World Bank Said to Be Urging Bulgaria to Cut VAT on Drugs

The World Bank has recommended to Bulgaria to cut Value Added Vax (VAT) levied on medicines as the tax is too high and poses a heavier burden on the poorer patients, Sega news daily reported on Monday.

The recommendation is included in a report containing guidleines for reforming the trade in pharmaceuticals in Bulgaria. The report has been prepared under a consultancy services agreement which the World Bank had signed with Bulgaria.

The World Bank has also concluded that patients in Bulgaria are paying too much for medicines themselves as the mechanism for payments from the state-run National Health Insurance Fund lacks efficiency, Sega said.

Bulgaria levies a flat VAT rate of 20% on goods and services with the exception of tourism services which are levied a 9% VAT.

According to the World Bank report, Bulgaria should cut its VAT rate of 20% for medicines to levels similar to thise in other countries of central and eastern Europe but even a rate of 9% is still considerably higher than the rate levied on medicines in other EU member states, Sega said.

For example, no VAT is levied on medicines in the UK, Ireland and Malta while the rate is 5% or lower in Croatia, Cyprus, France, Hungary, Lithuania and Spain, the newspaper added.

Some BGN 6.3B were spent on healthcare in Bulgaria in 2012 with 51% being public funds and the remainder paid by the patients themselves.

Not only are medicines having a disproportionate share of total healthcare costs in Bulgaria (38% versusan EU average of about 25%) but patients are paying themselves probably as much as 81% of the cost of the medicines prescribed to them, Sega said, citing conclusions from the World Bank report.

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