003 10.4 -3.39
Russian Federation 2002 9.81 2002 6.5 -3.31
Belarus 2002 8.26 2002 5 -3.26
Colombia 2004 8.04 2002 5 -3.04
Paraguay 2004 10.82 2003 8.27 -2.55
Rwanda 2003 2.5 2003 0 -2.5
Bangladesh 2004 9.63 2004 7.45 -2.18
Saudi Arabia 2004 2.15 2003 0 -2.15
Dominica 2003 8.76 2003 6.78 -1.98
Macedonia, FYR 2004 3.67 2001 2 -1.67
Argentina 2004 11.75 2003 10.08 -1.67
St. Kitts and Nevis 2003 6.82 2003 5.47 -1.35
Belize 2003 10.84 2003 9.62 -1.22
Grenada 2003 12.58 2003 11.37 -1.21
Austria 1990 7.13 1990 6.12 -1.01
Philippines 2003 3.84 2003 3 -0.84
Brazil 2004 10.31 2003 9.51 -0.8
Ecuador 2004 5.64 2002 5 -0.64
St. Vincent and the
Grenadines 2003 8.6 2003 8.08 -0.52
Algeria 2003 5.24 2003 5 -0.24
Antigua and Barbuda 2003 8.91 2003 8.7 -0.21
Suriname 2000 11.93 2000 11.73 -0.2
Jamaica 2003 7.7 2003 7.62 -0.08
Guatemala 2004 5 2002 4.93 -0.07
Albania 2002 0 2001 0 0
Angola 2002 2 2002 2 0
Armenia 2001 0 2001 0 0
Australia 2004 0 2004 0 0
Bahamas, The 2002 0 2002 0 0
Bahrain 2001 5 2001 5 0
Benin 2004 0 2003 0 0
Bermuda 2001 0 2001 0 0
Bhutan 2004 0 2002 0 0
Bolivia 2004 10 2002 10 0
Botswana 2001 0 2001 0 0
Pharmaceutical Tariffs
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55
Medicaments Ingredients
Reporter Name Tariff Year Weighted average Tariff Year Weighted Average Difference
Brunei 2003 0 2002 0 0
Bulgaria 2004 0 2003 0 0
Burkina Faso 2004 0 2003 0 0
Burundi 2002 15 2002 15 0
Cambodia 2003 0 2002 0 0
Cameroon 2002 5 2002 5 0
Canada 2003 0 2003 0 0
Central African Republic 2002 5 2002 5 0
Chad 2002 5 2002 5 0
Congo, Rep. 2002 5 2002 5 0
Costa Rica 2004 2.5 2002 2.5 0
Cote d'Ivoire 2004 0 2003 0 0
Cuba 2004 1 2003 1 0
Cyprus 2002 0 2002 0 0
Czech Republic 2003 0 2003 0 0
Djibouti 2002 10 2002 10 0
Dominican Republic 2004 3 2003 3 0
Equatorial Guinea 2002 5 2002 5 0
Eritrea 2002 2 2002 2 0
Estonia 2003 0 2003 0 0
European Union** 2003 0 2002 0 0
Gabon 2002 5 2002 5 0
Guinea-Bissau 2004 0 2003 0 0
Honduras 2004 0 2002 0 0
Hong Kong, China 1998 0 1998 0 0
Hungary 2002 0 2002 0 0
Indonesia 2003 5 2002 5 0
Israel 1993 7.2 1993 7.2 0
Japan 2004 0 2003 0 0
Korea, Rep. 2002 0 2002 0 0
Kuwait 2002 4 2002 4 0
Kyrgyz Republic 2003 0 2002 0 0
Lao PDR 2001 10 2001 10 0
Latvia 2001 0 2001 0 0
Lebanon 2002 5 2002 5 0
Libya 2002 0 2002 0 0
Lithuania 2003 0 2003 0 0
Madagascar 2001 0 2001 0 0
Malawi 2001 0 2001 0 0
Malaysia 2003 0 2002 0 0
Maldives 2003 5 2003 5 0
Mali 2004 0 2003 0 0
Malta 2003 0 2003 0 0
Mauritania 2001 0 2001 0 0
Mauritius 2002 5 2002 5 0
Moldova 2001 0 2001 0 0
Mozambique 2003 0 2003 0 0
Myanmar 2003 1.5 2002 1.5 0
Namibia 2001 0 2001 0 0
New Zealand 2004 0 2004 0 0
Pharmaceutical Tariffs
Olcay & Laing May 2005
56
Medicaments Ingredients
Reporter Name Tariff Year Weighted average Tariff Year Weighted Average Difference
Nicaragua 2004 0 2002 0 0
Niger 2004 0 2003 0 0
Nigeria 2002 20 2002 20 0
Norway 2003 0 2003 0 0
Oman 2002 5 2002 5 0
Papua New Guinea 2004 0 2004 0 0
Peru 2004 12 2000 12 0
Qatar 2002 4 2002 4 0
Senegal 2004 0 2003 0 0
Seychelles 2001 15 2001 15 0
Singapore 2003 0 2003 0 0
Slovak Republic 2002 10 2002 10 0
