Two-thirds of the global population and 80 percent of Africans do not have adequate access to drugs and many clinics gather dust for lack of drugs. Manufacturers’ pricing and widespread poverty impede access to medicines, but a major culprit is poor-country governments raising funds and allegedly protecting domestic industries by increasing the price of medicines through import tariffs, taxes and customs duties.

Resident Fellow Roger Bate

Some countries such as Nigeria, Iran and India have tariffs of over 15 percent and other charges hiking prices by over 50 percent in some instances. Not only do tariffs increase prices but they also encourage corruption, with fatal consequences, as explained in our recently published paper.

G-8 leaders recently denounced the severe public health effects of tariffs on medical interventions: “We encourage governments around the world to consider eliminating import tariffs and non-tariff barriers on medicines and medical devices, where appropriate, as a measure to reduce further the cost of health care for the poor and expand their access to effective treatments.”

And at last year’s G-8 summit in Gleneagles, Scotland world leaders identified overcoming corruption as a key component in poor nations growing rapidly. In our latest research, we analyzed the link between tariffs and corruption and found evidence that tariffs provide opportunities for irregular payments and delays of product shipments through ports.

The paper is the product of months’ worth of interviews and surveys in the field, providing first-hand accounts from charity, corporate, multilateral and bilateral aid agency donors of their experiences with drug delivery in developing countries.

Most respondents reveal that tariffs on essential medicines, are a “serious threat” to access to medicines. We found numerous instances where organizations donating products were asked to pay questionable “administrative handling” fees and other “custom support” fees.

In one case, donated drugs destined for use in South Africa were repeatedly delayed because of several bureaucratic requirements which took years to resolve and only after the donor secured the services of appointed local distributors.

The frustration of many philanthropic drug donating organizations was overtly expressed by one: “the necessity to invest both time and effort to address such delays is a significant deterrent to [our] ongoing commitment.”

But the pernicious effects of tariffs on essential medicines permeate deeper still. The burden caused by high and frequently altered tariff rates creates an opportunity for public officials to extract bribes; since local officials often have asymmetric knowledge about what is a correct fee and the authority to charge it locally, this allows them all sorts of leverage, such as allowing them opportunities to waive official fees if paid a bribe. Equally, random or capricious intervention by custom officials makes criminals of importers, by often leaving them little choice but to pay bribes to avoid delays, especially where goods with short shelf lives (for example, antibiotics that need refrigeration) are concerned.

Such corruption contributes to the instability of access to medicines in a country. Clearly, the corrupting influence of tariffs is detrimental to any ongoing efforts to improve health in a nation. From our surveys we found the following specifics: Vietnamese officials routinely demand bribes (an issue the country must address with new WTO membership); delays and unofficial administrative payments are routinely demanded in Nigeria, and Uganda, Kenya and Ethiopia are almost as bad. We found that in about a third (36 out of 105 cases) bribes were demanded, in 85 percent of cases delays occurred and non-official payments were demanded.

Tariffs and taxes on essential medicines form a negligible contribution to national income so give little benefit to developing countries, but the effect of the conditions they create is disproportionate and damaging.

Rallying behind the G-8 are other multilateral initiatives--such as the United States Trade Representative, Swiss and Singaporean collective initiative to remove tariffs on essential medicines--striving to see the era of tariff imposition on essential medicines come to an end.

Leaders of developing countries should not wait for U.S. and EU action but restart the Doha Development Round by taking the simple, initial step required to help their own people--implementing national tariff policies to eliminate tariffs and taxes altogether from essential medicines. This action will come at little cost to their revenue base but an immeasurable gain to their people.

Roger Bate is a resident fellow at AEI. Kathryn Boateng is a research assistant at AEI.