Brazil drug tax move "will cut prices 10%"

Brazil's federal government was due to implement changes to the taxationof medications on May 1, under which 1,563 products, mainly used to treat chronic conditions, were to be exempted from taxes, while levies charged on other pharmaceuticals were to be increased 8.8%, reports the Gazeta Mercantil.

As a result, consumer prices for the exempted drugs are expected to fall up to 10%, while for those on which taxes were to be raised, manufacturers are expected to pass on the increases to retailers, which are not permitted to raise their prices in turn, says the report. Therefore, the state governments will have to recalculate the products' added-value margins, and these recalculations are expected to produce revenue declines of 10%-15% for all states except Sao Paulo, where most drugmakers have their production facilities.