The goods and services tax (GST) which takes effect on April 1, 2015 would render medicines which are not zero-rated more expensive, making it costly for patients on long-term medication, feel some of the pharmaceutical groups in Malaysia. The GST was tabled in Budget 2014.
Patients with serious illnesses and who require long-term medication will be hit the hardest once the GST, they opine.
There were concerns patients might stop taking their medicines when the price of medicines, which are not zero-rated, are increased by six per cent with the GST, as some illnesses like cancer cost patients up tens of thousands of ring git every month.
Malaysian Pharmaceutical Society (MPS) along with the Malaysian Community Pharmacy Guild (MCPG), Pharmaceutical Association of Malaysia (PhAMA), Malaysian Organisation of Pharmaceutical Industries (MOPI) and Malaysian Association of Pharmaceutical Suppliers (MAPS) said only 320 medications were zero-rated under the National Essential Medicines List (NEML) 4th Edition.
According to a report, paracetamol was counted 17 times instead of being just one item while the NEML only represented 13 per cent of the total 43,000 registered medicines.
"On the price hike, those who require long-term medication will be the hardest hit. It is of concern that with such price increases, the patient may be forced to stop taking their medicines," MPS president ,Datuk Nancy Ho said.
"If they are made to pay GST at a standard rate, they will need to pay an extra RM600 for every RM10,000 they need to pay for their medication. It is already sad for a person to fall seriously sick which cripples his ability to generate an income necessary to battle for his life. With GST, he may have to pay even more for his medicines."
"The majority of these zero-rated medicines are only used in government hospitals. The many medicines outside the list are widely prescribed and used in the private sector, hospitals, clinics and pharmacies which are mainly paid out of pocket," Ho said
"The MPS and other pharmacy stakeholders would like to see all scheduled medicine zero-rated before April 1," she said.
The pharmaceutical groups said they have written to Prime Minister Datuk Seri Najib Razak to urge that all scheduled medicines be
zero-rated under GST, while MPS has initiated a petition to gain support that all controlled medicines (schedule poison B and C) be exempted from the GST.
"The health minister himself has previously been quoted (as saying) there is a possibility of increase in medical care by one to two per cent after the implementation of GST and the government is looking into ways to reduce this cost," Ho said
Ho said it was difficult to explain to patients why the price of essential medicines would be increased while 900 other items, including lobster, were zero-rated under the GST.
In the meanwhile according to a recent report, the Malaysian Pharmaceutical Society has submitted 60,000 signatures, seeking the government to exempt all scheduled poison drugs from the Goods and Services Tax.
Datuk Nancy Ho said they have submitted the list with an appeal to make medicines GST exempted to the Prime Minister, Ministry of Health and Customs Department but the response has been unfavourable.
"To me wellness and health should be GST exempted as we are talking about the lives of people. Only the old generation drugs are GST exempted while the new generation drugs fall under the six per cent GST," she said, adding that what is worrying her is people who cannot afford may opt for cheaper drugs and this may not help with the diseases they suffer.
Nancy said although the pharmacies nationwide are fully aware of the GST implementation, they are also prepared for reviews and fine tunings.
She said patients with terminally ill diseases and those on long term medications are anxious as there are still grey areas that need to be addressed.
Nancy admitted that there are still many consumers who are still not fully aware of the GST and its implications.
Earlier Health Minister Datuk Seri Dr S. Subramaniam had told that the government had no intention to exempt all medicines from the GST when it is implemented. He said the ministry had already identified 320 chemical compounds which were approved as "zero-rated" under the GST, involving more than 4,200 brands of medicine. He said non-essential drugs would be bound for the GST upon implementation of tax
A total of 302 types of medicines under the "Essential Drugs List" category may be exempted from the GST to be implemented on April 1.
He said the ministry had discussed the matter with the finance ministry to meet the requirements and needs of the people while increasing the level of healthcare in the country.
"We have submitted a 'list of essential medicines' to the finance ministry to be exempted from GST, most likely involving 302 types of medicines, commonly prescribed by doctors for common ailments," he had said
Professional fees charged by doctors in private hospitals for consultation will be subject to the GST when it is implemented. Under a new guideline from the Customs Department, the fees are not exempted from GST.
According to a spokesperson of the Association of Private Hospitals of Malaysia (APHM),initially they were told that healthcare will be in the "exempt" category as hospitals will not be able to claim input taxes on goods and services purchased.
"This sounded very kind and the proper thing to do. But the devil is in the details. This became obvious and clearer to private healthcare providers only in the process of implementation and the explanation which followed," he said.
The shocking revelation came to light when it was found that in the Customs GST Guidelines of Nov 19, 2014, medical specialists were found to have been reclassified as "outsourced service providers", in contrast to the same guideline dated June 25, 2014 where they were considered to be "joint providers of healthcare within the hospital".
He said APHM is concerned and shocked at the possible implications of GST which were never explained clearly to the people.
He said the term "exempt" is misleading and the rakyat are still under the impression that private healthcare costs are under the exempted category just as before.
"Classifying medical specialists as outsourced service providers is ridiculous as they are independent practitioners within a private hospital.
"It is even more ridiculous to say that because they are now categorised as outsourced service providers, their fees will be subjected to GST.
"We feel this is not a rational and fair way of enforcing GST."
"If the government does not want to burden the rakyat, then medical specialists must remain categorised as joint providers of patient care with the hospitals, and stay in the exempted category as highlighted in the draft which was distributed to APHM on Feb 6," he said.
The reclassification of medical specialists as outsourced service providers, he said, has caused operational difficulties and some private hospitals are considering modifying their contracts and relationship with the specialists.
He said hospitals are considering various options in invoicing patients for services, with many invoices involved each time they seek treatment.
On the 2,999 drug items proposed for exemption under the National Essential Medicines list, Thomas noted that the list does not include many medications, including those for cancer, which are expensive.
"Medical devices which are not taxed now would also be taxed except for those in the exemption list to be decided and approved," he said, adding that APHM has submitted a comprehensive list for consideration to Finance Ministry.
All outsourced services like security, housekeeping and laundry will be subject to GST, resulting in an escalation of private healthcare costs which is anticipated to be in the region of five per cent or more.
"With so many unknowns, this is only an estimate. The increased cost of drugs, medical supplies, outsourced services will make hospital operations more expensive," he said, adding that a patient's bill which will not indicate a GST (except the doctor's fee charged to the patient) will be much higher.
At the same time a spokesperson of the Malaysian Medical Association (MMA) told that the six per cent GST on doctors' fees, procedures and for use of medical devices may see the Rakyat congesting government hospitals.
"This will increase workload of government doctors, what more with shortage of specialists," he said, adding government cannot turn down its patients and this will pose a burden and a problem.
On the issue of separation of powers in the prescribing and dispensing of drugs by doctors and pharmacies, he said it has been 'blown out of proportion' as it was only an idea which was being toyed by certain quarters.
"I would like to reassure that the government has not made any decision on dispensing separation and we will ensure that whatever we do does not affect or burden the Rakyat," he added.
He said although some countries, such as the United Kingdom, have implemented the system, it does not mean that Malaysia should be taking the same steps.
"We have to relook the system in a different scenario. What applies there does not mean it can be applied here," he added.