Actualities of the Hungarian pharmaceutical

financing market

Newsletter

No. 5, Issue V. May 2017

Published: 06/06/2017

Changes to subsidised medicinal product categories, March 2017

Dynamics of the sales/circulation of prescription-only-medicine

News, current issues Decision-making index, March 2017

3,06

Balance of the Health Insurance Fund, March 2017

Pharmacy DOT turnover Pharmacy reimbursement turnover

Explanation

Originator First generic

Number of authorized products

Applications for reimbursement

Number of reimbursed products

2017 March

Average of last 6 months

2

4

2

2,4

4

2,5

2

1

1

4,3

1

1

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Based on the next year estimation of the Health Security Fund, revenues reshape,

drug budget increases, some items remain unclear (HUN)

By summer, six active substances get reimbursed in different indications (bone

cancer, Parkinson's disease etc.), nine other products get refused (HUN)

Super hospitals: development starts next year. Big central hospitals will operate with

partner hospitals, outpatient care gets reorganized (HUN)

News

News

News

Macro approach to financing healthcare and medicinal products

Legislation

Activity of Parliament

NIHIFM decisions 39/330

46/330

12/330

Methodology

103%110%

101%94%

114%106% 105%

112% 105%113%

103% 108%

201504 201505 201506 201507 201508 201509 201510 201511 201512 201601 201602 201603

15 000

17 000

19 000

21 000

23 000

25 000

27 000

29 000

31 000

33 000

35 000

201604 201605 201606 201607 201608 201609 201610 201611 201612 201701 201702 201703

Million HUF

201504 201505 201506 201507 201508 201509 201510 201511 201512 201601 201602 201603

375

400

425

450

475

201604 201605 201606 201607 201608 201609 201610 201611 201612 201701 201702 201703

Million DOT

385,12

280,35 280,35 263,01

+2,16

17,93

78,25 82,23 82,23

119,58176,29 176,29 175,22

Billion HUF

Other revenuesContribution of Pharmaceutical

Manufacturers and Wholesalers

Socil Security Contributions

Other expenditures

Curative preventive provisions

Medicine subsidies

Expenditures: Prorated appropriation

534,9

Expenditures520,5

Balance522,6

Revenues

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Actualities of Hungarian pharmaceutical

financing market

Newsletter

No. 5, Issue V. May 2017

Published: 06/06/2017

Market data

Toplists of reimbursement and number of patients, March 2017 Average number of medical sales reps

In subsequent years, following the fall in 2013, we may see stagnation or slight growth in the sum and in the proportions. The reason why pharmaceutical companies (in contrast to other industries) have not been able to reduce their special tax burden in total or in a proportionate way in recent years has been attributed to many effects: After the drug reimbursement restriction in 2012 – more than 60 billion – continued decreasing in 2013, but since then it has been growing steadily, so the tax base of the special tax increases. The tax rate could be increased by the introduction of the so-called „Spanish tax” from 2012, which has to be paid for products that have long been subsidized and do not have a generic competitor (10% of reimbursement in the ratio of manufacturer price). Taxes increased by 2014, since then it has declined steadily, last year it came to HUF 5 billion. On the other hand, producers might gain discount from the 20% tax liability throughout price cuts, but with limited potential: while in 2012 the discount from cutting prices was 3,56% compared to the whole 20% tax, this figure in 2016 was only 0,43%. It means that discounts from cutting prices decrease proportionally year to year. Since 2014, price volumen agreements have bigger and bigger importance, which together with the R&D activity can decrease the amount of special tax. As a summary it can be told that special taxes related to healthcare show diverging pattern in comparison with other, similar tax types. For the first, these amounts do not get to the central budget, but directly to the Health Insurance Fund. It is important because in the Health Insurance Fund, besides Contributions, revenues from special taxes are more and more significant. From the viewpoint of the pharmaceutical industry it is important to highlight that meanwhile in case of special taxes of other industries it is an actual tendency that in the first year after introduction they bring the maximum of revenue for the government and gradually lose their importance, in case of special taxes of pharmaceutical industry there are no such tendencies.

Over the last decade, special taxes have become an integral part of the Hungarian tax system. These industry-specific burdens also affected the domestic pharmaceuticals and distributors sector significantly. In the case study, we examine whether the special taxes affecting the pharmaceutical sector are considered to be a heavy tax burden compared to the tax rates affecting other industries, or what trends have emerged over the past few years. In case of special taxes, it is worth first to determine what we consider to be a special tax. Officially, there are only three such tax types currently in Hungary (special tax on financial institutions, special tax on credit institutions, and special tax on distributors and investment funds), but at the approach of the Banking Association, we consider a tax as a special tax that distinguishes certain sectors, industries and activities from the taxation point of view . According to this study, we consider 16 taxes as a special tax. Of these, 13 go to the central budget, and 3 directly to the Health Insurance Fund: accident tax (since 2012), public health product fee (since 2012), pharmaceutical special tax (since 2007). (This also included the healthcare contributions of the tobacco companies introduced in 2015, which the European Commission terminated in 2016.) The pharmaceutical special tax is an overall category, in the Health Insurance Fund report published by National Institute of Health Insurance Fund Management is referred to as „pharmaceutical and distributor’s payment providing continuous drug provision”. It shows the 20% tax, the 10% Spanish tax, the medical reps fee, and the 2.5% wholesale margin tax. (The payment obligations generated by the price volumen agreements are often come under the pharma industries repayment obligations, but they are subject to private law contracts, not taxes.)