Solomon Islands 1995 5 1995 5 0
South Africa 2001 0 2001 0 0
Sri Lanka 2004 0 2001 0 0
Sudan 2002 10 2002 10 0
Swaziland 2001 0 2001 0 0
Sweden 1989 0 1989 0 0
Switzerland 2004 0 2004 0 0
Syrian Arab Republic 2002 1 2002 1 0
Tajikistan 2002 5 2002 5 0
Tanzania 2003 10 2003 10 0
Togo 2004 0 2003 0 0
Turkey 2003 0 2003 0 0
Turkmenistan 2002 0 2002 0 0
Uganda 2004 0 2003 0 0
United States 2004 0 2004 0 0
Uzbekistan 2001 0 2001 0 0
Vanuatu 2002 0 2002 0 0
Yemen 2000 5 2000 5 0
Uruguay 2004 11.7 2002 11.81 0.11
Egypt, Arab Rep. 2002 6.83 2002 7.05 0.22
Azerbaijan 2002 0 2002 0.26 0.26
St. Lucia 2003 8.43 2003 8.79 0.36
Guyana 2003 12.04 2003 12.49 0.45
Barbados 2003 14.37 2003 15 0.63
Venezuela 2004 9.2 2002 9.93 0.73
Chile 2004 6 2002 7 1
Iceland 2003 3.61 2003 4.65 1.04
Zambia 2003 0 2003 1.1 1.1
China 2004 4.41 2004 5.6 1.19
Kenya 2004 5.29 2001 6.86 1.57
Montserrat 1999 6.96 1999 8.87 1.91
Panama 2001 2.77 2001 4.93 2.16
Romania 2001 6.25 2001 9.29 3.04
Georgia 2004 1 1999 5 4
India* 2004 30 2001 35 5
Croatia 2004 1.5 2001 6.56 5.06
Poland 2003 0.46 2003 5.71 5.25
Ghana 2004 4.73 2000 10 5.27
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57
Medicaments Ingredients
Reporter Name Tariff Year Weighted average Tariff Year Weighted Average Difference
Nepal 2004 9.29 2003 15 5.71
Mexico 2004 6.91 2003 14.67 7.76
Morocco 2003 12.4 2003 23.74 11.34
Iran, Islamic Rep. 2004 54.26 2003 100 45.74
* During the preparation of this paper, India lowered its tariff rates on active pharmaceutical ingredients and
finished products to 16%.
** The European Union has been counted as an individual country since the rate provided is an aggregate of all
the member countries' (for the year indicated) pharmaceutical tariffs rates.
Annex 5: Revenue from tariffs on finished products as a percentage of GDP
Active pharmaceutical ingredients 3003 Finished Products 3004
Reporter Name GDP (1000
US$)° Tariff Year Weighted
average
tariff rate %
Imports
Value
(1000
US$)
Revenue from
API tariffs
(1000 US$)
API tariffs
revenue as
% of GDP
Weighted
average
tariff rate %
Imports
Value
(1000 US$)
Revenue from
finished
products tariffs
(1000 US$)
Finished
products tariffs
revenue as % of
GDP
Total
pharmaceutical
tariff revenue (3003
and 3004) as % of
GDP
Albania 4,254,227 2001 0 3896 0 0.0000% 0 24272 0 0.0000% 0.0000%
Armenia 2,118,468 2001 0 38 0 0.0000% 0 22189 0 0.0000% 0.0000%
Australia** 522,377,527 2004 0 148931 0 0.0000% 0 2719031 0 0.0000% 0.0000%
Bahamas, The 7,137,510 2002 0 977 0 0.0000% 0 21340 0 0.0000% 0.0000%
Benin 988,500 2003 0 610 0 0.0000% 0 24131 0 0.0000% 0.0000%
Bermuda 2,371,786 2001 0 766 0 0.0000% 0 170200 0 0.0000% 0.0000%
Botswana 5,014,183 2001 0 1355 0 0.0000% 0 28601 0 0.0000% 0.0000%
Brunei 5,393,727 2002 0 872 0 0.0000% 0 24213 0 0.0000% 0.0000%
Burkina Faso 19,860,228 2003 0 21 0 0.0000% 0 24864 0 0.0000% 0.0000%
Cambodia 628,096 2002 0 1743 0 0.0000% 0 55233 0 0.0000% 0.0000%
Canada 12,490,874 2003 0 137688 0 0.0000% 0 4742140 0 0.0000% 0.0000%
Cote d'Ivoire 17,427,212 2003 0 195 0 0.0000% 0 97156 0 0.0000% 0.0000%
