Nigeria’s health sector is currently being threatened by a disagreement within the pharmaceutical industry over the possible imposition of a 20 percent tariff on imported drugs.
The conflict arises from the ongoing Common External Tariff (CET) which places zero tariff on imported finished drugs but imposes between five and 20 percent duty on imported raw and packaging materials.
Local manufacturers, consisting of members of the Pharmaceutical Group of the Manufacturers Association of Nigeria (PMG-MAN), say the five to 20 percent duty on raw and packaging materials is already threatening to destroy 150 local drug makers and an estimated N300 billion investment made so far, in the domestic sector, calling for a review of a the CET to include imposition of 20 percent tariff on imported finished drugs.
But representatives of overseas pharmaceutical companies in the country, under the aegis of the Association of Nigerian Representatives of Overseas Pharmaceutical Manufacturers (NIROPHARM), disagree, saying that doing so would prevent Nigerians suffering from chronic diseases such as cancer, asthma, heart and kidney diseases, among others, from accessing essential medicines.
“Whilst it is a development imperative for the Nigerian government to support local manufacturing across all industrial sectors, we affirm that this PMGMAN position, albeit based on an unsubstantiated premise that any additional taxes on the products will be passed on to the patients, should be deemed invalid, as there are more benefits accruable to the wider Nigerian pharmaceutical industry and most importantly Nigerians, if the CET is retained, supported and sustained,” said Lekan Asuni, president, NIROPHARM, at a press conference held yesterday in Lagos.
According to Asuni, who is also the managing director of GlaxoSmithKline (GSK) Pharmaceuticals Nigeria Limited, the HS Code 3003 and HS Code 3004 include essential drugs used in the treatment of chronic diseases, which are on the rise among Nigerians (current risk exposure is 10.4 percent), and are currently not produced locally and must then be imported to save lives.
“For instance, recent evidence-based guidelines for the management of Type 2 diabetes recommend early ‘insulinisation’ for those difficult to control with oral hypoglycaemic. The resultant effect of increasing the taxes is that the approximately over six million Nigerians that will qualify to receive insulin and other life-saving medicines under this guideline will needlessly be paying more for their medications,” he further said.
While also calling for zero percent tariff on manufacturers’ raw materials, he said manufacturers involved in importation are also engaged in research and development which brings about technology transfer that will be beneficial to the local industry and the economy.
“Let me point out that you do not jumpstart manufacturing by fiat or decree,” said Ike Onyechi, MD, Alfa Pharmaceuticals and Stores.
“While government must ensure that manufacturers get their raw materials, I will like to point out some of the drugs in question cannot be produced here for now, owing to low capacity of the local industry,” Onyechi said.
Okey Akpa, chairman, Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria (PMG-MAN) said “the CET as it is currently, spells doom for the local industry and could lead to low demand for locally made drugs.
“The lack of demand for locally manufactured medicines as a result of cheap imports, will lead to idle capacity and will negatively impact previous investments in the sector, worth over N300 billion,” Akpa said.
Steve Onya, managing director/CEO, Chi Pharmaceuticals, said the Federal Government should protect local industries by reversing the tariff structure and imposing tariff on imported products, to avoid closure of over 150 drug makers, stressing that there is no place in the world where inefficiency is rewarded.
ODINAKA ANUDU
