Italy Raises VAT On Some Medicines

Last week the Italian government raised value added tax on somemedicines, under a 4,300 billion lire ($2.8 billion) budget-cutting package.

The package, the last leg of 62,500 billion lire ($40.87 billion) total deficit cuts for 1997, raises VAT to 10% from 4% on the A, B and H classes of drugs provided under the state health service, but should have no real impact on final drug prices or on inflation, say government statements.

The state is seeking to raise 598 billion lire through this move, which will also mean an extra burden to the state health fund, which is to absorb some 357 billion lire of the estimated extra income which the VAT rise should provide, while the overall yearly ceiling for drug spending will have to be revised upwards.