Brazilian Drug Tax Break Expected Shortly

A tax break, due within a fortnight, is set to cut the average price of roughly 1,000 drugs in Brazil by 11%. The country's Health Ministry claims that exemption from the taxes, known as PIS and COFINS, will affect approximately 250 active pharmaceutical ingredients.

According to officials, the tax breaks will ease access to drugs for major diseases, including coronary conditions, central nervous system disorders such as Alzheimer's and depression, as well as tuberculosis, hypertension, ulcers, and HIV/AIDS.

Pharmacies have already claimed that the move will negatively affect margins. Further, the small scale of the price cut on the drugs, which are most likely to be cheaper generics, will do little to change the fact that Brazil's taxes on pharmaceuticals are currently among the highest in the world at more than 32%.

Whether the government actually has the power to significantly change the situation is doubtful. The largest single tax on pharmaceuticals is the ICMS sales levy, which is not administered by the federal government. Brazil's state governments will be unwilling to lose the tax, which is a key source of revenue.