Medical Drugs Producers warn that applying clawback tax to cheap drugs is endangering healthcare system

The Industrial Medical Drugs Producers’ Union of Romania (PRIMER) is signalling the deepening of the crisis of cheap medical drugs because of the clawback tax, an income tax applied exclusively for medical drug producers.

UPDATE: The Tudose Government announced on Wednesday that it is now considering eliminating the clawback tax for cheap medical drugs, besides removing it from plasma-based drugs to counter the immunoglobulin crisis. All the measures will be included in an emergency ordinance that will be adopted during a cabinet meeting next week.

PRIMER claims that Romanian authorities are unwilling to understand the fact that applying the clawback tax to drugs that are cheaper than RON 25 has “devastating effects on the population, the health system and the pharmaceutical industry”.

The clawback tax is described as the number one cause of the unavailability of cheap drugs in pharmacies and hospitals, which is blocking patients’ access to treatments.

“We’ve repeatedly explained to Parliament, the Health Ministry, the Finance Ministry and the National Health Insurance House that if the clawback tax reaches 25% of the price of a cheap drug, that drug becomes completely unprofitable and producers struggle to continue to manufacture it.

We’ve presented numbers showing that if a RON 5 clawback tax is applied to a drug that costs RON 25 in a pharmacy or hospital, that drug ends up having zero profitability after production cost and other taxes are accounted for.

The situation is even worse for drugs that cost less than RON 15, which create losses of RON 1-2 for producers”, argued Dragos Damian, PRIMER Executive Director.

PRIMER’s press release also argues that the excessive politicisation of the subject of medical drugs and finding other explanations for the crisis are inappropriate and don’t lead to real solutions for stopping the disappearance of cheap medicines that cost less than RON 25.

“The cheap medical drug crisis can only be solved by a dialogue with local producers who manufacture most of these drugs, which have been available in emergency rooms and first-aid kits across the country.

Romanian authorities prefer short-term solutions, and we have not yet been contacted by any official in order to work together towards solutions, despite the fact that we have repeatedly expressed our availability to them”.

The clawback tax is a very controversial subject and it has a variable level, having increased to 20 percent in the last year, which means it is 30 percent higher than in Q3 of 2016. PRIMER argues that this increase is inexplicable considering the fact that drug prices decreased two years ago, and they estimate that the clawback tax will increase to 25-30 percent in 2018, which would only further deepen the crisis for the cheap medical drug segment.

The message comes in the context of the Tudose Government announcing that the clawback tax will be suspended for plasma-based drugs as a solution for the immunoglobulin crisis.

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