Cyprus 10,105,680 2002 0 2138 0 0.0000% 0 94191 0 0.0000% 0.0000%
Czech Republic 89,715,098 2003 0 35462 0 0.0000% 0 1144247 0 0.0000% 0.0000%
Estonia 9,082,071 2003 0 313 0 0.0000% 0 106682 0 0.0000% 0.0000%
European Union 6,662,332,088 2002 0 683635 0 0.0000% 0 16587454 0 0.0000% 0.0000%
Guinea-Bissau 238,625 2003 0 4 0 0.0000% 0 846 0 0.0000% 0.0000%
Honduras 6,594,071 2002 0 456 0 0.0000% 0 67675 0 0.0000% 0.0000%
Hong Kong, China*** 160,636,027 1998 0 6687 0 0.0000% 0 704456 0 0.0000% 0.0000%
Hungary 64,884,163 2002 0 8332 0 0.0000% 0 653152 0 0.0000% 0.0000%
Japan 4,300,857,934 2003 0 111061 0 0.0000% 0 3801266 0 0.0000% 0.0000%
Korea, Rep. 546,713,207 2002 0 136684 0 0.0000% 0 503816 0 0.0000% 0.0000%
Kyrgyz Republic 1,605,641 2002 0 57 0 0.0000% 0 34448 0 0.0000% 0.0000%
Latvia 8,229,764 2001 0 2006 0 0.0000% 0 129793 0 0.0000% 0.0000%
Libya 19,130,702 2002 0 6590 0 0.0000% 0 108273 0 0.0000% 0.0000%
Lithuania 18,215,203 2003 0 1096 0 0.0000% 0 274379 0 0.0000% 0.0000%
Madagascar 4,529,556 2001 0 3241 0 0.0000% 0 21853 0 0.0000% 0.0000%
Malawi 1,704,773 2001 0 2067 0 0.0000% 0 13220 0 0.0000% 0.0000%
Pharmaceutical Tariffs
Olcay & Laing May 2005 59
Malaysia 95,164,211 2002 0 25713 0 0.0000% 0 335465 0 0.0000% 0.0000%
Mali 4,325,950 2003 0 286 0 0.0000% 0 38165 0 0.0000% 0.0000%
Malta 4,850,810 2003 0 403 0 0.0000% 0 55137 0 0.0000% 0.0000%
Mauritania 962,005 2001 0 696 0 0.0000% 0 7548 0 0.0000% 0.0000%
Moldova 1,479,387 2001 0 168 0 0.0000% 0 26419 0 0.0000% 0.0000%
Mozambique 4,320,574 2003 0 1428 0 0.0000% 0 16145 0 0.0000% 0.0000%
Namibia 3,215,869 2001 0 1634 0 0.0000% 0 28691 0 0.0000% 0.0000%
New Zealand** 79,571,993 2004 0 9865 0 0.0000% 0 364561 0 0.0000% 0.0000%
Nicaragua 4,006,926 2002 0 901 0 0.0000% 0 106785 0 0.0000% 0.0000%
Niger 2,731,418 2003 0 2 0 0.0000% 0 15893 0 0.0000% 0.0000%
Norway 220,853,797 2003 0 25657 0 0.0000% 0 909875 0 0.0000% 0.0000%
Papua New Guinea** 3,182,093 2004 0 2468 0 0.0000% 0 10314 0 0.0000% 0.0000%
Senegal 6,496,372 2003 0 387 0 0.0000% 0 64583 0 0.0000% 0.0000%
Singapore 91,342,283 2003 0 27107 0 0.0000% 0 365665 0 0.0000% 0.0000%
South Africa 114,232,713 2001 0 25750 0 0.0000% 0 524498 0 0.0000% 0.0000%
Sri Lanka 15,745,701 2001 0 2411 0 0.0000% 0 80333 0 0.0000% 0.0000%
Swaziland 1,291,331 2001 0 1518 0 0.0000% 0 9310 0 0.0000% 0.0000%
Sweden*** 251,322,253 1989 0 37313 0 0.0000% 0 704337 0 0.0000% 0.0000%
Switzerland** 320,118,227 2004 0 135328 0 0.0000% 0 6150762 0 0.0000% 0.0000%
Togo 1,758,947 2003 0 310 0 0.0000% 0 56344 0 0.0000% 0.0000%
Turkey 240,375,841 2003 0 95904 0 0.0000% 0 1579342 0 0.0000% 0.0000%
Turkmenistan 4,605,930 2002 0 3790 0 0.0000% 0 23031 0 0.0000% 0.0000%
Uganda 6,296,606 2003 0 3910 0 0.0000% 0 45367 0 0.0000% 0.0000%
United States** 10,948,546,920 2004 0 687879 0 0.0000% 0 23112108 0 0.0000% 0.0000%
Uzbekistan 11,401,351 2001 0 559 0 0.0000% 0 31958 0 0.0000% 0.0000%
Vanuatu 234,421 2002 0 155 0 0.0000% 0 5811 0 0.0000% 0.0000%
Azerbaijan 253,126,066 2002 0.26 6926 18 0.0000% 0 11642 0 0.0000% 0.0000%
