Saturday, June 22, 2024

France’s High Tax Burden on Pharma Industry

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France is the European country with the highest tax burden for pharmaceutical companies, according to a study published by Entreprises du Médicament en France (Leem), an association of French pharmaceutical companies. The study, commissioned by Leem from consulting firm PwC, examined tax policies in seven European countries: Germany, Italy, the United Kingdom, Ireland, Spain, Switzerland, and France. It found that, in 2023, France leads in both general and sectoral taxes applied to the pharmaceutical industry, with sector levies reaching 88%.

Comparison with Other Countries

In comparison, the United Kingdom’s sector levies are 74%, Germany’s are 43%, Spain’s are 53%, and Switzerland’s are only 3%. Despite some reductions in general taxation and the maintenance of incentive schemes like the research tax credit, these measures are insufficient to offset the increasing sectoral contributions in France. Leem particularly criticized the safeguard clause, a financial regulation that requires pharmaceutical companies to reimburse part of their profits to the French health insurance system when they exceed a certain threshold.

The safeguard clause, currently capped at 1.6 billion euros, is seen as a significant burden. Industry Minister Roland Lescure announced this cap in September. However, the French pharmaceutical industry lobby wants more substantial changes. Thierry Hulot, president of Leem, suggests reducing the clause to less than 500 million euros within three years. Leem also highlighted that the price of medicines in France is among the lowest in Europe, averaging 25% less than elsewhere in the EU.

Pharma Industry

Impact on Pharmaceutical Industry

Leem argues that these mechanisms stifle a sector strategic for the country’s sovereignty, counteracting the government’s ambition to make France a world leader in healthcare. In 2008, France was Europe’s leading producer of medicines, but it now ranks sixth, behind Switzerland, Belgium, Germany, Italy, and the UK. Leem calls for a new deal to rebuild France’s attractiveness, health sovereignty, the competitiveness of its companies, and the conditions of patient access to medicines.

Mélanie Heard, a health expert at the Terra Nova think tank, acknowledges that public health cannot rely solely on private companies that do not generate sufficient profits. However, she noted that the study only briefly mentions the research tax credit and lacks transparency about the significance of various forms of public support for private research and innovation. This aspect of public support is crucial for understanding the full context of the pharmaceutical industry’s financial landscape in France.

The call for reform in France’s pharmaceutical sector highlights the need for a balanced approach that supports both public health goals and the economic viability of pharmaceutical companies. By addressing these concerns, France can work towards regaining its position as a leader in the global pharmaceutical industry and ensuring better healthcare outcomes for its population.



Resource: EURACTIVE, May 22, 2024

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