Source: O Globo Online, 24/05/2009

BRASÍLIA and RIO - With no hope that the tax reform will take off anytime soon, the government and the pharmaceutical industry have resumed in recent weeks talks about reducing the tax burden on medicines. The main target is the ICMS, the tax that most levies on medicines. On the proposal menu is the reduction of the current average rate, from 17,5%, to 12% or even to around 6%. In the first case, prices for high-consumption drugs may fall by almost 9%. This is what Gustavo Paul's report in Monday's GLOBO edition reports.

The announced objective of the negotiation is to increase the supply of medicines to the population - via price reductions -, to reduce treatment costs and even to combat tax evasion.

Care not to buy counterfeit drugs

Conversations are taking place at the technical level. Next Thursday, the Executive Group of the Industrial Health Complex (Gecis), which gathers several ministries and is coordinated by the Ministry of Health, meets to study strategies to convince states to reduce the tax. On the 6th, a representative of this group met for a few hours at the headquarters of the Brazilian Federation of the Pharmaceutical Industry (Febrafarma) to analyze numbers and discuss the proposal.

A study by the Brazilian Institute of Tax Planning (IBPT), at the request of the federation, points out that the drugs consumed in Brazil have an average tax burden of 35,7%. Of this total, the ICMS is the most important, with an average rate of 17,5%. For comparison, medicines for animal use have a tax burden of only 14,3%. The document also shows that the highest rate is that charged in Rio, which reaches 19%. In São Paulo the rate is 18% and most states charge 17%.