IGST exemption for some rare disease drugs: Here is what it means for patients

In a move aimed at improving access to crucial medical treatments and supporting institutions that provide healthcare services for rare diseases, the Goods and Services Tax (GST) Council, in its 50th meeting, made some significant exemptions on IGST for certain medical imports.

Under the proposed recommendations, the Council suggested exempting Dinutuximab (Qarziba), a rare cancer drug, as well as medicines and Food for Special Medical Purposes (FSMP) used in the treatment of rare diseases listed under the National Policy for Rare Diseases, 2021, from IGST when imported for personal use, subject to certain conditions. 

Additionally, the Council proposed extending the exemption to FSMP imports by Centres of Excellence for Rare Diseases, as well as any institution or individual recommended by these listed Centres of Excellence.

The move followed recommendations of a committee of tax officers from the Centre and states, known as the Fitment Committee for granting an exemption for the import of the cancer medicine Dinutuximab (Qarziba) from GST. This decision acknowledged the high cost of Rs 36 lakh and the common practice among patients to raise funds through crowdfunding to purchase the medication. Furthermore, imports of medicines and FSMP used in the treatment of rare diseases were also exempted from Integrated GST. Previously, such imports were subject to an IGST of either 5% or 12%.

Industry experts emphasised the importance of extending Customs and GST waiver benefits to all life-saving medicines, including cancer medicines that are imported. The experts argued that this would enable patients in India to avail of duty waiver benefits and reduce their treatment costs.

“To have a significant impact, it is crucial that the Customs duty and GST waiver provided by the government apply to all approved rare disease products available in the country, not just personal imports. By considering the interests of patients, companies are introducing innovative treatment options in India at the earliest, eliminating the need for complex import processes whenever patients require them,” said V Simpson Emmanuel, MD and CEO of Roche Pharma India and Co-Chair of the Rare Disease Committee at the Organisation of Pharmaceutical Producers of India (OPPI).

“Currently, patients being treated with locally available and approved products are excluded from the Customs duty and GST waiver benefits. Even Centres of Excellence (CoEs) cannot import such products and receive duty benefits for patients. This is because, if a product is registered and available in India, licensing at the patient or institute level is not permitted,” Emmanuel, said.

Last year, a parliamentary panel urged the government to waive GST on cancer drugs and implement stringent measures to control medicine prices and radiation therapy costs. The panel recommended designating cancer as a “notifiable disease” to assess its true impact on the nation and facilitate assistance to patients. A "notifiable" disease requires mandatory reporting to government authorities, enabling effective monitoring.

Members of the panel highlighted the high cost of cancer treatment in the country and emphasised the need for comprehensive pricing regulations. In response, the government informed the panel that the National Pharmaceutical Pricing Authority (NPPA) had already set maximum ceiling prices for 86 formulations, rationalised trade margins for 49 drugs, and reduced the maximum retail price (MRP) of cancer treatment medications by up to 90%.

“Dinutuximab is a highly effective drug used in the treatment of Neuroblastoma, a rare form of cancer that predominantly affects young individuals. However, the cost of such medicines is already exorbitant, making it incredibly challenging for people to afford them. In this regard, the government’s decision to waive GST on these drugs provides much-needed support to patients in need,” said Dr Praveen Gupta, Director and Unit Head of Neurology at Fortis Memorial Research Institute, Gurgaon.

“Additionally, it would be immensely beneficial if the government extends this exemption to other rare and untreatable disorders like motor neuron disease and muscular dystrophy, which also have emerging expensive medications,” he added.

The exemption on the basic Customs duty was provided for rare disease drugs imported for personal use or by Centres of Excellence in the Union Budget for 2023-24. As the exemption will not be applicable to drugs that are commercially available in the market, OPPI has urged the government to extend these exemptions not only to patients but also to medical institutions and importers, including private entities.

“Extending this exemption from customs duty to all would not only help patients financially but also ensure that these life-saving medicines are available to everyone who needs them, especially children with rare diseases. All life-saving drugs, whether for Rare Diseases or cancer, should be exempted from customs duty and GST,” said Suresh Pattathil, President of OPPI.