SIXTEENTH CONGRESS OF THE
REPUBLIC OF THE PHILIPPINES:
First Regular Session

HOUSE OF ROPRESENTATIVE
ag
H.B. No. __ 48 1

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 “Universally Accessible Cheaper Medicines Act of 2008" or RA No. 9502 intended 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 law,
medicines remain to be one of the most expensive commodities, a condition which deprives a
majority of our people of medical aid. Thus, there is a great need for additional legislation in
order to make adequate and affordable healthcare accessible for all

Under the current circumstances, most basic raw materials, active ingredients and other
auxiliary materials for the manufacture of medicines are imported by Pharmaceutical
Companies. Upon importation, these products are already burdened with importation duties and
tariffs and in addition a 12 percent Value Added Tax (VAT) is imposed on their sales. Sales of
manufactured drugs are further subjected to another 12 percent Value Added Tax and sales
taxes by local governments. With all these fees and taxes on medicines, their prices become
unreachable to the ordinary Filipino.

‘The removal of Tariffs and Value Added Tax on medicines will lead to significant savings
for our people especially where millions live in poverty. It should be a priority of the govemment
to see to it that the poorest of poor can acquire proper health care thru quality medicines. This
bill seeks to further cut down the charge of health care in the country by making medicines


affordable by exempting them from the coverage of the Value-Added Tax. With the exclusion of
VAT lower-priced health care can be achieve by every Filipino.

For the forgoing reasons, the approval of this bill is eamestly sought.

Pe cca

MARK A. VILLAR,


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‘SIXTEENTH CONGRESS OF THE
REPUBLIC OF THE PHILIPPINES
First Regular Session

HOUSE OF REPRESENTATIVES

nea 231

INTRODUCED BY HONRABLE 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 AGT 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 House of Representatives and Senate of the Philippines in
Congress assembled:

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 Internal 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:

5) Xa

(W) SALE OR IMPORTATION OF DRUGS, MEDICINES,
PHARMACEUTICAL PRODUCTS AND RELATED RAW
MATERIALS, AND PHARMACEUTICAL EQUIPMENT AND
INSTRUMENTS USED FOR THE MANUFACTURE
THEREOF.

SECTION. 3. The importation of drugs, medicines, pharmaceutical products and
related raw materials and pharmaceutical equipment and instruments used for the
manufactured thereof shall be exempted from tariff and duties; Provided, That the

R


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importation of said articles shall be accompanied by a certificate duties issued by the
Department of Finance stating that such importation is exempt from tariffs and duties;
Provided further, that said certificate is based on a certification by the Food and Drugs
Administration that the said products being brought into the country are drugs, medicines,
pharmaceutical products and related raw materials and pharmaceutical equipment and
instruments used for the manufacture thereof.

SECTION. 4. Implementing Rules and Regulations. - 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 shall 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 - All laws, republic acts, presidential decrees
orders, rules and regulations or other issuance of government agencies inconsistent with
the provisions of this Act are hereby repealed, amended or modified accordingly.

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

Approved