Pharma-Economic Act now passed by the Hungarian Parliament

The Hungarian Parliament approved the new, Pharma- Economic Act on the November 21. Under the new legislation, pharmaceutical manufacturers in Hungary will have to pay 12% rebate to the National Health Insurance Fund from January 15, 2007 (Marketletters passim).

The rebate is calculated on the basis of drug manufacturers revenues generated from sales of their reimbursed medicines. The original plan for a mandatory 14%-16% rebate was slightly reduced in the last minute but the finally-approved 12% did not really ease the burden on drug producers. Manufacturers will also have to pay an annual 5.0 million forint ($25,450) tax on each of their sales representatives. (The original proposal was 5.0 million forint for the first year and a further 1.0 million forint for every consecutive year.)

The new bill regulates the amount manufacturers must pay in case of overspending the annual drugs budget. Overspending up to 10 % will be split equally between the government and the drugmakers. Should the pharmaceutical budget deficit exceed 10%, manufacturers and wholesalers will have to bear the costs of overspending, calculated according to the proportion of the reimbursement paid for their products. The National Health Insurance Fund's budget deficit in 2007 is already predicted to reach 25%. While pharmaceutical manufacturers will contribute to the budget with 22.0 billion forint this year, in 2007 their contribution may treble, leading to very significant reduction of the profitability of the pharmaceutical industry in Hungary.