Why GST cut is a boost for Indian healthcare: Experts' take

The reduction of the Goods and Services Tax (GST) from 12 per cent to 0 on critical lifesaving drugs, including cancer treatments and medicines for rare diseases, from 12 per cent to 5 per cent on diagnostic materials and exemption of health insurance, effective September 22, has been welcomed by the stakeholders in the health sector.

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The new GST reforms are expected to be an advantage to the pharmaceutical industry, bringing down treatment costs and enhancing public health outcomes across the nation. For the pharma industry, the reform is expected to boost demand and improve healthcare access for life-threatening health conditions such as cancer.

Making critical treatments accessible

Dr. Dhanuja Bhowmick, Manager of Clinical Pharmacology at MGM Cancer Institute, Chennai, describes the curated list of drugs that have seen a reduction in GST as a well-curated one, as it targets costly and frequently used drugs like Daratumumab (for multiple myeloma), Teclistamab (for blood cancer), Amivantamab, and Alectinib (both for lung cancer). “These are not one-time use drugs; they require repeated administration for effective treatment,” she told The Federal.

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"The GST reduction will significantly improve affordability, ensuring patients can adhere to prescribed regimens without discontinuing due to high costs. This move not only makes critical treatments accessible but also allows patients to redirect the amount saved toward supportive care, such as nutrition. Many of these drugs are not one-time use drugs and they are required repeatedly for the treatment," Dr. Dhanuja added.

The increased affordability would likely boost demand for these drugs, encouraging pharmaceutical companies to ramp up production and invest in research for innovative treatments. Additionally, reduced drug costs could alleviate pressure on public healthcare facilities, as more patients could access private care. Experts call for effective implementation of the GST reforms to benefit the healthcare industry and the public.

GST slashed on diagnostics

Dr. GSK Velu, Chairman & Managing Director, Trivitron Healthcare, Neuberg Diagnostics, and Maxivision Super Speciality Eye Hospitals, on the GST reductions of medical devices and critical medicines, says that the new GST reforms should overall boost our economy and benefit every citizen of India. “If the well-intended reforms on GST and resolution to inverted duty structure are well implemented, it will benefit all industries and will ensure desired benefit reaches end consumers,” he added.

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The GST slab has also been reduced on diagnostic kits, reagents, glucometers and test strips, thermometer, medical grade oxygen, corrective spectacles as well, cutting down from 12 per cent GST to 5 per cent. The cutting down of GST on diagnostics would be significant for preventive and curative healthcare in the country.

V Govindarajan, Founder and Managing Director, Aarthi Scans and Labs, said that the reduction of GST would lower patient costs while enabling providers to uphold the highest standards of quality is a progressive step.

“By easing the tax burden on these essential tools, the reforms will make diagnostic services more affordable, encourage timely testing, and ultimately lead to earlier detection and improved health outcomes. Equally significant is the exemption of GST on health and life insurance, a move that will ease the financial burden on patients and families, promote wider adoption of insurance coverage, and ensure that healthcare is not only accessible but also sustainable in the long run,” stated Govindarajan.

The health insurance being exempted from GST is expected to be encouraging for the public to safeguard individuals and families against rising medical costs. Removing the tax on health insurance is expected to lower premiums, enabling more people to afford comprehensive insurance plans. This would provide financial protection against high medical expenses, reducing out-of-pocket costs that often lead to debt or delayed treatment. Affordable insurance would encourage timely medical care, including preventive measures like check-ups and vaccinations, improving overall health outcomes.

“The move reinforces the importance of making financing the access to quality healthcare more affordable and easy for people across the country. We believe this exemption will encourage more people to opt for comprehensive health coverage and take proactive steps toward their health security and well-being," says Manish Dodeja, Chief Operating Officer, Care Health Insurance.