The United States, Switzerland, and Singapore this week called for an end to import tariffs that affect trade in drugs and medical devices worth more than $56bn (£32bn; €47bn) a year. Products covered by the tariffs include pharmaceutical goods, from antibiotics to vitamins, and medical devices, from surgical equipment and instruments to x ray equipment, hearing aids, and orthopaedic appliances.
In a joint proposal, the countries said that scrapping the tariff would result in “effective action to improve access to medicines and medical devices needed to treat a wide variety of diseases effectively and ensure that these goods reach patients expeditiously at a lower cost.”
The proposal was circulated during a session of the World Trade Organization (WTO) sponsored round of liberalisation talks in Doha, Qatar. It highlighted the fact that although many countries have no tariffs on medicines, some countries, mainly developing nations, still retain tariffs as high as 40% and duties of up to 30% for medical devices.
“It is ironic that many of the countries that are in urgent need of cheap medicines also have a significant tax added to drugs and medical devices they import,” said Peter Allgeier, the US ambassador to the WTO.
The proposal asserts that according to one study on the effects of health on economic growth “a one year improvement in a population’s life expectancy contributes to a 4% increase in production.”
In May 2005, a report by the World Health Organization concluded that pharmaceutical tariffs are “a regressive form of taxation which targets the sick” and suggested that they could be abolished without any adverse impact. The report stressed that factors other than import tariffs—such as manufacturers’ prices; sales taxes, including valued added taxes; mark-ups; and other charges—affect drug prices more.
Senior Western trade diplomats told the BMJ that “there’s a good momentum” on the proposal in the segment of the talks dealing with market access for non-agricultural goods. But they admitted that a number of important developing countries still had reservations.
Brazil and India are poor countries with large pharmaceutical sectors. They are eager to protect their domestic generic manufacturers and have not shown any interest in supporting initiatives to abolish tariffs. Securing the support of other important generic producers, such as Israel and South Korea, would also be crucial, said trade diplomats.
A group of countries, including members of the European Union, Canada, the United States, Japan, Switzerland, and Norway, agreed to eliminate import tariffs on thousands of finished drugs and intermediate ingredients in the Uruguay round trade talks between 1986 and 1994. As a result, out of an average global trade in drugs worth $145bn between 1999 and 2001, $114bn was covered by the initiative. But almost $33bn is still subject to duty, the joint proposal noted.
Similarly for medical devices, out of an annual trade of $111bn, a zero duty initiative agreed by mainly rich WTO members accounted for $88bn. But $23bn of trade is still subject to duties.