Central African Republic 724,852,474 2002 5 71 4 0.0000% 5 5216 261 0.0000% 0.0000%
Zambia 4,335,242 2003 1.1 2269 25 0.0006% 0 13560 0 0.0000% 0.0006%
Syrian Arab Republic 19,042,935 2002 1 485 5 0.0000% 1 32167 322 0.0017% 0.0017%
Colombia 1,270,999,941 2002 5 17997 900 0.0001% 8.04 313579 25212 0.0020% 0.0021%
Equatorial Guinea 2,117,683 2002 5 88 4 0.0002% 5 956 48 0.0023% 0.0025%
Congo, Dem. Rep. 80,346,890 2003 10 687 69 0.0001% 15.45 16903 2612 0.0033% 0.0033%
Pharmaceutical Tariffs
Olcay & Laing May 2005 60
Belize 17,492,785 2003 9.62 108 10 0.0001% 10.84 6859 744 0.0043% 0.0043%
Angola 11,248,467 2002 2 1085 22 0.0002% 2 25340 507 0.0045% 0.0047%
Poland 209,562,862 2003 5.71 15976 912 0.0004% 0.46 2038443 9377 0.0045% 0.0049%
Eritrea 630,841 2002 2 5 0 0.0000% 2 1728 35 0.0055% 0.0055%
Indonesia 172,970,721 2002 5 7102 355 0.0002% 5 192265 9613 0.0056% 0.0058%
Solomon Islands*** 361,911 1995 5 15 1 0.0002% 5 451 23 0.0062% 0.0064%
Saudi Arabia 214,748,201 2003 0 407203 0 0.0000% 2.15 708734 15238 0.0071% 0.0071%
India 478,524,211 2001 35 28726 10054 0.0021% 30 116294 34888 0.0073% 0.0094%
Barbados 51,913,662 2003 15 548 82 0.0002% 14.37 36119 5190 0.0100% 0.0102%
Rwanda 1,637,261 2003 0 331 0 0.0000% 2.5 6978 174 0.0107% 0.0107%
Dominican Republic 16,540,849 2003 3 7196 216 0.0013% 3 52457 1574 0.0095% 0.0108%
Tajikistan 1,088,689 2002 5 25 1 0.0001% 5 2354 118 0.0108% 0.0109%
Qatar 17,466,483 2002 4 37272 1491 0.0085% 4 18987 759 0.0043% 0.0129%
Philippines 80,573,850 2003 3 9434 283 0.0004% 3.84 290352 11149 0.0138% 0.0142%
Zimbabwe 9,056,895 2001 2.76 876 24 0.0003% 17.6 7525 1324 0.0146% 0.0149%
Kuwait 35,180,495 2002 4 851 34 0.0001% 4 135221 5409 0.0154% 0.0155%
Mexico 626,079,629 2003 14.67 68359 10028 0.0016% 6.91 1336578 92358 0.0148% 0.0164%
Oman 20,309,494 2002 5 975 49 0.0002% 5 77957 3898 0.0192% 0.0194%
Egypt, Arab Rep. 89,853,927 2002 7.05 20113 1418 0.0016% 6.83 264614 18073 0.0201% 0.0217%
Israel*** 103,852,212 1993 7.2 8883 640 0.0006% 7.2 310657 22367 0.0215% 0.0222%
Yemen 9,414,753 2000 5 2458 123 0.0013% 5 39824 1991 0.0211% 0.0225%
Georgia 2,805,174 1999 5 138 7 0.0002% 1 62946 629 0.0224% 0.0227%
Croatia 19,863,052 2001 6.56 1980 130 0.0007% 1.5 311816 4677 0.0235% 0.0242%
Burundi 3,203,346 2002 15 122 18 0.0006% 15 5053 758 0.0237% 0.0242%
Lao PDR 1,749,940 2001 10 325 32 0.0019% 10 3917 392 0.0224% 0.0242%
Sudan 15,375,787 2002 10 3288 329 0.0021% 10 35042 3504 0.0228% 0.0249%
Pakistan 82,323,661 2003 10 14587 1459 0.0018% 13.63 141408 19274 0.0234% 0.0252%
Maldives 715,367 2003 5 0 0 0.0000% 5 3792 190 0.0265% 0.0265%
Argentina 129,595,761 2003 10.08 19363 1952 0.0015% 11.75 290115 34089 0.0263% 0.0278%
Gabon 4,970,816 2002 5 154 8 0.0002% 5 28080 1404 0.0282% 0.0284%
Panama 11,807,500 2001 4.93 5339 263 0.0022% 2.77 112969 3129 0.0265% 0.0287%
Suriname 877,460 2000 11.73 171 20 0.0023% 11.93 2069 247 0.0281% 0.0304%
Iceland 10,512,966 2003 4.65 1116 52 0.0005% 3.61 87818 3170 0.0302% 0.0306%
Pharmaceutical Tariffs
Olcay & Laing May 2005 61
Bangladesh+ 7,682,917 2004 7.45 5988 446 0.0058% 9.63 20284 1953 0.0254% 0.0312%
