By- SEMAYAWIT BAHIRU

As of August 14, 2025, Ethiopia’s Ministry of Revenue has issued a directive enforcing the existing VAT law, which officially classifies over-the-counter (OTC) medicines as taxable supplies. While prescription drugs and certain essentials remain VAT-exempt, this move now places an added 15% burden on everyday reliefs our people rely upon…painkillers, cough syrups, antacids, and more (VATupdate, 2025).

OTC Does Not Mean Luxury, Yet Now It Costs Like One

In Ethiopian law, OTC medicines are legally permitted to be sold directly by pharmacists, not because they are luxuries, but because they’re considered safe enough with proper guidance. They are meant for self-care, for minor ailments, not life-enhancement products or unnecessary add-ons. Specifically, OTC medicines are classified as non-prescription medicines for treating minor symptoms and self-limiting conditions, dispensed under the supervision of pharmacy professionals without requiring a physician’s prescription (Ethiopian Food and Drug Authority, 2022).

Imposing VAT on them is not just unfair, it flips public policy on its head. It now equates everyday remedies with non-basic goods, treating them as revenue sources rather than essential health interventions.

The Human Cost: When Medicine Becomes a Luxury

Here’s what this means for the average Ethiopian:

Out-of-pocket (OOP) medicine costs already account for a significant portion of health spending, exceeding 31% of total health expenditure in Ethiopia, which is above the globally recommended target of 20% (Tadiwos et al., 2025).

Even when overall catastrophic medicine payments have been analyzed, the pooled incidence of impoverishment attributed to health expenditure among households was 5.20% (95% CI: 4.30%, 6.20%), pushing thousands into poverty annually (Tsega et al., 2024).

Some critical medicines cost dozens or even hundreds of days’ wages for the lowest-paid government workers, e.g., metoprolol for cardiovascular disease can cost up to 352.44 days’ wages for a one-month treatment (Masresha et al., 2024).

Adding VAT to OTC drugs is like pouring salt on an open wound, making something already unaffordable even more out of reach.

VAT Enforcement vs Health Access: A Misguided Priority

Yes, it is claimed that “enforcing compliance under existing VAT law” (VATupdate, 2025). But law enforcement shouldn’t override basic human needs. Just because a product is technically taxable doesn’t mean taxing it makes sense or justice.

People are not hoarding vitamins or caffeine pills. They’re seeking simple, necessary relief from fever, indigestion, allergies, or minor infections. VAT on these items will force many, especially those without insurance or access to subsidized public care, to skimp, skip doses, or go without entirely.

A Call to Reconsider, Before It’s Too Late

Picture this: Azeb, a single mother of two in Addis Ababa, works as a daily laborer earning barely 150 birr a day. Her youngest son wakes up with a persistent cough, a common issue in the dusty city air.

Normally, she’d head to the local pharmacy for a simple OTC cough syrup costing 50 birr. But now, with the new 15% VAT, it’s 57.5 birr. That extra 7.5 birr? It’s the difference between buying milk for dinner or skipping it. Azeb hesitates, opts for home remedies that don’t work, and the cough worsens into a fever.

A doctor’s visit? Unthinkable, too expensive, given that OOP payments already push families like hers toward impoverishment (Tsega et al., 2024).

Days later, her son misses school, she misses work, and the family spirals deeper into debt. This isn’t just a story; it’s the reality for millions like Azeb, where a small tax hike turns minor ailments into major crises.

We can’t let this continue. Restore VAT exemption for OTC medicines. If prescription drugs remain exempt because they are essential, OTC remedies, no less vital, should be treated the same.

Recognize public health needs over short-term tax gains. The minister seeks increased revenue, but at what cost? The impoverishment and suffering of citizens is not a price worth paying.

Expand medicine protection mechanisms. As experts recommend, Ethiopia urgently needs to strengthen public supply chains, subsidize essential medicines, and extend funding or insurance support to cover medicine costs, such as through community-based health insurance and fee waiver systems to reduce OOP expenditures (Debie et al., 2022).

Join the call: share Azeb’s story, and demand policy change now.

Before another family pays the ultimate price for a pill they can’t swallow.

In Summary

OTC medicines are not perks; they are necessities. VAT on them is not only economically regressive but morally questionable. It disproportionately hits low- and middle-income households, who already bear the brunt of catastrophic health expenses. Before this policy crushes even more citizens under unbearable costs, authorities must reconsider for the sake of health, human dignity, and justice.

References

Debie, A., Khatri, R.B. and Assefa, Y., 2022. Contributions and challenges of healthcare financing towards universal health coverage in Ethiopia: a narrative evidence synthesis. BMC Health Services Research, 22(1), p.866. DOI: 10.1186/s12913-022-08151-7.

Ethiopian Food and Drug Authority, 2022. Over-the-Counter Medicines List for Ethiopia, Third Edition. Addis Ababa: Ethiopian Food and Drug Authority.

Masresha, R., Habte, F., Senbeta, M.F., Baye, A.M., Kassaw, C. and Beyene, M.G., 2024. Availability, price, and affordability of essential medicines for managing cardiovascular disease in Addis Ababa, Ethiopia. Scientific Reports, 14, p.31357. DOI: 10.1038/s41598-024-82919-1.

Tadiwos, Y.B., Kassahun, M.M. and Mebratie, A.D., 2025. Catastrophic and impoverishing out-of-pocket health expenditure in Ethiopia: evidence from the Ethiopia socioeconomic survey. Health Economics Review, 15(15). DOI: 10.1186/s13561-025-00602-1.

Tsega, Y., Endawkie, A., Kebede, S.D. et al., 2024. The burden of health expenditure on household impoverishment in Ethiopia: a systematic review and meta-analysis. Cost Effectiveness and Resource Allocation, 22(36). DOI: 10.1186/s12962-024-00543-2.

VATupdate, 2025. Ethiopia imposes VAT on over-the-counter medicines, enforcing compliance among pharmaceutical companies. [Online] Available at: https://www.vatupdate.com/2025/08/20/ethiopia-imposes-vat-on-over-the-counter-medicines-enforcing-compliance-among-pharmaceutical-companies/ (Accessed: 23 August 2025).

Me and My Thoughts.

Written as Authentically as Possible

As of August 23, 2025

Semayawit Bahiru