(# RECEIVED
I> pare 2 UMAR 2012
Republo ofthe Prippines

HOUSE OF REPRESENTATIVES
Quezon City

15" CONGRESS
SECOND REGULAR SESSION

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Howse Burne, __ S051

INTRODUCED BY HONORABLE MARK A. VILLAR

EXPLANATORY NOTE

Congress is mandated by the Fundamental Law to evolve a progressive
system of taxation in order to approximate the contribution of the people to the
lifeblood of the State. This is in accordance with their ability to pay and the amount of
benefit they derive from the protection extended to them by the State. However, it is
unfortunate that congress has resorted to the system of value added taxes in order
to generate more revenues for the State coffers. This system by its very nature is
regressive and becomes more burdensome on the poor who are less likely to have
adequate access to medicines as it is expensive due the imposition of VAT and
importation fees.

The primary intent of the “Universally Accessible Cheaper Medicines Act of
2008” or RA No. 9502 was to drop the prices of essential medicines and drugs in the
Philippines. This measure was clearly crafted with the purpose of making medicines
accessible for all. However, despite the passage of the law, medicines remain to be
one of the most expensive commodities, depriving a majority of our people access to
medical aid. Thus, there is a great need for additional legislation in order to make
adequate and affordable healthcare available for all

Under the current circumstances, the basic active ingredients, raw and other
auxiliary materials for the manufacture of medicines are imported by Pharmaceutical
Companies. Upon importation, these products are already burdened with duties and
tariffs. In addition, a 12 percent Value Added Tax (VAT) is imposed on their sales
Furthermore, sale of manufactured drugs are subject to another 12 percent Value
Added Tax and sales tax by local governments. With all these fees and taxes,
medication becomes more unaffordable to the ordinary Filipino.

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icines affordable. nee from
the coverage of the Value-Added Tax and the removal of tariffs on medicines. will
allow for lower-priced but quality health h cbre that can be attained by every Filipino I

For the forgoing reasons, the approval of this bills eamestly sought: | |
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MARK A. VILLAR

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~ Republic of the Philippines.
HOUSE OF REPRESENTATIVES
Quezon City

45 CONGRESS
: SECOND REGULAR SESSION
: ofa
‘ : Hause Bill No.7 6 BL
|

INTRODUCED BY HONORABLE MARK A. VILLAR

AN ACT EXEMPTING THE SALE AND IMPORTATION OF DRUGS, MEDICINES,
PHARMACEUTICAL PRODUCTS AND RELATED RAW MATERIALS, AND
PHARMACEUTICAL EQUIPMENT AND INSTRUMENTS USED FOR THE.
MANUFACTURE THEREOF FROM THE COVERAGE OF REPUBLIC ACT NO. 8424,
OTHERWISE KNOWN AS NATIONAL INTERNAL REVENUE CODE OF 1997, AS
AMENDED BY REPUBLIC ACT NO. 9337 AND THE IMPOSITION OF TARIFF AND.
DUTIES AND FOR OTHER PURPOSES:

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled: 7]

SECTION 1. This Act shall apply to the sale and importation of drugs, medicines,
pharmaceutical products and related raw materials and pharmaceutical equipment and
instruments used for the manufacture thereof.

SECTION. 2. Section 109 of Republic Act No. 8424, otherwise known as the

National Intemal Revenue Code of 1997, as amended by Republic Act No. 9337, is hereby
further amended to read as follows:

SEC. 109. Exempt Transactions - Subject to the provisions of

Subsection (2) hereof, the following transactions shall be exempt from value-
added tax:

x. Exe 5 ix

(W) SALE OR IMPORTATION OF DRUGS, MEDICINES,
“PHARMACEUTICAL PRODUCTS AND RELATED RAW
MATERIALS, AND PHARMACEUTICAL EQUIPMENT AND.

INSTRUMENTS USED FOR THE MANUFACTURE
THEREOF. :



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Provided, That the
Wroportation ofjsaid articles, shall be accompanied; abyza cert lificate‘duties ‘issued by the -»
Departhhent of Finance stating that sich importation is Sore capt tara and duties;
Provided further, that said certificate ie hased on a certification by “the Food and Drugs
‘Acininistfation that the said products bei: unight into the country are drugs, medicines,

pharmaceutical products and related raw iiaterials and pharmaceutical equipment. and
instruments used for the manufacture thereof.
1 x . 1 ‘

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{SECTION. 4. Implementing Rules and Regulatins. = The Secretary of Finance,
upon recommendation of the Commissioners of -Intemal Revenue and the Tariff
Commission, respectively, and, in coordination with the Department of Health and the Food
and Drugs Administration shal promulgate within thirty days from the effectivity of this
Act the necessary Rules and Regulations to implement the provisions of this Act.

SECTION. 6. Separability Clause - If any provision of this Act is declared
unconstitutional or invalid, the provisions: not affected thereby shall continue to be in full
force and effect.

SECTION. 7. Repealing Clause - Ail laws, republic acts, presidential decrees
orders, rules and regulations or other issuance of government agencies inconsistent with
the provisions of this Act are hereby repeaieamended or modified accordingly.

SECTION. 8. Effectivity Clause.- This Act shall take effect fifleen days after its
publication in the Official Gazette or in two newspapers of general circulation.

Approved