Bosnia and Herzegovina 8,023,456 2001 0 80 0 0.0000% 3.93 67991 2672 0.0333% 0.0333%
Mauritius 4,542,203 2002 5 107 5 0.0001% 5 30737 1537 0.0338% 0.0340%
Tanzania 10,296,812 2003 10 7769 777 0.0075% 10 27302 2730 0.0265% 0.0341%
St. Kitts and Nevis 345,526 2003 5.47 60 3 0.0009% 6.82 1705 116 0.0337% 0.0346%
Bahrain 4,950,000 2001 5 1477 74 0.0015% 5 34276 1714 0.0346% 0.0361%
Nepal 5,850,821 2003 15 141 21 0.0004% 9.29 22578 2097 0.0358% 0.0362%
Venezuela 95,423,881 2002 9.93 12243 1216 0.0013% 9.2 377693 34748 0.0364% 0.0377%
Peru 53,044,273 2000 12 2619 314 0.0006% 12 164226 19707 0.0372% 0.0377%
Russian Federation 345,588,531 2002 6.5 2049 133 0.0000% 9.81 1360194 133435 0.0386% 0.0386%
Ethiopia(excludes Eritrea) 6,059,204 2002 5 1396 70 0.0012% 8.56 26592 2276 0.0376% 0.0387%
Congo, Rep. 5,547,082 2002 5 2984 149 0.0027% 5 44209 2210 0.0398% 0.0425%
St. Lucia 692,778 2003 8.79 16 1 0.0002% 8.43 3481 293 0.0424% 0.0426%
Kenya 11,185,046 2001 6.86 4083 280 0.0025% 5.29 88020 4656 0.0416% 0.0441%
Vietnam 35,058,217 2002 0.08 10377 8 0.0000% 5.71 277876 15867 0.0453% 0.0453%
Paraguay 6,029,826 2003 8.27 112 9 0.0002% 10.82 25660 2776 0.0460% 0.0462%
Dominica 259,148 2003 6.78 32 2 0.0008% 8.76 1381 121 0.0467% 0.0475%
Morocco 43,726,610 2003 23.74 7284 1729 0.0040% 12.4 154689 19181 0.0439% 0.0478%
Uruguay 12,276,741 2002 11.81 4132 488 0.0040% 11.7 48655 5693 0.0464% 0.0503%
Romania 40,165,462 2001 9.29 4294 399 0.0010% 6.25 334813 20926 0.0521% 0.0531%
El Salvador 14,311,900 2002 0 1148 0 0.0000% 5 152834 7642 0.0534% 0.0534%
Nigeria 46,710,833 2002 20 2523 505 0.0011% 20 123014 24603 0.0527% 0.0538%
Chad 1,045,929 2002 5 84 4 0.0004% 5 11458 573 0.0548% 0.0552%
St. Vincent and the Grenadines 371,481 2003 8.08 2 0 0.0000% 8.6 2397 206 0.0555% 0.0555%
Trinidad and Tobago 10,511,080 2003 8.55 277 24 0.0002% 12.36 47227 5837 0.0555% 0.0558%
Algeria 66,530,136 2003 5 37474 1874 0.0028% 5.24 685167 35903 0.0540% 0.0568%
Guatemala 20,961,083 2002 4.93 3880 191 0.0009% 5 234884 11744 0.0560% 0.0569%
Antigua and Barbuda 756,667 2003 8.7 2250 196 0.0259% 8.91 2662 237 0.0313% 0.0572%
Thailand 115,536,396 2001 10 17031 1703 0.0015% 18.01 373569 67280 0.0582% 0.0597%
Ecuador 24,310,999 2002 5 565 28 0.0001% 5.64 258947 14605 0.0601% 0.0602%
Macedonia, FYR 3,436,961 2001 2 175 4 0.0001% 3.67 57103 2096 0.0610% 0.0611%
Ukraine 42,392,895 2002 1.92 1408 27 0.0001% 7.02 369712 25954 0.0612% 0.0613%
Jordan 9,860,106 2003 0 21344 0 0.0000% 4.18 150587 6295 0.0638% 0.0638%
Pharmaceutical Tariffs
Olcay & Laing May 2005 62
Ghana 4,977,581 2000 10 1829 183 0.0037% 4.73 66642 3152 0.0633% 0.0670%
Jamaica 7,729,946 2003 7.62 985 75 0.0010% 7.7 66409 5113 0.0662% 0.0671%
China** 72,415,388 2004 5.6 79690 4463 0.0062% 4.41 1125658 49642 0.0686% 0.0747%
Cameroon 3,999,766 2002 5 2587 129 0.0032% 5 65652 3283 0.0821% 0.0853%
Lebanon 18,263,230 2002 5 5856 293 0.0016% 5 311648 15582 0.0853% 0.0869%
Slovenia 27,748,856 2003 0 11550 0 0.0000% 8.9 299343 26642 0.0960% 0.0960%
Tunisia 25,037,330 2003 10.4 70074 7288 0.0291% 13.79 123996 17099 0.0683% 0.0974%