In the last 4 years, however, there is a clearly decreasing trend in the amount of special taxes, both as a percentage of GDP, and the revenue of the budget. The special taxes and the liabilities affecting the pharmaceutical industry received in the Health Insurance Fund, shaped differently. Typical data is that if the special tax on pharmaceutical companies is not counted, the proportion of all other special taxes as a percentage of GDP ranges from 2.21% to 1.6% in 2013, in proportion to the revenue of the budget decreased from 6.06% to 4.48%. In the pharmaceutical industry in 2012, the Széll Kálmán Plan had the highest contribution of the sector as a percentage of GDP and as well as the revenue of the budget.

1Siklós Márta – Mladonyiczki Balázs:A különadók szerepe az adózásban - http://www.bankszovetseg.hu/wp-content/uploads/2017/01/GP4-273-304-siklos.pdf

2EC (2016): Hungarian health contribution of tobacco industry businesses - http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_41187 3Act XCVIII of 2006

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16%

13%

49%

Special taxes (billion HUF) 2010 2011 2012 2013 2014 2015 2016

Amount received in the central budget 377,91 401,95 295,00 624,52 638,66 568,08 494,17

Amount received in the Health Insurance Fund 38,26 48,99 100,80 92,83 94,40 111,90 115,49

Of this, pharmaceutical special taxes 38,26 45,72 56,60 51,07 50,55 54,98 53,77

Total 416,17 450,95 395,80 717,35 733,06 679,98 609,65

Amount received in the Health Insurance Fund (ratio) 9,2% 10,9% 25,5% 12,9% 12,9% 16,5% 18,9%

Amount received in the central budget (ratio) 90,8% 89,1% 74,5% 87,1% 87,1% 83,5% 81,1%

Total special tax as a percentage of GDP 1,5% 1,6% 1,4% 2,4% 2,3% 2,0% 1,8%

The proportion of special taxes within budget revenues 4,9% 5,4% 4,2% 6,5% 6,1% 5,7% 4,9%

0,14% 0,16% 0,20% 0,17% 0,16% 0,16% 0,16%

0,45% 0,55% 0,60%0,46%

0,42% 0,46%0,43%

4,47%4,86%

3,61%

6,06%5,71%

5,22%

4,48%

1,40% 1,44% 1,18%2,21% 2,11%

1,84%1,60%

0,00%

1,00%

2,00%

3,00%

4,00%

5,00%

6,00%

7,00%

0,00%

0,10%

0,20%

0,30%

0,40%

0,50%

0,60%

0,70%

2010 2011 2012 2013 2014 2015 2016

Rat

e of

spe

cial

tax

es

Ra

te o

f p

ha

rma

ceu

tica

l sp

eci

al t

axe

s

Payment of pharmaceuticals by GDP Payments by pharmaceutical manufacturers within budget revenues

Other special taxes within budget revenues Other special taxes as a percentage of GDP source: HCSO

358

308

263 260 254

231

219 214

208

189

TOP 10 active substances by number of patients (thousand individuals)

ace

tyls

alic

ylic

aci

d

pe

rin

do

pri

l an

d d

iure

tics

ne

biv

olo

l

amlo

dip

ine

pan

top

razo

l

rosu

vast

atin

allo

pu

rin

ol

ato

rvas

tati

n

kole

kalc

ifer

ol

pe

rin

do

pri

l

334 M Ft

339 M Ft

340 M Ft

347 M Ft

452 M Ft

458 M Ft

516 M Ft

634 M Ft

659 M Ft

722 M Ft

TOP 10 ATCs by all reimbursement paid

paliperidone

imatinib

insulin glargine

rosuvastatin

rivaroxaban

perindopril and diuretics

dimethyl fumarate

insulin (human)

enoxaparin

other nutrients

Sha

re o

fTOP

10

active

subs

281 M Ft

287 M Ft

297 M Ft

298 M Ft

319 M Ft

339 M Ft

347 M Ft

446 M Ft

497 M Ft

722 M Ft

TOP 10 brands by all reimbursement paid

XEPLION

TECFIDERA

TASIGNA

XARELTO

OPDIVO

HUMULIN

SUTENT

SPIRIVA

CLEXANE

GLIVEC

Share

of TO

P 1

0 b

rand

s

852 M Ft

963 M Ft

1 035 M Ft

1 113 M Ft

1 341 M Ft

1 423 M Ft

1 508 M Ft

1 526 M Ft

2 046 M Ft

2 785 M Ft

TOP 10 distributors by all reimbursement paid

EGIS Gyógyszergyár Zrt.

TEVA Gyógyszergyár Zrt.

Pfizer Kft.

Richter Gedeon Vegyészeti Gyár NyRt.

Janssen-Cilag Gyógyszerkereskedelmi M. Sz. Kft.

Boehringer Ingelheim Pharma G. m. b. H. Mo.-i Fiókt.

Novo Nordisk Hungária Kft.

Sandoz Hungária Kereskedelmi Kft.

Novartis Hungária Kft.

SANOFI-AVENTIS Zrt.

Share o

f TOP

10

distrib

uto

rs

1535

1454

20

16

Octo

be

r-2

01

7 M

arch

20

17

M

arch

The role and importance of special taxes in healthcare financing—Case study