Tax system for French drug firms to change

The current fiscal regime covering the French pharmaceutical industry is "complex, unstable and barely structured," according to the National  Assembly's task force for the evaluation and control of the Social  Security financing system (MECSS). Drugmakers face no fewer than 12  taxes, including value-added tax, which between them generate 1.1  billion euros ($1.70 billion) per year. The French drug industry  association (LEEM) claims the extra burden on drugmakers is worth about  5.5% of turnover, leaving aside levies that are made across all business  sectors.

The MECSS proposes the reform of the tax on drug companies' marketing  expenses in France, whose real impact they describe as "uncertain." The  task force also challenges the viability of the regulation under which a  tax is supposed to be levied if and when drug company sales pass a  certain level. The mechanism is rarely if ever applied in practice  because drugmakers prefer to work on the basis of framework agreements  with the government. The group also recommends some sort of  stabilization of the sales tax which currently varies from year to year.

The LEEM's president, Christian Lajoux, in testimony to the MECSS, said:  "we would much prefer a structured fiscal system, for example geared  towards a reduction in the consumption of medicines or of the social  funds' deficits. That is not [at present] the case and, even if one  takes note of certain recent developments, for example regarding the R&D  tax credit, this fiscal system is not of a nature to make France the  pick of international [pharmaceutical] groups."