Tariffs & customs affecting local pharmaceutical production in Kenya

1. +
Tariffs & Customs affecting Local Pharmaceutical
Production in Kenya – Role of Pharmacy & Poisons
Board Anthony Toroitich
Head,Trade Affairs
Pharmacy and Poisons Board

2. +Outline
n Introduction
n Medicine Registration Statistics
n Tariffs Affecting Local Pharmaceutical Production
in Kenya
n Tariffs Case Study: Orphan Drug – Rufinamide
n Role of PPB
n Conclusion
PHARMACY AND POISONS BOARD Ensuring the provision of Quality, Safe and Efficacious
Health Products and Services

3. + Introduction
n National Pharmaceutical Policy (2012): aimed at
- Promotion of local production, research and innovation
for essential health products and technologies.
- Promotion of self-sufficiency in Essential Medicines
- Growth in pharmaceutical exports: Industrialization
attainment of Vision 2030.
n Good Manufacturing Practices (GMP) is key
n Pharmacy and Poisons Board provide regulatory
oversight, including inspection.
Sunday,
March
15,
15
PHARMACY AND POISONS BOARD
Ensuring the provision of Quality,Safe and Efficacious Health Products and Services

4. +Medicine Registration Statistics
PHARMACY AND POISONS BOARD
Ensuring the provision of Quality,Safe and Efficacious Health Products and Services
41.79
21.09
16.99
3.64
3.37
1.87
1.78
1.70
1.59
1.14
0.85
0.35
0.32
0.28
0.24
0.21
0.07
0.03
0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00
India
Kenya
Europe
Bangladesh
Pakistan
China
South Africa
Middle East
North Africa
North America
Southeast Asia
Rest of EAC
Others
Australia & Ocenia
South America
South Korea
Japan
Rest of Africa
Percentage(%)
Percentage(%)

5. + Tariffs Affecting Local Pharmaceutical
Production in Kenya
n No duties on imported inputs or raw materials including imported
finished pharmaceutical products.
n No Value-Added Tax on inputs or raw materials (either procured locally
or imported) as per VAT amendment Act No. 7 of 2014. However;
- Taxation on inputs or raw materials not in the exempt list submitted by
Pharmacy and Poisons Board/Cabinet Secretary for health – See Case Study.
- Long Lead time for approval of new exempt list by Cabinet Secretary for
National Treasury
- Indirect Taxation:
« Import Declaration Fees (IDF) of 2.25% of CIF Value subject to a minimum
of Ksh. 5,000.
« VAT of 16% on electricity, water etc. due to change from Zero rated to
Exempt status thus no claim refunds on VAT paid.
n Duty and VAT: Applicable to some packaging materials including
equipment and spare parts due to lack of harmonized HS codes.
PHARMACY AND POISONS BOARD
Ensuring the provision of Quality,Safe and Efficacious Health Products and Services

6. +Other Regulatory Fees
n KEBS Standards Levy Order: 0.2% of ex-factory
price each month (minimum of Kshs 1,000 per
month and maximum Kshs. 400,000 per annum).
n PPB Levy on Local Manufacturers
- GMP fees
- Annual Retention
- Manufacturer Licence
PHARMACY AND POISONS BOARD
Ensuring the provision of Quality,Safe and Efficacious Health Products and Services

7. +Tariffs Case Study: Orphan Drug
- Rufinamide
Tariffs Kshs Percentage
Import Declaration Fees 2.25%
Railway development levy 1.5%
VAT 16%
Import Duty 25%
Clearing Charges 6 – 7%
Others ≈13%
Total Fees 480,000 ≈65%
PHARMACY AND POISONS BOARD
Ensuring the provision of Quality,Safe and Efficacious Health Products and Services
Cost of API (USD 8000 x 92) ≈ 736,000

8. +Role of PPB
n Preparation of inputs or raw materials on exemption list – Should be
proactive rather than reactive.
n Advocacy like Cabinet Memo in consultation with stakeholders.
n Sector specific Quarterly meetings for local manufacturers.
n Fair and Transparent Market with easily accessible regulatory
resources including EAC harmonization initiatives.
n Industry Capacity Building:
- Improving compliance through training and regular inspection.
- Liaise with education institutions in curricula development
- Annual Scientific Conference
n Issue regular Market intelligence reports: CHAI project
n Stringent Import Control for finished products esp. policy on loan
licenses: Imports should be sourced from registered sites.
PHARMACY AND POISONS BOARD
Ensuring the provision of Quality,Safe and Efficacious Health Products and Services

9. +Conclusion
n Consolidation of Regulatory fees for local manufacturers
n Non-tariff barriers on imported essential medicines
where there exists capacity for local product – Ghana
Model: Caveat WTO rules
n Raise penalties applicable to sale of unregistered
medicines and non-compliance: Caveat double edged
sword.
n Price Control on imports based on maximum prices by
local manufacturers.
PHARMACY AND POISONS BOARD
Ensuring the provision of Quality,Safe and Efficacious Health Products and Services

10. • Thank you
• Questions & Comments
• Email Contact:
toroiticham@gmail.com or
toroiticham@pharmacyboardkenya.org
PHARMACY AND POISONS BOARD
Ensuring the provision of Quality,Safe and Efficacious Health Products and Services