Import Duty Waivers on Life-Saving Drugs in 2025

The Union Budget 2025 introduced changes in import duties on life-saving drugs. The government has waived import duties on 36 essential medicines and reduced duties on another six. This move aims to enhance accessibility and affordability for patients relying on imported drugs for serious medical conditions. Most of these drugs remain under patent protection, which contributes to their high costs.

Import Duty Changes

In the 2025 Union Budget, the basic customs duty on life-saving medicines was set at 5%. However, the import duty on six critical drugs has been reduced from 7.5% to 5%. For 36 drugs essential for treating cancer and rare diseases, the import duty is now fully exempted. Additionally, 37 life-saving drugs under patient assistance programmes also enjoy a complete waiver on import duties.

Goods and Services Tax Implications

All finished formulations of medicines in India are subject to a Goods and Services Tax (GST) of 12%. However, specific medicines for critically ill patients are taxed at a lower rate of 5%. This dual tax structure aims to balance revenue generation with the need for affordable healthcare.

Impact on Patients and the Pharmaceutical Industry

The easing of import duties is expected to reduce the financial burden on patients. Over 97% of medicines sold in India are off-patented and manufactured domestically. Less than 3% are patented and imported. The duty cuts are unlikely to harm the domestic pharmaceutical industry, which is robust and primarily focused on producing cost-effective drugs.

India’s Pharmaceutical Landscape

India is often referred to as the “world’s pharmacy” due to its status as the third-largest manufacturer of medicines. It produces nearly all dosage forms and off-patented drugs. Indian medicines are known for being over 52% cheaper than global prices. The Indian pharmaceutical sector is increasingly investing in research and innovation, enhancing its global competitiveness.

Price Regulation of Imported Drugs

All medicines sold in India, including imported ones, are regulated by the Drugs Price Control Order (DPCO). The DPCO ensures that essential medicines remain affordable. The National Pharmaceutical Pricing Authority (NPPA) sets and monitors retail prices for medicines included in the National List of Essential Medicines (NLEM).

Initiatives for Affordable Healthcare

The Government of India is committed to making healthcare more accessible. Initiatives like the Pradhan Mantri Jan Aushadhi Pariyojna and Ayushman Bharat aim to provide affordable medicines and healthcare services. Collaboration between the government, pharmaceutical companies, and charitable organisations further supports patient access to essential medications.

Questions for UPSC:

1. Examine the implications of import duty waivers on the pharmaceutical sector in India.
2. Critically discuss the role of the National Pharmaceutical Pricing Authority in regulating drug prices in India.
3. Analyse the impact of the Goods and Services Tax on the affordability of healthcare in India.
4. Estimate the significance of patient assistance programmes in enhancing access to life-saving medicines.

Answer Hints:

1. Examine the implications of import duty waivers on the pharmaceutical sector in India.

1. Import duty waivers can lower the prices of life-saving drugs, making them more accessible to patients.
2. Most imported drugs are patented, but the majority of medicines in India are off-patented and locally produced.
3. The duty cuts are unlikely to adversely affect the robust domestic pharmaceutical industry.
4. India remains a major global supplier of affordable medicines, with focus on research and innovation.
5. The overall market share of imported medicines is low, reducing potential negative impacts of the waivers.

2. Critically discuss the role of the National Pharmaceutical Pricing Authority in regulating drug prices in India.

1. The NPPA regulates prices of essential medicines listed in the National List of Essential Medicines (NLEM).
2. It ensures that essential drugs remain affordable for the average consumer.
3. The authority monitors price changes and enforces compliance among manufacturers.
4. Current regulations balance industry needs with patient access, but may require procedural simplification.
5. Progressive pricing models can encourage innovation while maintaining affordability.

3. Analyse the impact of the Goods and Services Tax on the affordability of healthcare in India.

1. GST on finished medicines is set at 12%, while critically needed drugs are taxed at a lower rate of 5%.
2. This dual tax structure aims to balance revenue generation with affordability for patients.
3. Higher taxes on non-critical medicines may limit access for some patients, impacting overall healthcare costs.
4. Lower GST rates for essential drugs can enhance access to necessary treatments for critically ill patients.
5. Overall, GST impacts the pricing structure of medicines, influencing affordability and accessibility.

4. Estimate the significance of patient assistance programmes in enhancing access to life-saving medicines.

1. Patient assistance programmes provide free or subsidized access to expensive medicines for low-income patients.
2. These programmes are crucial for patients relying on imported drugs, particularly those with critical conditions.
3. They often collaborate with pharmaceutical companies and NGOs to maximize outreach and effectiveness.
4. Such initiatives bridge the gap between high drug costs and patient needs, improving health outcomes.
5. Overall, these programmes play a vital role in making healthcare more equitable and accessible in India.