Why don’t we tax complementary and alternate medicines?

Today I heard Dr Ken Harvey speak at our medical grand rounds on the problems of regulation of complementary and alternative medicines (CAM) in Australia. In a nutshell the current situation is that the Therapeutic Goods Administration undertakes minimal review of the effectiveness of CAM and has little capacity under law to protect consumers from potential harm.

The issues around regulation are unlikely to change in the near future – real change would likely require a change to the Therapeutic Goods Act and it is always difficult to change an Act.

Which leads me to wonder – why don’t we use financial regulation to reduce the use of CAM? Taxation of CAM might reduce its’ use by raising the price for the consumer. If this didn’t deter the consumers then at least revenue might be raised that can offset costs of conventional healthcare.

The estimated market in Australia for CAM is roughly half of PBS expenditure – which in the last year approached $10 billion. A modest tax on CAM could recoup a substantial percentage of the PBS expenditure.

Alternately a tax might impact revenue and force smaller vendors out of the market.

We want to tax miners – why not tax CAM companies?

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