Grenada 439,259 2003 11.37 24 3 0.0006% 12.58 3665 461 0.1050% 0.1056%
Iran, Islamic Rep. 137,143,730 2003 100 7311 7311 0.0053% 54.26 287845 156185 0.1139% 0.1192%
Djibouti 591,995 2002 10 118 12 0.0020% 10 7745 774 0.1308% 0.1328%
Guyana 741,972 2003 12.49 954 119 0.0161% 12.04 7490 902 0.1215% 0.1376%
Slovak Republic 24,184,052 2002 10 5511 551 0.0023% 10 418528 41853 0.1731% 0.1753%
Costa Rica 3,017,260 2002 2.5 1381 35 0.0011% 2.5 212245 5306 0.1759% 0.1770%
Seychelles 617,636 2001 15 11 2 0.0003% 15 7710 1157 0.1873% 0.1875%
Belarus 2,534,778 2002 5 1540 77 0.0030% 8.26 125127 10335 0.4077% 0.4108%
Bolivia 603,344 2002 10 342 34 0.0057% 10 28435 2844 0.4713% 0.4770%
Chile 2,007,772 2002 7 3520 246 0.0123% 6 208517 12511 0.6231% 0.6354%
Brazil 7,530,320 2003 9.51 127830 12157 0.1614% 10.31 922010 95059 1.2624% 1.4238%
Austria N/A 1990 6.12 24336 1489 N/A 7.13 868037 61891 N/A N/A
Bhutan N/A 2002 0 1258 0 N/A 0 208 0 N/A N/A
Bulgaria N/A 2003 0 556 0 N/A 0 225257 0 N/A N/A
Cuba N/A 2003 1 191 2 N/A 1 12960 130 N/A N/A
Finland N/A 1990 N/A 14807 N/A N/A 2 323201 6464 N/A N/A
Montserrat N/A 1999 8.87 6 1 N/A 6.96 27 2 N/A N/A
Myanmar N/A 2002 1.5 3841 58 N/A 1.5 50370 756 N/A N/A
Source: World Development
Indicators database MEAN 0.0025% MEAN
0.0437%
* The GDP (1000 US$) corresponds to the same year as tariff MEDIAN 0.0001% MEDIAN 0.0107%
** Based on latest available GDP data (2003) MAXIMUM 0.1614% MAXIMUM 1.2624%
*** Based on 1999 data MINIMUM 0.0000% MINIMUM 0.0000%
°GDP data corresponds to same year as tariffs data unless otherwise noted MEAN 0.0462%
MEDIAN 0.0109%
MAXIMUM 1.4238%
MINIMUM 0.0000%
... This presents particular problems in the context of chronic, non-communicable diseases; ailments of this nature require ongoing treatment that is often much less affordable than a one-time expenditure to treat an acute illness Mendis, Fukino et al., 2007). Such problems are exacerbated by the fact that many countries continue to apply value added taxes and import tariffs to the relevant medicines (Olcay and Laing, 2005). To say nothing of the fact that the medicines required may not be physically available, or, if they are, either of substandard quality or even fake. ...
Book
In addressing the politics of the international regulation of public procurement, this book fills a major gap in the literature. Brown-Shafii does this by investigating whether a WTO Agreement can be used to promote good governance, development and accountability.
... The victorious evolution of India"s pharmaceutical industry has not only been beneficial for India"s economy, but also for meeting the demands of patients in developing countries and ipso facto accelerating access to medicines for people in these countries. Pharmaceuticals are an exclusive kind of goods and many countries do not levy duties on pharmaceutical products (Olcay and Laing, 2005). FTAs also negotiate environmental standards, labor standards, and intellectual property laws between signatories by which associated regulations and commitments affect pharmaceutical companies. ...
