BRAZIL INTRODUCES NEW TAX EXEMPTION FOR DRUGS

Brazil's government has approved the exemption of 60 categories of drugs from two national taxes, which is expected to reduce selling prices by 11% and cost the authorities some BRL125mn (US$53.34mn). The measure is expected to impact manufacturer or retailer margins significantly, and could boost overall sales.

Pharmaceutical producers will now be required to submit requests for the exemptions from local pricing agency CMED. Local trade associations have supported the initiative, estimating that without the exemptions Brazil's factory exit drug prices are 4.9 times lower than in the US, but final selling prices are an average 2.9 times higher than in the US.

Nevertheless, the ICMS sales levy continues to place a heavy burden on selling prices, although political problems may endanger the government's ability to roll back the tax.