Government proposes new taxes for drug companies

A legislative proposal approved by the government on Wednesday would require drug companies to pay two new taxes from next year: a tax proportional to the subsidy paid by the state on pharmaceutical products and another tax to be paid if the National Health Fund Administration (OEP) exceeds its drug subsidy budget. The new taxes are contained in one of three health reform-related bills the government will submit to parliament on Friday, Health Minister Lajos Molnár said after Wednesday's cabinet meeting. He said he hoped Parliament would approve the legislation during the autumn session. The tax on the subsidized content of drugs will be a double-digit tax, Molnár said. He added that drug makers could request exemption from the tax if they promise to lower their drug prices for three consecutive years. Molnár added that proposals on pharmacies, a health insurance watchdog and the scrapping of mandatory membership of healthcare workers in professional bodies would be presented to Parliament on Friday.

In addition to the new taxes, the government aims to introduce stricter regulation of drug advertising and cut subsidies for pharmacies. It also plans to tax drug companies a one-off Ft 5 million for each sales representative and Ft 1 million per representative each year after that. The proposal would force all but the neediest of Hungarians to pay for drugs. In the case of drugs which are wholly subsidized, patients will have to pay Ft 300. Some drugs will be allowed to be sold outside of pharmacies, although their sale will be strictly regulated. The proposal would introduce a "solidarity fee", of 1% of revenue, on average, to be paid by pharmacies with high turnover. Revenue from the fee would be used to support pharmacies in smaller villages and towns. The government has also proposed setting up a watchdog to oversee the National Health Fund, the rights of those it insures and the efficiency of healthcare institutions and providers. Molnár noted that drug subsidy expenditures are expected to reach Ft 400 billion in 2006. Opposition MP István Mikola, vice president of Parliament's Healthcare Committee, said the government failed to negotiate with drugmakers before submitting the proposal, which is against the law. (Mti-Eco)