Recent changes to the Goods and Services Tax (GST) framework — simplified tax structure, removal of tax on drugs and medical equipment and increased taxation on tobacco products — mark an important policy shift towards making cancer care more affordable and accessible, AIIMS researchers have said.
In a commentary published in Frontier, Oncologist Dr Abhishek Shankar and Scientist Dr Vaibhav Sahni from the Department of Radiation Oncology, Dr BR Ambedkar Institute Rotary Cancer Hospital, AIIMS, Delhi, noted that the reforms acknowledge the financial toxicity faced by cancer patients and attempt to address long-standing gaps in treatment affordability.
The researchers mentioned that the GST council, in its 56th meeting, recommended the total exemption of 33 lifesaving drugs, including those used in cancer care, from GST altogether (erstwhile 12 per cent to now zero and three critical drugs for rare diseases and cancer from 5 per cent earlier to zero).
The council has also recommended no GST application on individual health and life insurance policies (from 18 per cent previously).
An important aspect of this policy reform is that it includes certain patented drugs with no generic alternatives, they said.
In another significant step, the authors stated that the council has also increased the tax slab for tobacco products to 40 per cent, which is the highest for any class of goods in the country. Tobacco and products related to it shall, however, remain under the 28 per cent tax slab till loans and compensation cess have been paid.
“Regardless, the new taxation slab on health-harming products is a step in the right direction and provides increased opportunity to redirect the generated revenue for funding cancer care in the country.
“There is evidence in literature which supports the fact that tobacco taxation leads to improved health outcomes, particularly in economically disadvantaged sections of society,” the researchers said.
A subnational study using the extended-cost effectiveness model across four Indian states found that a price increase of Rs 10 per cigarette with an ad valorem of 10 per cent led to 65,762 individuals from the top income bracket and 485,725 individuals from the bottom income bracket quitting smoking. This adjustment led to the prevention of 665,000 mortalities, a gain of 11.9 million years of life, and over USD 1.96 trillion in averted treatment costs.
Additionally, it led to the saving of over USD 762.5 million for AB-PMJAY (Ayushman Bharat Pradhan Mantri Jan Arogya Yojana), which is India`s universal health coverage scheme. The modelling considered only the coverage for those below the poverty line, as noted by the researchers.
Recent literature suggests that a 50 per cent hike in tobacco tax stands to avert 1.8 million mortalities while saving, over the span of a decade, Rs 11.9 trillion. It has also acknowledged that affordability for cigarettes has either remained neutral or improved, and that for smokeless tobacco, it has improved in India over a period of time. Therefore, increasing the tax slab for these is a welcome step, the researchers underlined.
Dr Shankar, Assistant Professor in the Department of Radiation Oncology at AIIMS, Delhi, said, “The complete removal of GST on several life-saving cancer drugs and rare disease therapies, along with reductions on medical equipment and diagnostics, will significantly lower out-of-pocket expenditure for patients, provided the benefits are fully passed on by manufacturers.”
Authors added that the exemption of health and life insurance from GST could further reduce financial barriers to care, especially for middle- and lower-income households.
Dr Shankar and Dr Sahni also highlighted the public health importance of raising GST on tobacco products, calling it a positive step toward reducing future cancer burden while generating revenue that could be redirected into cancer care and prevention.
However, they cautioned that effective implementation, timely tax refunds to manufacturers, and ongoing monitoring will be crucial to ensure these reforms translate into real-world gains for patients and the healthcare system.
“Overall, these economic policy changes should be regarded as steps in making cancer care more affordable and accessible, as well as ones which promote health in society. The key takeaways from these reforms in terms of healthcare involve a simplified tax structure, removal of tax on drugs and medical equipment and increased taxation on tobacco products,” the researchers said.
