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Richter says Hungarian draft law threatens net profit

Richter Gedeon Nyrt, Eastern Europe's biggest drug maker by market value, said a new bill proposed by the Hungarian government would cut sales and profit, Bloomberg reported.

The draft, discussed by the government in first reading today, calls for drug makers to give a rebate to state health insurer National Health Fund Administration (OEP) as their biggest customer, Ágnes Horváth, state secretary at the Health Ministry, said in an interview.
“If this is really going to be the case, it could have a very serious affect on the turnover and net profit of all Hungarian manufacturers,” said Richter spokeswoman Zsuzsa Beke in a phone interview. “This is a kind of tax. The whole draft we had seen is absolutely unacceptable,” she said.
Richter was never consulted on the draft law, Beke said. “We had two hours to look over the 300-page draft,” she said.

The government is seeking to limit healthcare spending as part of its program to battle its budget deficit, set to reach 10.1% of GDP this year. The government proposed to cut spending at the OEP by 0.9% of GDP by 2009.
Health Minister Lajos Molnár, who took office in June, has pledged to battle what he calls overspending on drugs at the state insurer. The fund spent Ft 348.9 billion on drugs last year, more than double the amount it spent in 2001, according to government data.
The average Hungarian consumes about $220 in drugs each year, more than any country in Eastern Europe, according to Citigroup Investment Research.