Paswan for duty cuts on life-saving medicines

The prices of about 20 life-saving medicines used in the treatment of diseases like cancer, diabetes and AIDS may go down in the coming months if the finance ministry considers the proposals for duty exemption on such drugs.

The recommendations, made by the chemicals and fertilisers ministry led by Ramvilas Paswan are based on the drug-makers' assurance to pass on the entire benefits of tax exemption to the consumers.

Multinational drug firms like Eli Lilly, Bristol Myers Squibb and Pfizer are likely to be the beneficiaries if the proposals find space in the forthcoming Union Budget.

According to sources, most of the imported medicines currently attract 10 per cent basic Customs duty and 16 per cent countervailing duty.

The ministry recommendation to waive these duties would amount to a 26 per cent reduction in the prices of medicines. The Kelkar Committee, which looked into tax issues, had suggested zero per cent duty on life-saving medicines.

The recommended medicines are used in the treatment of diseases like diabetes, cancer, AIDS and asthma. A couple of preventive therapies like Hepatitis-B and pneumococcal vaccines also figure in the list.

For instance, Eli Lilly's pemetrexed disodium powder is an anti-cancer drug prescribed to treat non-small cell lung cancer patients who have already undergone chemotherapy. Johnson & Johnson's durogesic is used for chronic cancer pains. Pfizer's sunitinib malate is used in the treatment of renal cancer.

In the anti-diabetic segment, exenatide injection marketed by Eli Lilly under brand name "Byetta" has been recommended for tax exemption. The ministry has also indicated that Wyeth and Sanofi Pasteur have requested for tax exemption on their Pneumococcal and CTP combination vaccines, respectively.

The ministry has also supported the views of chambers and industry associations on the need for income-tax sops for research and development programmes.

Endorsing the views of the lobbyists, the ministry wanted the finance ministry to extend the income-tax benefits currently available for pharma research from March 2012 to March 2017.

Similarly, it wanted the benefits under Section 80-IB (8A) of the Income Tax Act "" it allows 100 per cent deduction in profits to all research organisations that are approved by the Department of Scientific and Industrial Research (DSIR) "" to be extended up to March 2012.

While the recommendations cover the aspirations of pharmaceutical industry in general, they make no specific mention about the need to extend the tax benefits available to drug research units attached to medicine makers to stand-alone drug research entities also.

The extension of this benefit was one of the key demands of domestic drug majors that have hived off their research operations into separate entities.