The federal government has officially begun the implementation of zero Value Added Tax (VAT) and excise duties on pharmaceutical products and medical devices, aiming to reduce drug prices across the country.
In a statement issued by the head of information at the Federal Ministry of Health, Alaba Balogun, it was announced that the Executive Order establishing a harmonised implementation framework has been cleared for gazetting. With this, both the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service (NCS) can now begin enforcing the zero VAT and excise duty policy.
The policy also extends relief to local pharmaceutical manufacturers, who will now benefit from these tax exemptions. According to the ministry, “The Ministry of Health and Social Welfare is pleased to announce the finalisation of the Executive Order Harmonized Implementation Framework, now cleared for gazetting. This crucial step enables FIRS and NCS to proceed with the implementation of zero VAT and excise duties on pharmaceutical products and medical devices.”
It added, “We expect a significant drop in the prices of essential pharmaceutical products and medical consumables. This aligns with the ministry’s commitment to alleviating both the physical and financial burdens faced by millions of Nigerians dependent on these critical health supplies.”
The gazetting of the Harmonised Implementation Framework also marks the realisation of the third pillar in the Ministry’s 4-point agenda, which focuses on enhancing the healthcare value chain.
In June 2024, President Bola Tinubu signed four Executive Orders aimed at removing tariffs, excise duties, and VAT on specialised machinery, equipment, and pharmaceutical raw materials. The goal is to boost local production of essential healthcare products, such as pharmaceuticals, diagnostics, medical devices, biologicals, and medical textiles, thereby strengthening Nigeria’s healthcare infrastructure.
At the time, Health Minister Prof. Muhammed Pate emphasised that these measures would help lower drug prices across the country.
The departure of major pharmaceutical companies like GSK and Sanofi, combined with the depreciation of the Naira, has caused drug prices to skyrocket in Nigeria. The resulting price hikes have made healthcare unaffordable for many, particularly vulnerable populations.
NATIONAL ECONOMY previously reported that prices of essential drugs like Ventolin inhalers and Augmentin surged by nearly 1000 per cent in 2023, following GSK’s exit from the Nigerian market.
