The position of the pharmaceutical industry, which was united in its opposition to the introduction of excise taxes on the pharmaceutical substance of ethyl alcohol, due to the significant risks of increased production costs, and consequently, the pharmaceutical products themselves, upon entry into force of this measure, was heard by regulators. The Ministry of Finance proposed to improve excise taxation by providing for a full deduction of excise taxes used for the production of medicines, which will prevent the rise in the price of medicines.
Let us recall that, at the suggestion of the Federation Council, in order to suppress the illegal production and circulation of alcoholic products, the Ministry of Finance prepared amendments to the tax code, including those providing for excisability of medical alcohol and a number of alcohol-containing drugs. However, representatives of the pharmaceutical industry, having analyzed the draft law, expressed their concern about the initiatives put forward. ARPM, together with leading industry associations, sent an appeal to the Ministry of Industry and Trade, the Ministry of Health and the Federal Antimonopoly Service of Russia in November last year, in which it pointed out the serious socio-economic consequences that would result from the legitimization of the proposed amendments.
The legislative innovations would inevitably lead to a significant increase in the costs of pharmaceutical manufacturers, an increase in the financial component of production, an increase in prices for finished products, an additional burden on the budget, the risk of drug shortages and social tension, and would have a negative impact on the drug safety policy of the Russian Federation. At the same time, it remained unclear how the extension of the excise tax to medical alcohol would reduce the volume of the illegal market for surrogate alcohol, and the financial compensation to pharmaceutical manufacturers proposed by the developers would actually increase the labor costs of regulatory bodies, the bureaucratization of production processes, and would appear to be only additional multidirectional financial flows.
It is gratifying to note that the relevant regulators supported the industry’s position, and thanks to active joint discussion and development of mutually acceptable solutions, the Ministry of Finance revised the draft law in order to prevent an increase in the cost of medicines for the population and the creation of an additional financial burden on the industry and the healthcare budget.