Government expands tax exemption for medicines

By ETCO
27/06/2014

Source: Folha de S.Paulo - 27/04/2014

The Dilma Rousseff government (PT) decided to expand the list of substances used in the manufacture of medicines that are free from the collection of part of the taxes.

The expected impact, in practice, is a reduction of at least 12% in the prices of medicines containing the benefited substances.

The decision of the Dilma government comes just over three months from the elections and seven years after the last update of this list, which took place in 2007, during the Lula government.

According to Folha, the new list will be published on Friday (27), containing about 160 items. The antibiotic amoxicillin - used, for example, in cases of tonsillitis - is one that should be benefited.

The industry, which had been pushing for years to update the list, had the expectation that this new list would include up to 340 items.

The so-called “positive list” has existed since 2001 and brings together active ingredients of medicines considered as priorities and, many, of continuous use, such as antiallergic agents, vaccines and cancer drugs.

Medicines that contain the substances on this list have their PIS / Cofins taxes zeroed. Therefore, this impact of 12% in the price, according to the industry.

In the government's calculations, the update will generate a tax waiver of around R $ 20 million in one year.

The products benefited are red or black stripe medicines.

It is up to the official chamber that regulates drug prices to ensure that tax reductions are fully reflected in the prices set as a ceiling for products.

And the industry claims that, for reasons of competition in the market, these reductions are passed on to consumers in pharmacies and to governments in public purchases.

In a letter to an entity in the sector in 2011, the Ministry of Health stated that it had already asked the government's economic area to urgently update the list.

According to the industry, the gap prevented the price reduction of medicines with new substances and generated an unfair competition between products with similar medical indications, but that had different taxation.

Earlier this month, Sindusfarma (Pharmaceutical Products Industry Union in the State of São Paulo) went to the STF (Supreme Federal Court) in an attempt to have the Justice order President Dilma Rousseff to publish a new list. Today, there is no rule that defines the periodicity of the review.

"It will lower prices and expand access, in addition to avoiding unfair competition from products that are tax exempt against those that are not," says Nelson Mussolini, the entity's chief executive.

In the union's accounts, the price reduction in pharmacies and public purchases can reach an average of 33%, since, when the taxes are zeroed, there will be an impact on the collection of ICMS by the States.

Reginaldo Arcuri, executive president of the FarmaBrasil group, says that several entities in the sector had been negotiating, in the last two years, to update the list with the federal government.