The proposed national budget for fiscal year 2024-25 aims to make healthcare more affordable by reducing costs for essential medical services, including kidney dialysis, dengue testing, cancer treatments and other essential equipment.
This cost reduction is possible due to the government's decision to eliminate import duties on certain raw materials and to remove value-added tax (VAT) on healthcare products.
Additionally, the government has implemented strategies to bolster local manufacturers, enhancing their competitiveness against importers and in the global market.
Finance Minister Abul Hassan Mahmood Ali, on June 6, tabled his proposals for the Tk 7,97,000 crore- budget for FY25. He proposed that the health sector get Tk 41,407 crore, which is 5.19 per cent of the total budget allocation.
Policy shift
The government has announced a significant policy shift to support the pharmaceutical sector by waiving customs duty on 16 additional raw materials that are essential for active pharmaceutical ingredient (API) manufacturing.
Furthermore, the initiative extends the complete withdrawal of customs duty and VAT on six essential new raw materials needed to produce cancer medicines.
Azithromycin, whether compacted, micronised, or granulated, will no longer be subject to any customs duty, facilitating the public's more accessible access to this vital antibiotic.
To enhance diagnostic capabilities, the government has removed customs duty, VAT, and advance taxes on dengue testing kits. Similarly, to boost the pharmaceutical manufacturing process, the regulatory duty for pharmaceutical-grade Dioctyl Orthophthalates and DMF-grade COC/COP has been eliminated.
Importers of kidney dialysis filters and circuits will see a significant reduction in customs duty, dropping from 10 per cent to just 1 per cent. This substantial decrease will make these critical medical supplies more affordable and accessible.
According to the budget proposal, a fixed 5 per cent customs duty has been set for spinal needles to streamline medical procedures. Meanwhile, specialised hospitals that import medical equipment will face a 10 per cent duty to regulate imports and ensure quality.
These measures collectively aim to reduce costs, broaden the availability of key medical supplies and support the local pharma industry.
Fixed rate
Regarding this, Md Rukanuzzaman Talukder, Gonoshasthaya Pharmaceuticals Limited's former director of Commercial, Procurement and Planning, said, "Import of dialysis filters and circuits has been given 1 per cent tax exemption instead of the previous 10 per cent even though it was supposed to be fully tax exempt. The tax should not only be exempt but the price should also be brought to a tolerable level.
"Those who do dialysis in private medical institutions have higher prices. A single dialysis costs Tk 4,000 to Tk 6,000, which is too much for common people. A fixed rate should be placed," he added.
"Dialysis fluid can actually be manufactured in our country. The big companies can make this fluid instead of importing it, which will reduce the price."
"Some medications, like hepatitis B injections, were only available through imports, costing Tk 395 per file at our clinic. However, prices vary widely elsewhere, ranging from Tk 450 to Tk 900 for the same thing, which is quite unfair. Also, we all need to be aware. If anything, consuming Paracetamol or Napa can cause severe damage to our kidneys," he warned.
He emphasised that no medication should be taken without the doctor's advice.
On the other end, importers are welcoming the proposed tax exemptions as Cosmo Pharma Laboratories Ltd's Managing Director and CEO Abu Shahadat Mohammad Ali said, "The reduction in duties, particularly on items like dialysis filters and circuits, testing kits, and cancer medications, is highly welcomed."
However, despite some positive measures, the government has increased the special duty on over 200 medical devices from 1 per cent to 10 per cent. This hike is likely to raise the cost of medical services.
Mohammad Ali, who is also a member of the Bangladesh Association of Pharmaceutical Industries (BAPI), pointed out, "On over 200 medical devices, the particular duty hike from 1 per cent to 10 per cent will be a burden for the people.
"As a result, it will be a problem for both the importers and the people as no one will be able to hold off increasing the prices for much time."
According to the proposed budget documents, Bangladesh has approved the export of medicines valued at Tk 9,880 crore to various countries from January to December of 2023.
Mohammad Ali stated, "We export medicines abroad to satisfy domestic demands. However, an increase in duties could hinder our exports. Therefore, the government should consider this matter."
