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20% VAT on the medicine import will lead to the price increase by 70-80%


Kyiv, 7 April 2014, Ukraine Crisis Media Center – The NGO representatives stated that the introduction of 20% VAT on imported medicine can lead to a significant increase of the treatment cost.

Since the 1st of April, 2014 all the medicine and medications are imposed an additional tax (VAT) of 7% according to the Law of Ukraine “On prevention of financial disaster, and creating conditions for economic growth in Ukraine”. However, already on the 4th of April the Ministry of Revenue and Duties of Ukraine has sent to all Ukrainian customs an explanatory letter No. 7822/7/99-99-19-05-01-17, stating that the VAT rate on all imported medicine in Ukraine will be equal to 20%.

Oleh Matsekh, member of the “Reanimative Package of Reforms” Community Initiative, the owner of the medical equipment trade company, has highlighted three main points in his speech, to which now all the parties interested in problem solving need to pay attention:

–          The manual control of laws on business is unacceptable after all the Maidan events;

–          Intervention of officials into pharmaceutical market will cause negative consequences not only for business, but also for all the patients and citizens of Ukraine;

–          If the tax rate remains at 20%, the medicine prices will rise by 80%.

Yevgeny Zhyvodernykov, the SMD (System Market Research) Deputy Director, has provided statistics, indicating that the adoption of the law can lead to a catastrophe for Ukraine. First of all, he drew attention to the fact that only 11 % of medicine is purchased by the state in Ukraine, in other cases the patients are forced to buy medicine by themselves (in Russia – 20%, Belarus – 30%, Kazakhstan – 41%). Thus, the pharmaceutical market of Ukraine fully depends on consumers’ purchasing power, and their income does not grow so fast that the price increase by 70-80% may pass painlessly for them.

Dmytro Shemberei, Chairman of the Board “Patients of Ukraine” Charitable Foundation (UCAB), has stated that the only basic requirement of society is the right to “implement the health”. All attempts of officials to interfere into medicine pricing will lead to the death of Ukrainians. “People survive only when they have the opportunity, and such mechanisms take away their chance to live. From this moment on, we demand that all further similar initiatives are not carried out without the participation of patient organisations, “- said Dmytro. According to him, it is expected that in 2014 the implementation of all the programs to provide the population with medicine will decrease by 40%.

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