Банкеръ Weekly

Briefs

PHARMACISTS WANT 10% VAT ON MEDICINES

The Association of Phamaceuticals Producers insists for a 50% reduction of value added tax (VAT) on medicines. Statistics show that according to the size of VAT charged on medicines, Bulgaria comes next to Denmark (25%), Sweden (25%) and Norway (24 per cent). In most European countries VAT on medicines is several times lower than VAT on other commodities. As of the beginning of 2004 in was cut down from 19% to 9% in Romania; it is only 5% in Lithuania, and in Hungary no VAT at all is charged on medicines, experts from the association pointed out. According to them, the National Healthcare Insurance Fund will remit BGN48MN to the Treasury if VAT remains 20 per cent. This amount will be reduced by half if VAT is cut down to 10% and medicines will be 9% cheaper. A considerable amount of money will be saved, that could significantly improve the financial state of the domestic healthcare system, the Executive Director of the branch organization Deyan Denev said. However, the initiative for the reduction of the VAT rate should not come from us, but from the governors who declared they were trying to optimally use the finances, earmarked for healthcare, he added. The end price of medicines presently depends on the surplus, charged on them while travelling from importers to the pharmacies. Wholesale traders make them 7% to 12% more expensive, and retailers add another 20-33 per cent. Finally, after-VAT prices of medicines when they reach consumers are some 52-66% higher than producers' or importers prices. Some medicines cost in Bulgaria even more than in the EU countries. Currently, the State sets retail prices only for products which are in the Positive Medicine List or will be supplied to medical institutions with state participation. The list includes life-saving medicines, chosen as per their compliance with high quality and safety criteria. The prices of medicines which are not subject to public procurement orders of the Ministry of Healthcare and municipal hospitals are not liable to regulation. Therefore, Deputy Minister of Healthcare Prof. Oleg Hinkov took a stance for formulating a specific policy on medicines, taking into account the challenges which pharmacists will face on Bulgaria's accession to the EU. According to Prof. Hinkov, distributors' and drug stores' surplus charges are excessive, and an adequate mechanism for setting a ceiling should be urgently worked out. The introduction of a methodology will stabilize the market and the prices of one and the same medicines will be the same in various pharmacies, he said. The Association of Phamaceuticals Producers pointed out that costs for medicines could be cut down if a good balance is found between prescribed original products and their analogues. In the EU more original medicines than substitutives (generic medicines) are sold. However, the use of analogues is encouraged, as they are cheaper and at the same time have almost the same therapeutical qualities. The reorientation of consumption to the generic medicines allows reduction of expenses for some products and their redirection to original medicines which still have no analogues. No such a balance exists in Bulgaria. For decades now the domestic market of pharmaceuticals has been dominated by generic products, which limits patients' access to the most contemporary medicines and forms of treatment and medication. Judging from some analyses, 85% of medicines bought in Bulgaria are not original.

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