The Tribune

A senior pharmacist yesterday argued “we have to reconsider putting VAT on medicines” amid industry concerns over how reforms to a plan impacting more than 37,000 Bahamians could affect pricing.

Dr Marvin Smith, the Bahamas Pharmaceutical Association’s (BPA) president, told Tribune Business the sector is closely watching how moving the National Prescription Drug Plan from the National Insurance Board’s (NIB) care to Ministry of Health and Wellness overnight will work in practice and what changes will result.

Asserting that it is “too early” to say what alterations will be made, with participating pharmacies at present still being compensated via NIB despite the switch taking effect from July 1, he added that the move was likely tied to the Government’s plan to more closely align - and eventually “amalgamate” - the drug plan with the National Health Insurance (NHI) scheme.

Determined that pharmacists will be involved at “the front end” of any reforms, and not suffer a repeat of what occurred with the recent medical marijuana legislation, Dr Smith said the Association plans to write to Dr Michael Darville, minister of health and wellness, setting out both its concerns and proposed solutions to issues involving the National Prescription Drug Plan.

“We wanted to see how things progress a little bit first,” he explained. “One of the concerns we have is how this amalgamation is going to impact the products we carry, and what’s going to be interesting for us is what are going to be the price points as everything else is going up.

“Particularly the cost of doing business. The cost of power, the cost of security, all these different things are impacting the cost of pharmacy goods and services. And, when we look at where we are now, many of the pharmacists coming home are highly qualifies so that means salaries are going up.

“We want to give a high level of service, but that’s going to cost you. All these are things we have to look at and find a proper price point that does not jeopardise patient costs and patient access.” This, Dr Smith explained, meant a balance needs to be struck between these factors and the need to ensure pharmacies remain sustainable, profitable businesses over National Prescription Drug Plan prices.

And, directly linked to this, is the issue of whether 10 percent VAT should be levied on medicines. “One of the things we have to discuss again is we have to reconsider putting VAT on medicines,” he told Tribune Business. “We have to reconsider that. We are talking about a 10 percent reduction for the patient. Ten percent can be serious for patients.

“At the end of the day, we have to look at whether charging VAT on medicines makes any sense when we look to move to NHI. In the case of public pharmacies, the Government is going to be paying 10 percent on its own goods that they’re providing to patients. They’re moving it from one pocket to the other at their own end. Does that make sense? We have to look at that.”

VAT’s imposition on medicines has become a political issue. The Minnis administration removed the levy on these products, and so-called ‘breadbasket’ food items, arguing that it would ease the cost burden especially for low income and elderly persons, but the Davis administration restored the 10 percent after being elected to office in September 2021 on the basis it went against the low-rate, broad base VAT model.

Dr Smith yesterday reiterated that the Association and its members “want to make sure it’s cost effective, patients have access to care” and businesses can generate the necessary income and revenues to ensure their sustainability.

“We intend to write to the minister with not only queries but solutions,” he added. “The concern is not so much that it has moved to the ministry, but it has moved to the ministry in effect to amalgamate the drug plan and NHI. We want to, as stakeholders, know how that happens, the mechanisms with that and how that impacts us.

“We understand this is a step towards what the Government wants to do with NHI. We know what the drug plan’s formulary is, and what’s going to be covered. We’d like to see what happens with NHI’s formulary, and we’d like to be involved in helping them with that.”

Dr Smith said pharmacists, including the Association and its members, will “be the best information source” for the Government as they know what patients can and cannot “tolerate” with respect to medicines and pharmaceutical drugs. 

“We want to help the Government with that,” he added. “In our conversation with the minister on the cannabis legislation, we did mention we want to be more involved at the front end rather than come in when it’s done and we fight back and forth. We’re going to be writing to him to see where it is.”

Responsibility for the National Prescription Drug Plan was rather quietly transferred from NIB to the Ministry of Health and Wellness via reforms that accompanied the Government’s 2024-2025 Budget, with the change taking effect from July 1 to coincide with the start of the new fiscal year.

Dr Gertrude Holder, NIB’s deputy director and chief medical officer, wrote to pharmacies participating in the plan last month to advise of the switch. She said it had been facilitated by reforms to the National Insurance (Chronic Diseases Prescription Drug Fund) (Amendment) Act.

These changes, she wrote in a letter obtained by Tribune Business, “transfer management and operation of the National Prescription Drug Plan from NIB to the ministry responsible for health and wellness with effect from July 1, 2024”.

“Accordingly, please be advised that all agreements must now be forwarded to the permanent secretary of the Ministry of Health and Wellness, Colin Higgs, for his execution of the certificate and agreements,” Dr Holder added.

NIB’s 2021 annual report showed, when that year closed, that the National Prescription Drug Plan had some 37.068 active members or beneficiaries - having grown by 3.3 percent, or close to 1,200 persons, compared to the prior year’s 35,897.

Some 44 private pharmacies, with 68 locations, and 30 public or government-owned pharmacies were participating as distributors of medications, along with nine wholesalers. Some 312 medicines, and 20 conditions, were covered by the plan.

Branville McCartney, the former Democratic National Alliance (DNA) leader whose family runs Wilmac’s Pharmacy, yesterday agreed with Dr Smith that it was a “wait and see” as to how the National Prescription Drug Plan may change due to the oversight switch. However, he repeated his assertion that the plan’s introduction by the last Ingraham administration had “done a number on the pharmacy business”.

He explained: “It’s break even. It really did a number on the business of pharmacy. You don’t really make a profit from the National Prescription Drug Plan, and you’re in business to make a profit. You honestly just break even.

“When the Government doesn’t pay in a timely manner, that’s even worse because you end up losing. You have to keep your business fully supplied, fully stocked with drugs that are not inexpensive. You are usually not paid right away. You are paid a couple of weeks later, and there have been times when we weren’t paid for months, and that really was damaging to the business.

“Most recently, NIB, for the last couple of years, they’ve been about two to three weeks in terms of payment. That still means you have to be a little liquid to support your participation in the programme and, at the end of the day, it’s not profitable.”

Dr Smith, though, told Tribune Business that there has yet to be any change in the National Prescription Drug Plan’s payment mechanisms with compensation still coming from NIB rather than the Ministry of Heath and Wellness. He added that this was confirmed following a recent meeting involving pharmacy owners who are members of the Association.

“It doesn’t impact the pharmacies unless there’s an issue administering the prescription drug plan and payment,” Dr Smith said. “We’ve not seen any challenges. Requests are being submitted, payment is going through. Nothing has been late. There’s no real difference in the user end for us now, but when they amalgamate that it brings in some other things.”