Could Taxing Alternative Medicine Help the Health Budget?

Australia, like many parts of the world, has an approach to alternative medicine and therapies that involves turning a blind eye to therapies that at face value seem harmless and able to be regulated with a lower level of rigour than conventional medicines. These therapies provide often provide false hope for patients with life threatening illnesses like cancer. Equally they are misleading for less immediately life-threatening problems. My wife is constantly receiving spam/junk advertising for weight loss programs that promise unrealistic weight loss – some of these have been in the press for serious side effects (and of course no weight loss except that attributable to the complications).

The alternative therapy industry is critical of the profit motive of ‘big pharma’ but these guys could equally be called ‘big herbal’. Australia spends approximately 9-10 billion dollars per annum on conventional medications and direct costs to patients accounts for 10-15% of this. Yet in 2005 more than 3 billion was spent on alternative therapies. If Australia parallels the US then current expenditure on alternative therapies might be 6 billion dollars or more.

A tax on these therapies – which bear minimal costs for development and proof of effectiveness and which rely predominantly on marketing for sales – could potentially raise enough funds to save 5% on the national medicines budget. There is no reason why a tax couldn’t be imposed – the government does it for tobacco, alcohol and luxury goods. And realistically – isn’t alternative medicine a luxury good.

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