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Drug prices not likely to rise, Bogsch says

Drug makers and the government should make a compromise in order to maintain the competitiveness of pharmaceuticals, and, at the same time, to make the government’s economic plans come true, said Erik Bogsch.

The CEO of listed pharma company Richter Gedeon was reacting to the government’s plan to raise taxes on subsidized medicines from the current 12% to 18%.

Richter CEO Bogsch, who is also president of the Hungarian Pharmaceutical Manufacturers’ Association (MAGyOSz), warned that if the restructuring of the drug subsidy system will not end in a way which is satisfactory for both the government and the sector, mainly small- and medium-sized companies would suffer and might lose their competitiveness, but even the big ones would feel the negative effects. However, the association also believes that restructuring is necessary.

According to Bogsch, the increased tax on subsidized medicines means an extra HUF 15 billion burden on drug manufacturers.

Hungarian drug makers add up nearly half of the research and development segment, approximately HUF 60 billion a year, he said. Furthermore, they directly employ some 14,000 staff – 45,000 considering vendors -, and pay nearly HUF 80 billion in taxes every year to the state coffers, Bogsch said.

“All these should be considered by the government, as well as the investment activity of the companies in the sector,” he said, adding that he hopes talks with the government will continue.

Bogsch also said that restructuring the subsidy system will not necessary trigger higher drug prices. “Some product groups might cost more, but in general, companies will not raise their prices,” he said. “With lower subsidy rates, patients would pay more for certain drugs, but it would not be profitable for the companies therefore raising prices is not in their interest.”