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NINETEENTH CONGRESS 0F THE   )
REPUBLIC OF THE PHILIPPINES      )
Second Regular session                  )
HOUSE OF REPRESENTATIVES
HouseBi||No.    8788
±     DATE
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Introduced by Representative Ralph G. Recto
AN ACT
LOWERING   THE   COST   OF   PRESCRIPTION    DRUGS   AND   MEDICINES,
AMENDING roR THE puRrosE SECTION log OF THE NATIONAL INTERNAL
REVENUE CODE OF 1997, AS AMENDED
EXPLANATORY NOTE
This  proposed  measure  seeks  to  provide  affordable  prescription  drugs  and
medicj'nes in the country.
The State shall protect and promote the right to health of the people and instill
health  consciousness  among  them.1  The  State  shall  also  adopt  an  integrated  and
comprehensive  approach  to  health  development  which  shall  endeavor  to  make
essential  goods,   health  and  other  social  services  available  to  all  the  people  at
affordable cost.2 In view of these mandates, the government must institute a  policy
that  will  ensure  the  availability  of affordable  prescription  drugs  and  medicines  to
protect and promote the health of the Filipino people.
Expenditures on  drugs  and  medicines  account for the  biggest  share  of total
medical expenditures for both  poor and  rich  households.3 The prices of drugs in the
Philippines have traditionally been high compared with other Asian countries (except
Japan).4
1 Section  15, Article 11,  1987 Constitution
2 Section 11, Article XIII,  1987 Constitution
3 Transforming the Philippine Heath Sector:  Challenges and Future Directions, PHILIPPINE HEALTH
SEoroR REVIEW, April 2011
4 Ibid.
1


The September 2019  4#af ng fia/an Report conducted by Pulse Asia revealed
that  99%  of  Filipinos  do  not  buy all  their  prescription  medicines  because  they are
expensive.  Further, 23% said that medicines are not accessible,  160/o said there are
no medicines in their place, 40/o said they had no time to buy the medicines, and 2%
said they did not need to take medicines.
The same Report further showed that 73% were of the opinion that the DOH
and the pharmaceutical industry should work together to lower drug prices at par with
other   countries.   This   public   sentiment   validates   the   results   of  another   survey
commissioned  by  the  DOH  that  the  Philippines  is  still  paying  far  more  than  the
international  reference prices for branded and generic medicines,  at 22 and 4 times
more, respectively.5
The value-added tax (VAT)  is an  indirect tax and the amount of tax may be
shifted  or passed  on to the  buyer, transferee or lessee of the goods,  properties or
services.6 Therefore,  its  imposition  has the  effect  of  increasing  the  prices  of  basic
goods and services. ultimately, by its nature, the burden of VAT falls on the end user
of consumer goods and services. To ensure the affordability of prescription drugs and
medicines, these essential goods must be free from the burden of taxation such as
the VAT.
In  an  attempt to  lower the  cost of drugs and  medicines,  certain  laws were
enacted   amending   the   National   Internal   Revenue  Code  of  1997,   as  amended,
exempting from VAT the sale or importation of prescription drugs and medicines for
hypertension,  diabetes,   high  cholesterol,  cancer,   mental   illness,  tuberculosis  and
kidney diseases.
Despite  government  efforts  to   make   medicines  cheaper  and   to   improve
medicine access through the promotion of generic drugs, enactment of the Cheaper
Medicines Act and the passage of recent laws exempting certain drugs and medicines
5 https : //doh. gov. ph/doh-press-release/99-percent-of-fi I i pi nos-say-med ici nes-a re-expens ive-
september-ulat-ng-bayan-report. Accessed on Aug. 7, 2023
6 Section 105, National Internal Revenue Code of 1997, as amended
2


from VAT, and the establishment of village pharmacies or fiofx.Aa sa fiarangays, access
to affordable drugs for the poorer populations remains to be a problem.
One of the general objectives of Republic Act (R.A.) No.  11223 or the Universal
Healthcare (UHC) Act is to "ensure that all  Filipinos are granted equitable access to
quality and affordable health care goods and services, and protected against financial
risk". To ensure the optimum health of Filipinos and to achieve the objectives of the
UHC  Act,  it  is  imperative  upon  Congress  to  enact  a  law  exempting  from  VAT  all
prescription drugs and medicines.
The purpose and  intent of this proposed  measure  is to  lower the cost of all
prescription drugs and  medicines, thereby ensuring their affordability to the Filipino
people. Thus, this bill exempts these essential goods from the imposition of VAT.
3
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NINETEENTH CONGRESS 0F THE   )
REPUBLIC OF THE PHILIPPINES      )
Second Regular session                   )
HOUSE OF REPRESENTATIVES
H6useBillNo.      8783
Introduced by Representative Ralph G. Recto
AN ACT
LOWERING    THE    COST    OF    PRESCRIPTION    DFIUGS    AND    MEDICINES,
AMENDING  FOR THE  PURPOSE  SECTION  109  0F THE  NATIONAL INTERNAL
REVENUE CODE OF 1997, AS AMENDED
Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:
1                   Section.1. 5»orf 77H/g. -This Act shall be known as the "Affordab[e Medicines Act."
2                   Sec. 2. Section  109 of the National Internal Revenue code of 1997, as amended,
3      is hereby furtheramended to read as follows:
4                              "S/HC. Tf yB. Exempt Transactions. -
5                                "(1)  Subject  to  the  provisions  of  Subsection  (2)  hereof,  the  following
6                  transactions shall be exempt from the value-added tax:
7                                         ``(A) )OO(;
8                                          "XXX ;
9                                ``(AA) Sale of or importation of prescription drugs and medicines for:
io                                ``(i) Diabetes, high cholesterol, and hypertension beginning January 1, 2020;
11                     and
12                                 ``(ii)  Cancer,  mental  illness,  tuberculosis,  and  kidney  diseases  beginning
13                     January 1, 2021.
14                             "Pflol/+Ofo, THAT THE VAT EXEMPTION UNDER THIS SUBSECTION
15                   SHALL APPLY TO THE  SALE OR IMPORTATION  OF ALL  PRESCRIPTION
16                   DRUGS   AND   MEDICINES   BEGINNING   JANUARY   1,   2024:   Pnovi.JEld,
1


1                   fiUfl7]tI£IT, That the DOH shall  issue a  list of approved drugs and  medicines for
2                   this purpose within sixty (60) days from the effectivity of this Act; and
3                                   `>hK)/:
4                   Siyt. 3. Implementing Rules and Regulations (IRR). -W.rNhim ThiJHrty (3f I) days frclm
5      the eifectivity of this Act, the secretary of Health and the secretary of Finance, upon the
6      recommendation   of  the   Commissioner  of  Internal   Revenue,   shall   promulgate   the
7      necessary rules and regulations for its effective implementation.
8                   Sec.  4.  A8;c}ca/w.ng Cya4/se.  -All  laws, acts,  decrees, executive orders,  issuances,
9      and  rules and  regulations or parts thereof which are contrary to and  inconsistent with
io      this Act are hereby repealed, amended or modified accordingly.
11                   Sec,  5.   47racz/.I+ify, -This Act shall take effect fifteen (15) days after its complete
12      publication in the offci/a/Gazfffgor in at least two (2) newspapers of general circulation.
Approved,
2