Original Research

Cost-savings accruable to removing value added tax from antiretrovirals in the South African private health sector

Varsha Bangalee, Fatima Suleman
Health SA Gesondheid | Vol 22 | a979 | DOI: https://doi.org/10.4102/hsag.v22i0.979 | © 2017 Varsha Bangalee, Fatima Suleman | This work is licensed under CC Attribution 4.0
Submitted: 10 October 2017 | Published: 10 October 2017

About the author(s)

Varsha Bangalee, Discipline of Pharmaceutical Sciences, School of Health Sciences, University of KwaZulu-Natal, South Africa
Fatima Suleman, Discipline of Pharmaceutical Sciences, School of Health Sciences, University of KwaZulu-Natal, South Africa

Full Text:

PDF (235KB)

Abstract

Background: Despite the important and essential role that medicines play in any society, all medicines, including those identified as essential, are uniformly subjected to 14% value added tax (VAT), regardless of their therapeutic value in the private healthcare sector of South Africa. The aim of this article is to demonstrate the potential cost-saving attained from the removal of VAT from the private sector pricing of essential medicines, using antiretroviral treatment as an example.

Methods: An empirical analysis was undertaken to illustrate the potential cost-saving achieved by removing VAT from the Single Exit Price and the dispensing fee of essential medicines. This outcome was demonstrated by applying the methodology to an adult fixed dose combination 1st line antiretroviral regimen as well as to a group of 3rd line antiretroviral medicines.

Results: The potential saving for the lowest priced generic and originator 1st line antiviral regimen accrued to ZAR 693.84 and ZAR 1085.04 over a year respectively. Regarding the 3rd line antiretroviral drugs, results yielded an annual saving of ZAR 1678.68 (darunavir), ZAR5741.04 (maraviroc) and ZAR 159.48 (rilpivirine).

Conclusions: Lobbying for the removal of VAT from the supply chain of medicines should be intensified. Policy development to monitor and recover lost government revenue through the removal of taxes should be explored.


Keywords

Essential medicines; Value added tax removal; Antiretrovirals

Metrics

Total abstract views: 2127
Total article views: 984


Crossref Citations

No related citations found.