Hungary court strikes down drug sales agent fee

Issues

Hungarian drug makers won a partial victory in court when the Constitutional Court ruled that a tax on sales agents was illegal but said subsidy repayment obligations were legal.

In a ruling published on Tuesday, the court said a Ft 5 million ($31,500) annual fee to be paid by drug makers for each sales agent was illegal, but said drug makers could not reclaim the fees already paid. The move will cost the government around Ft 8 to 10 billion in lost revenue annually and save drugmaker Richter Gedeon around Ft 700 million a year and Egis around Ft 600 million per year. “We had been quite confident that the fee would be abolished ... but we had also hoped that the repayment obligations would also be struck down,” Krisztina Székely, chairwoman of the Innovative Association of Innovative Pharmaceutical Manufacturers, told Reuters. “We were hoping for more from the court and will now look at the ruling to weigh our options,” Székely said.

The court also said rules requiring drug firms to repay subsidies in case the government's drug budget exceeds its target, were not against the constitution. The government introduced several restrictive measures in 2006 and 2007, including tax hikes, fees and subsidy cuts, to curb drug spending and limit its subsidy obligations.

Richter earlier said all of these measures, including the fee on agents, would cost it around Ft 7 billion in 2007 while Egis estimated costs at around Ft 1.7 billion. Richter declined to comment and Egis was not available to comment. (Reuters)

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