By FAY SIMMONS

Tribune Business Reporter

jsimmons@tribunemedia.net

The Bahamas Pharmaceutical Association's (BPA) president yesterday renewed his call for the Government to eliminate VAT entirely on prescription drugs on the grounds it is harmful to patients.

Dr Marvin Smith, speaking after the Prime Minister hailed the 50 percent VAT rate cut - from 10 percent to 5 percent - on medicines, baby diapers and feminine products, argued that the tax represented a “silly cost” on medications that not only burdens the largest purchaser - the Government - but also restricts retail pharmacies from reinvesting in essential stock.

“The stance of the Association has always been that medicines should not be subject to VAT. Medicines are not a purchase of choice. Anybody who is on medicines, whether it's over-the-counter pain medication, or whether it's a chronic disease, nobody chooses to be on medicine,” said Dr Smith.

“Medicines are an essential service. The issue that we have is anything that raises the price of medication in the country is not good for the patient and is not good for local pharmacies. That additional 5 percent is still an additional 5 percent.

"Community pharmacies can't use that 5 percent to go and make sure they stock up on their medicines so that they're on the shelves when people need them. It's money that can be used in other places.”

Dr Smith pointed out that the Government, through the National Insurance Board (NIB) prescription drug programme, is effectively taxing itself 5 percent on purchases it later reimburses. He said this creates inefficiencies in the system and drives up costs unnecessarily for wholesalers and retailers.

“What's critical for us to remember is that even with the prescription drug programme, the Government is only reimbursing the retailer on what consumers spend. When the wholesalers buy and the Government charges 5 percent VAT, they pass that on to the retailers. The retailers then have to put that cost in to recoup that and get the patient to pay that,” said Dr Smith

“Now, the Government is reimbursing the retailer on everything they sell for the prescription drug programme under NIB. The Government is charging VAT to turnaround and still pay what the costs are because, at the end of the day, the patient isn’t paying for NIB; the Government is paying for NIB. It seems silly for the Government to take one out of one pocket and put it in the other pocket they’re going to loose.”

Dr Smith urged the Davis administration to reinstate the zero-rated VAT introduced by the Minnis administration, noting it would lower costs for both patients and government spending.

“It's a silly cost. And what the Government should do is go back to what originally they started properly. They recognised that medicines were essential. They also recognised that they were the biggest purchaser of medicines,” said Dr Smith.

“That was the smart thing to do. This government, for some reason, has unwisely decided that they want to charge VAT on medicine. If they implement zero percent VAT, the cost to the patient would be decreased and the amount of money that the Government has to pay out to retail pharmacies who participate in the prescription drug programme would be reduced.”

Dr Smith's comments were echoed by the Opposition’s finance spokesman, Kwasi Thompson, who also called on the Davis administration to restore the zero VAT rate not only on medicines but also on essential personal care items.

“Yesterday, the Government released a statement claiming credit for reducing VAT from 10 percent to 5 percent on medicines, medical supplies, feminine hygiene products, and baby and adult diapers. They present this as relief for families, but what they will not acknowledge is that under the FNM, VAT on these same items was zero. This administration raised the rate, called it reform, and now pretends to be easing the burden by cutting their own tax in half,” said Mr Thompson. “The way forward is clear. Restore the zero VAT rate on essential medicines and supplies.”