The association representing the domestic pharmaceutical industry, INFADOMI, is asking for changes to the tariff/tax reform proposal sent to Congress by President Fernández. INFADOMI’s President, César Jiménez, and its Executive Director, Hochi Vega, argued yesterday that the proposal in its current form will favor imports over domestically-produced medicines, harming the local industry. They pointed out that imported pharmaceuticals already enjoy a competitive advantage, in that they are exempt from the Transfer Tax on Industrialized Goods and Services (ITBIS), while local producers must pay ITBIS on locally-sourced inputs. Although imported pharmaceuticals now pay a 5% tariff while local producers only pay 3% on imported production inputs, local companies must pay 20% tariff on the imported equipment they use to make their products. Furthermore, foreign producers are allowed to import without paying tariff on medicine samples, a key promotional tool in the pharmaceutical industry. Instead of correcting this imbalance, asserted Jiménez and Vega, the governmentís tariff/tax reform proposal will make it worse. Tariffs on imported pharmaceuticals are to be phased out completely, but domestic companies will see tariffs on the machinery they use drop to 14%, while certain key factors of production, such as packaging, will actually rise to 8-14%. Imported medicines will remain exempt from ITBIS, while local producers will see the ITBIS they pay on inputs rise from 8% to 14%. The INFADOMI executives insisted that they are not seeking special privileges or protection for local industry, but rather they want the government or congress to amend the reform proposals in order to level the playing field. Otherwise the domestic industry will steadily lose the 50% market share they currently enjoy in Dominican pharmaceutical consumption.
