2024-05-02 06:00:00
Medicines Companies (Leem) fire a new salvo on the taxation of the pharmaceutical industry in France. A study commissioned from PWC and published on May 2 concludes that France continues to be the “European leader in general and sectoral levies” for this sector in Europe. The said study compares French taxation relating to the pharmaceutical industry with four EU countries, namely Germany, Italy, Ireland and Spain, as well as the United Kingdom. and Switzerland. Or the largest drug producers on the continent, also including Belgium which was not part of the study.
According to PWC calculations, pharma in France would be subject to an overall levy rate of 60% on current profit before taxes, ahead of the United Kingdom (51%), Germany (42%), Italy ( 35%), Spain (29%), Ireland (22%) and far ahead of Switzerland which brings up the rear at 11%.
General taxation reduced in France for pharma but weighed down by sectoral taxes
The study, however, recognizes a reduction in general taxation, highlighting the reduction in the corporate tax rate, which was reduced from 33% to 25%, or the 75% reduction in the contribution on the added value of businesses. These measures, combined with the research tax credit, now allow the pharmaceutical industry in France to be “better placed than the United Kingdom, Italy and Germany“, countries which experienced, with Ireland, a “tightening of economic regulation measures“, describes the report. Except that “the weight of sectoral levies reduces [la France] in first place for companies in the pharmaceutical sector» in terms of taxation. PWC assures that the “exponential weight of sectoral levies largely cancels out the positive impact of the efforts made over several years in France on general taxation“. According to the study, the share of sectoral levies represents almost 90% of the taxation weighing on pharma in France compared to an average of around 50% in the four other large EU countries compared.
A safeguard clause with an amount multiplied by 12 in five years for pharma
The main target of Leem within the various sectoral taxes in France remains, unsurprisingly, the safeguard clause. Which is triggered when the turnover of the reimbursable medicine in France exceeds the envelope set by the social security finance law, leading to a repayment of up to 70% of the income earned beyond the envelope. However, this clause introduced in 1999 is now triggered every year, criticizes Leem, describing a weight that has increased from 126 million euros in 2019 to 1.6 billion euros in 2023. In recent years, the sector has constantly to take issue with this clause.
Last fall, Roland Lescure, Minister Delegate for Industry and Energy, agreed to a cap of 1.6 billion euros for 2023 and 2024 in order to temper the discontent. On the Leem side, we have been fighting for months for a profound lowering of the clause. In a press release, Thierry Hulot, the president of Leem, calls for the establishment of a “trajectory of decrease in the amount [de la clause] to reach less than 500 million euros within three years“. Which corresponds to one of the proposals put forward at the end of summer 2023 by the report of the interministerial mission on the financing and regulation of health products.
Resuming its usual and rehearsed speech of recent years, Leem sees in this taxation a brake on investment in R&D and production in France in the pharmaceutical sector. Particularly in a context where the prices of medicines in France are always described as the lowest at the European level. Leem reminds us in passing that the country has fallen at the European level both in terms of production, going from first to sixth place in pharmaceutical production, and from first to third place for clinical trials. Far from the government’s ambitions to make France the European leader in health.
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