Public health experts are making a strong push for tax reform on antibiotics ahead of the Union Budget 2026-27. They want the government to introduce a progressive goods and services tax regime specifically for these crucial medicines. The focus is particularly on last-resort drugs that face growing resistance threats.
A Call for Fiscal Action Against AMR
Dr Ranga Reddy Burri, president of the Infection Control Academy of India based in Hyderabad, has written to Union Finance Minister Nirmala Sitharaman. He describes antimicrobial resistance as a 'perpetual pandemic' that demands urgent attention. Dr Burri warns that rising resistance makes routine infections much harder to treat effectively.
This situation increases hospital stays and healthcare costs significantly. It also raises risks for vulnerable groups including surgical patients, cancer care recipients, intensive care patients, and children.
Proposed GST Structure Based on WHO Classification
The proposal aligns GST rates with the World Health Organization's AWaRe classification system. This system categorizes antibiotics into three groups based on their importance and resistance risk.
- Access antibiotics used for common infections would continue with a low GST of about 5% to ensure affordability
- Watch antibiotics posing higher resistance risks would face a 12% GST rate
- Reserve antibiotics meant only for confirmed multidrug-resistant infections would attract GST of 24% or more
Dr Burri calls this approach a fiscally sound and life-saving reform that could transform antibiotic stewardship in India.
Addressing Market Distortions in Healthcare
The letter highlights a concerning market distortion in current pricing. Last-resort antibiotics often cost less than basic diagnostic tests. This pricing mismatch encourages empirical and irrational prescribing practices by doctors.
"Regulation alone cannot fix these incentives," Dr Burri emphasizes. He argues that fiscal policy must play a central role in creating proper market signals for antibiotic use.
Broader Health Funding Demands
Public health experts are also reiterating their longstanding demand for increased health funding. They want at least 4% of the Union Budget allocated to healthcare. The proposed GST reform on antibiotics would be budget-neutral while strengthening India's fight against antimicrobial resistance.
Experts believe this dual approach of tax reform and increased funding represents a comprehensive strategy. It addresses both the immediate threat of antibiotic misuse and the long-term need for stronger healthcare infrastructure.