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The global trading system has witnessed an overwhelming surge in regional trade agreements (RTAs) in the recent decades. The free trade arena of India is also nudging in tune with the international trade kinetics, liberalization drives and is inking more and more trade agreements-both intraregional and international. The Regional Comprehensive Economic Partnership (RCEP) is a mega-regional trade agreement between sixteen countries (ten ASEAN countries and their six FTA partners) which make up about 45% of world population and contribute a third of the world"s Gross Domestic Product (i.e., US$17.23 trillion). RCEP aims to tap this immense potential of this region and transform it into an integrated market. However, there is growing opinion that RCEP will restrict public access to cheap, life saving medicines-a fact which opens new avenues of discourse with grim realities, as India is considered as the "pharmacy of the developing world." India must promote its pro-public IP law, which urges real innovation in pharmaceuticals by vetoing non-deserving patents as a model for the rest of the region to follow. This study attempts to conduct an impact assessment of the reverberations of RCEP on the Indian public, especially in relation to livelihood, health and medicine of its population and reappraise its existing liabilities before ratifying it, as the RCEP provisions will potentially increase drug costs by creating new monopolies and delaying the entry of affordable generics in the market. JEL Classification: F13, F15
... Key criticisms of industrial protection focus on the impact on prices and hence access, and external bodies are playing an important role in observing and documenting price differences (Ewen et al 2017). The challenge to external funders and other external actors, such as NGOs and the WHO, is to move away from principled opposition to all forms of industrial protection for pharmaceuticals, characterising tariffs as a tax on illness (Olcay and Laing 2005), towards a more nuanced and evidence-based position accepting the need for well-designed and time-limited protection (West and Banda 2016). The policy challenge is to ensure that, in the context of some 'infant industry' protection to allow firms to grow, domestic market competition is maintained and enhanced. ...
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Low-income populations in sub-Saharan Africa (SSA) continue to suffer inadequate health care, undermined by poor access to medicines. In the context of Sustainable Development Goal (SDG) 3 and international commitments to universal health coverage (UHC), international intervention finances large-scale international procurement of medicines and supports health system strengthening. Meanwhile, pharmaceutical manufacturing in SSA is long established, and is currently being promoted by African governments and other actors including the African Union Commission (AUC), the New Partnership for Africa’s Development (NEPAD) and the East African Community (EAC), and supported also by external actors including Germany’s Federal Ministry for Economic Cooperation and Development (BMZ). This Brief presents evidence for the actual and potential health and development benefits from creating stronger local and global linkages between these industrial and health agendas, and outlines how this can be done.
... However, prices of medicines are determined by a combination of variables including national and individual income, government policy, degree of competition in the public and private markets, health system capacity, public policies, intellectual property protection, non-tariff barriers and import tariffs. In developing countries, pharmaceutical costs are the largest health-related expenditures after staffing costs, comprising 40-60% of total health costs (14). The cost of medicines incorporates several added costs prior to reaching patients and includes the base prices from the manufacturer, costs for transportation, storage, import tariffs and taxes, wholesale and retail mark-ups, staff salaries, stock losses and procurement practices (15). ...
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Glaucoma is a leading cause of blindness. Affordability and availability are key factors that determine access to effective treatment. The aim of this study is to investigate the availability and affordability of antiglaucoma medicines in Benin City. A cross sectional survey of the major drug distribution sectors was conducted. The strength, unit pack, brand name and lowest priced generics (LPG) were recorded. Physical sighting of product was done to confirm availability in any facility. Data collected were sorted and analyzed using WakAfford1.0. (A Medicine Affordability Calculator) that we developed for this study, based on USD103 (NGN17, 000) minimum wage per month for the least paid government worker. Graph pad Instat was used for inferential analysis. The branded or innovator products in private pharmacies had 47.22% availability, followed by private clinics 38% and lastly the public hospitals 25%, while the generic medicines had 25% availability in private pharmacies, 22.22% in clinics and 19.44% in public hospitals. The most affordable branded product in private pharmacies is acetazolamide tablets (0.16 ± 0.02 days) and timolol 0.5% eye drop (0.59 ± 0.04 days), while the most unaffordable product is Combigan (12.71 ± 0.17 days). The public hospital had same trend, the least affordable medicine being Diamox and most unaffordable was Xalacomb. However, timolol 0.25% was the most affordable in private clinics while Xalacomb was the most unaffordable. The availability of antiglaucoma drugs in Benin City is suboptimal and some are unaffordable across the different sectors. Government and donor agencies should subsidize and make them accessible to patients.
