Hungary Government Raises Sales Tax, Fees On Drug Firms

Hungary's government will raise a tax on drug firms' sales of state subsidized drugs to consumers from July to prevent an overrun in the state drug fund, the health affairs state secretary said on Tuesday.

The country's health minister Miklos Szocska told a news conference the tax rate would rise to 20% from 12%, while annual fees payable on medical representatives employed by drug companies would be doubled to 10 million forints per head.

He said these steps were needed to prevent an overrun in the 343 billion forint ($1.8 billion) 2011 state drug fund but also formed the basis of planned reforms for the 2012-13 period to cut state spending in that area.

The measures, to be launched from July 1, are part of the government's three-year budget reform program designed to cut the size of the state drug fund by 120 billion forints by 2013.

"The current action plan contains steps needed to keep the 2011 drug fund on track but also form the basis of structural changes," Szocska said.

"The measures have an impact on 2012-2013 as well. This year they are expected to save 26 billion forints," he said. The steps, which are broadly in line with plans outlined in a government document obtained by Reuters last month, also include renegotiating volume contracts, in which government subsidies cover only a certain amount of drugs.

The government also plans to launch a so-called preferred reference price range for generic drugs to cut costs for patients, Szocska said.

"Market players willing to provide products at a lower price will gain a reliable market in return," Szocska said, adding that for expensive drugs the government would tailor subsidies to the proven effectiveness of the given product.

Szocska said some decisions in principle were made about the reforms affecting 2012 and 2013. He did not give details.