GST changes signal shift toward affordable cancer care: Aiims researchers | Health News
Recent changes to the Goods and Services Tax (GST) framework – simplified tax structure, removal of taxes on drugs and medical equipment, and increased taxes on tobacco products – mark an important policy shift aimed at making cancer care more affordable and accessible, Aiims researchers said.
In a commentary published in Frontier, oncologist Dr Abhishek Shankar and scientist Dr Vaibhav Sahni of the department of radiation oncology at Dr BR Ambedkar Institute Rotary Cancer Hospital, Aiims, Delhi, noted that the reforms recognize the financial toxicity faced by cancer patients and attempt to address long-standing gaps in affordability of treatments.
The researchers mentioned that the GST council, in its 56th meeting, recommended complete GST exemption for 33 life-saving drugs, including those used in the treatment of cancer (from 12 percent earlier, to zero today, and three essential drugs for rare diseases and cancer, from 5 percent earlier to zero).
The council also recommended not charging GST on individual health and life insurance policies (down from 18 per cent previously).
An important aspect of this policy reform is that it includes certain patented medicines without a generic alternative, they said.
In another important step, the authors said the council also increased the tax on tobacco products to 40 percent, which is the highest for any product category in the country. Tobacco and related products, however, will remain subject to the 28 percent tax rate until loans and compensation taxes are paid.
“Regardless, the new tax bracket on products harmful to health is a step in the right direction and provides an increased opportunity to redirect the revenue generated towards financing cancer care in the country.
“There is evidence in the literature that supports the fact that tobacco taxation leads to better health outcomes, particularly in economically disadvantaged sections of society,” the researchers said.
A subnational study using the extended cost-effectiveness model in four Indian states found that a price increase of Rs 10 per cigarette with an ad valorem rate of 10 percent led 65,762 people from the highest income bracket and 485,725 people from the lower income bracket to quit smoking. This adjustment resulted in the avoidance of 665,000 deaths, a gain of 11.9 million life years, and more than $1.96 trillion in avoided treatment costs.
Additionally, it saved over $762.5 million for AB-PMJAY (Ayushman Bharat Pradhan Mantri Jan Arogya Yojana), India’s universal health coverage system. The modeling only considered coverage for people below the poverty line, as the researchers noted.
Recent studies suggest that a 50 percent increase in tobacco tax would prevent 1.8 million deaths while saving 11.9 trillion rupees over a decade. He also acknowledged that the affordability of cigarettes has remained neutral or improved, and that of smokeless tobacco has improved in India over time. Therefore, increasing the tax base for the latter is a welcome step, the researchers stressed.
Dr Shankar, Assistant Professor, Department of Radiation Oncology, Aiims, Delhi, said, “Complete removal of GST on several life-saving cancer drugs and rare disease treatments, along with discounts on medical equipment and diagnostics, will significantly reduce out-of-pocket expenses of patients, provided the benefits are fully passed on by manufacturers. The authors added that GST exemption on health and life insurance could further reduce financial barriers to care, particularly for middle- and low-income households.
Dr Shankar and Dr Sahni also highlighted the public health importance of increasing GST on tobacco products, calling it a positive step towards reducing the future burden of cancer while generating revenue that could be redirected towards cancer care and prevention.
However, they cautioned that effective implementation, timely tax refunds to manufacturers, and continued monitoring will be crucial to ensure these reforms translate into concrete gains for patients and the healthcare system.
“Overall, these economic policy changes should be seen as measures to make cancer care more affordable and accessible, as well as to promote health in society. The main health care lessons of these reforms involve a simplified tax structure, the removal of taxes on drugs and medical equipment, and an increase in taxes on tobacco products,” the researchers said.
