•The government had at the beginning of the year announced a host of tax measures.
•These include a return of 16% VAT and a new 15 per cent presumptive tax which also came into effect on January 1.
Medical facilities and pharmaceutical firms want the government to reduce high taxes imposed on their products, saying the current levies are a major hindrance to the achievement of universal healthcare.
The managing director of Diabetes Management Medical Center, Pharmacy and Laboratory (DMMC) – a local based online Pharmacy and Diabetes Care Center, Duncan Motanya, says tax on diabetes drugs has increased the cost of healthcare.
The situation he says is locking out several diabetic patients from accessing treatment.
“This is a discussion that we need to have now and while our sole target is not to entirely make profits but to save lives, a conducive business environment will be key if players like ourselves are to remain in business,” said Motanya in an interview.
The government had at the beginning of the year announced a host of tax measures including a return of 16 per cent Value Added Tax (VAT) and a new 15 per cent presumptive tax which also came into effect on January 1.
As a result, the Finance Act of 2020 effectively pushed the prices of certain imports beyond the reach of ordinary Kenyans which also impelled local firms to pass on those costs to the consumers, even as the government seeks to increase its revenue collection.
“Eventually if the situation persists, we could be compelled to pass on the additional costs to the consumers, but it is our hope that the ongoing negotiations between organisations representing players like ourselves and relevant government agencies will bear fruits,” said an optimistic Motanya, ahead of the global Diabetes awareness month marked yearly on November 14.
Imports into Kenya are subject to a standard VAT rate of 16 per cent, levied on the sum of the CIF (cost, insurance, and freight ) value, duty, and other applicable taxes.
High cost and low availability of insulin in Kenya with inadequate patient follow-up contribute to poor management.
Although the Kenyan government subsidises insulin to reduce prices for patients, supplies frequently run out and there is miscommunication between local depositories and central medical stores to restock.
Motanya says the current disease burden indicates a need for more resources for prevention and health promotion, with primary healthcare taking greater responsibility for chronic diseases such as diabetes, but the high taxation regime is worsening the situation at a local level.
The cost of drugs generally contributed the most to total direct costs of treatment.
Poor services in public hospitals are also seen as a major hindrance to patients visiting such facilities for lack of adherence to Covid-19 protocols.
Trading Economics global macro models and analysts expectations, believes in the long-term, the Kenya Personal Income Tax Rate will trend at around 30 per cent in 2021, gesturing a dire situation ahead for both sellers and buyers of such drugs, particularly for insulin injection costs in Kenya.
Insulin costs between $25 (Sh2,771) -$100 (Sh11,086) per vial, while human insulin analogs averages between anywhere $174 and $300.
Without insurance, a new insulin pump costs about $6,000 out of pocket, plus another $3,000 to $6,000 annually for ongoing supplies, like batteries and sensors.
The cost varies depending on the features, software, brand, and size of the pump.
DMMC offers a platform to have constant communication with certified healthcare providers through digital check-ins and virtual visits when patients are under quarantine or on restricted movement.
It is one of the initiatives that was last year selected as a beneficiary of the Mbele Na Biz initiative by the World Bank and the Government of Kenya.