Healthcare sector: Concerns voiced over current trend of Customs classification disputes

LAHORE: The current trend of Customs classification disputes in the country had raised serious concerns for the healthcare sector.

In an effort to increase revenue collection, there is a growing perception among importers that long-established tariff classifications of medicines are being challenged, with products that have been imported under the same HS classification for decades being proposed for placement under residual tariff headings carrying substantially higher Customs duties and taxes, industry sources said.

Where a product vis lawfully authorized by the Drug Regulatory Authority of Pakistan (DRAP) as a medicine and has been consistently classified and imported under an established tariff heading for many years, any abrupt departure from that settled practice should be based on clear legal and scientific justification rather than solely on revenue considerations.

Tariff classification must remain consistent with the nature, characteristics, intended therapeutic use, and applicable legal provisions governing medicinal products, the sources said, adding, “The consequences of imposing excessive Customs duties on medicines extend far beyond the commercial interests of importers. Higher duties inevitably translate into higher retail prices, making medicines less affordable for patients. As costs continue to rise, importers and manufacturers may find it economically impossible to continue supplying certain products.”

When a medicine becomes commercially non-viable, businesses are forced to discontinue imports or local production, resulting in shortages and disruption of the healthcare supply chain, the sources added.

According to the sources, the availability of medicines depends not only on regulatory approval but also on economic viability. A medicine that cannot be imported or manufactured at a sustainable cost is, in practical terms, no longer available to the patients who depend on it. Tax policies that unintentionally eliminate commercial viability ultimately undermine the very objective of ensuring a stable and continuous supply of healthcare products.

Revenue generation is undoubtedly a legitimate objective of the State; however, taxation should not become so excessive that it defeats access to medicines, discourages lawful trade, or results in the elimination of legitimate businesses. A tax system that renders medicines commercially impossible to import or manufacture is ultimately self-defeating, the sources added.

Sustainable revenue is generated from a healthy, functioning economy — not from policies that eliminate the very businesses on which that revenue depends. The objective of Customs law should be to ensure the correct legal classification of goods while facilitating legitimate trade, protecting public health, and maintaining uninterrupted access to medicines, the sources said, adding, “This issue deserves the immediate attention of the Drug Regulatory Authority of Pakistan (DRAP), Pakistan Customs, the Federal Board of Revenue (FBR), the National Tariff Commission, the Ministry of Commerce, and representative trade bodies. A balanced approach that safeguards both public health and fiscal interests is essential.”

Copyright Business Recorder, 2026