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The sale of artemisinin-based combination therapy (ACT) by private licensed chemical shops (LCS) without testing is contrary to current policy recommendations. This study assessed the accuracy and perception of test-based management of malaria using malaria rapid diagnostic test (mRDT) kits at private LCS in two predominantly rural areas in the middle part of Ghana. Clients presenting at LCS with fever or other signs and symptoms suspected to be malaria in the absence of signs of severe malaria were tested with mRDT by trained attendants and treated based on the national malaria treatment guidelines. Using structured questionnaires, exit interviews were conducted within 48 hours and a follow-up interview on day 7 (±3 days). Focus group discussions and in-depth interviews were also conducted to assess stakeholders' perception on the use of mRDT at LCS. About 79.0% (N = 1,797) of clients reported with a fever. Sixty-six percent (947/1,426) of febrile clients had a positive mRDT result. Eighty-six percent (815/947) of clients with uncomplicated malaria were treated with the recommended ACT. About 97.8% (790/808) of clients with uncomplicated malaria treated with ACT were reported to be well by day 7. However, referral for those with negative mRDT results was very low (4.1%, 27/662). A high proportion of clients with a positive mRDT result received the recommended malaria treatment. Test-based management of malaria by LCS attendants was found to be feasible and acceptable by the community members and other stakeholders. Successful implementation will however require effective referral, supervision and quality control systems.
... Overall, there is a complex interaction between industrial policy and public health policy, not covered in this report, which can act as a barrier to generic policies. One such seemingly paradoxical example is the protection of a domestic pharmaceutical industry through methods such as tariffs on imported goods (Olcay and Laing, 2005), and restrictive quotas, which could lead to continuing operation of inefficient, poor quality domestic pharmaceutical production (Bate 2008), and/or domestic products with prices higher than international reference prices. This could be counterproductive to the promotion of quality assured generic medicines of affordable prices. ...
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This review seeks to help policy-makers prioritise pro-generic medicine policy actions through: • providing an introduction to policies that can be used to address enhancing uptake of generic medicines; • reviewing existing literature on generic medicines policies with an emphasis on low- and middle-income countries, particularly as the literature relates to research on the impact of such policies; and • identifying key enabling conditions that need to be introduced before pro-generic medicines policies can be effectively implemented and enforced.
... Key criticisms of industrial protection focus on the impact on prices and hence access, and external bodies are playing an important role in observing and documenting price differences (Ewen et al 2017). The challenge to external funders and other external actors, such as NGOs and the WHO, is to move away from principled opposition to all forms of industrial protection for pharmaceuticals, characterising tariffs as a tax on illness (Olcay and Laing 2005), towards a more nuanced and evidence-based position accepting the need for well-designed and time-limited protection (West and Banda 2016). The policy challenge is to ensure that, in the context of some 'infant industry' protection to allow firms to grow, domestic market competition is maintained and enhanced. ...
... This presents particular problems in the context of chronic, non-communicable diseases; ailments of this nature require ongoing treatment that is often much less affordable than a one-time expenditure to treat an acute illness Mendis, Fukino et al., 2007). Such problems are exacerbated by the fact that many countries continue to apply value added taxes and import tariffs to the relevant medicines (Olcay and Laing, 2005). To say nothing of the fact that the medicines required may not be physically available, or, if they are, either of substandard quality or even fake. ...
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Health care forms a large economic sector in all countries, and procurement of medicines and other essential commodities necessarily creates economic linkages between a country's health sector and local and international industrial development. These procurement processes may be positive or negative in their effects on populations' access to appropriate treatment and on local industrial development, yet procurement in low and middle income countries (LMICs) remains under-studied: generally analysed, when addressed at all, as a public sector technical and organisational challenge rather than a social and economic element of health system governance shaping its links to the wider economy. This article uses fieldwork in Tanzania and Kenya in 2012-15 to analyse procurement of essential medicines and supplies as a governance process for the health system and its industrial links, drawing on aspects of global value chain theory. We describe procurement work processes as experienced by front line staff in public, faith-based and private sectors, linking these experiences to wholesale funding sources and purchasing practices, and examining their implications for medicines access and for local industrial development within these East African countries. We show that in a context of poor access to reliable medicines, extensive reliance on private medicines purchase, and increasing globalisation of procurement systems, domestic linkages between health and industrial sectors have been weakened, especially in Tanzania. We argue in consequence for a more developmental perspective on health sector procurement design, including closer policy attention to strengthening vertical and horizontal relational working within local health-industry value chains, in the interests of both wider access to treatment and improved industrial development in Africa.
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Access to affordable essential medicines for noncommunicable, chronic diseases is critical in management of the diseases. This study aims to assess the availability, prices, and affordability of medicines for common chronic diseases in the Asia Pacific Region (APR). A secondary analysis of medicines price and availability data from the Health Action International's (HAI) database was undertaken using the standardized WHO/HAI methodology. The median availability of any medicine in the public sector was 35.5% compared with 56.7% in the private sector. Countries paid 1.4 times the International Reference Price to procure lowest-priced generics (LPGs) and 9.1 times for innovator brands (IBs). Patients would have to spend 2.3 and 0.4 day's wages to purchase one month's treatment of a chronic disease for IBs and LPGs, respectively in the private sector. These findings highlight the need to increase availability, reduce prices, and improve affordability of the medicines.
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