Taxing cancer drugs in Indonesia: Health or wealth?

Taxing cancer drugs in Indonesia: Health or wealth?

Pradono Handojo
Jakarta

After cancer diagnosis, being told the high cost of cancer
drugs comes as a second blow.

For those 14 to 15 million civil servants who have health
insurance, cancer is more of a health than a financial issue. But
for the rest of the population, with an average income of less
than US$150 per household, the cost of drugs may inform decisions
about cancer treatment.

A breast cancer patient typically requires $1,500 per
chemotherapy session for at least six sessions. So a lot of
cancer patients or members of their immediate families sell their
house, land or car in Indonesia to afford treatment.

One could call this the "good old family values" of supporting
a family member in need, I beg to differ and choose to call this
a fracture in the government's obligation to fulfill its duty to
provide cancer patients with the drugs they need.

There are import taxes, duties and levies for imported raw
materials. Then, there is the imposition of value-added tax (VAT)
of 10 percent of the pharmacy's net price. So when a patient
forks out $10,000 for cancer drugs, she or he pays more than $900
to the state coffers.

So a sick and poor breast cancer patient who sold their
family's land has in effect subsidized the Republic of Indonesia.
Financial constraints are the number one reason why
many people with cancer do not go to hospital until the cancer
has already spread.

Cancer drug sales totaled Rp 240 billion (equivalent to $24
million) in 2005. This translated into Rp 24 billion rupiah (or
$2.4 million) in VAT revenue

Should the government tax cancer drugs?

Cancer patients have limited options. This is vastly different
from, say, tobacco tax/duties, where people are healthy and have
a choice to smoke or to kick the habit.

Most cancer patients are depressed, some are suicidal. Close
relatives often feel helpless and ignorant when it comes to
therapies/treatment options. To tax patients an additional 10
percent for a drug that might save or prolong their life is
unethical and even cruel.

Singapore has a GST of 5 percent for drugs but Indonesians can
get this 5 percent refunded at Changi airport. Thus, patients pay
only the net price. It is no wonder that rich cancer patients go
to Singapore for chemotherapy while not-so-rich cancer patients
opt for local remedies such as buah merah (red fruit) from Papua
or virgin coconut oil -- I am not against buah merah or virgin
coconut oil, by the way.

Are any drugs eligible for tax exemption?

Fortunately yes, during the transition from Megawati
Soekarnoputri to Susilo Bambang Yudhoyono as president last
October some AIDS drugs were exempted from value-added tax.

Sadly, lobby groups have not been as successful in demanding
the government ease the financial burden of cancer patients.
Cancer can be fatal and often the death occurs much sooner than
with HIV/AIDS. People diagnosed with terminal lung cancer usually
do not survive past 12 months but people living with HIV/AIDS can
remain active and productive for years.

Obviously, the amount of VAT from cancer drugs the government
acquires is minuscule. However, it is cancer patients who must
shoulder the VAT. Exempting cancer drugs from tax would make
treatment more affordable. Compared to tobacco levies, the VAT
income from cancer drugs is negligible.

The writer is an alumni of the University of Indonesia's
school of medicine, whose father died of cancer and whose mother
is a cancer survivor. He can be reached at
jackpradono_md@yahoo.com.