France: Europe’s highest tax burden for pharma industry, lobby warns

France is the European country with the highest tax burden for pharmaceutical companies, according to a study published on Thursday (May 2) by Entreprises du Médicament en France (Leem), an association of French pharmaceutical companies.

The study, commissioned by Leem from consulting firm PwC, looked at tax policy in seven European countries: Germany, Italy, the United-Kingdom, Ireland, Spain, Switzerland, and France. 

“In 2023, two opposing dynamics can be observed in most of the countries studied: a reduction in general taxation but an overall tightening of sectoral regulation, more marked in France”, the study found. 

As a result, “France remains the European ‘leader’ in general and sectoral taxes”, Leem warned in a press release. 

In France, the proportion of sector levies applied to the pharmaceutical industry is of 88%. In the UK, it is 74%, in Germany 43%, in Spain 53% and in Switzerland 3%. 

While the pharmaceutical lobby welcomes a reduction in taxation and the maintenance of incentive schemes such as the research tax credit, it feels that this is not enough to offset the increase in sectoral contributions.

Leem was particularly critical regarding the so-called safeguard clause, a financial regulation mechanism that requires pharmaceutical companies to pay back part of their profits to the French health insurance system when they exceed a certain amount. 

Strongly criticised by the pharmaceutical industry, the safeguard clause is now limited to 1.6 billion euros, as announced in September by Industry Minister Roland Lescure in the daily newspaper Les Echos.

But the French pharmaceutical industry lobby wants to go further: “In addition to capping the clause, we need to establish a trajectory for reducing the amount of the clause to less than 500 million euros within 3 years,” said Thierry Hulot, president of Leem.

The pharmaceutical lobby in France also criticised the price of medicines in the country, which is among the lowest in Europe. According to Leem, medicines sold in France cost on average 25% less than elsewhere in the EU. 

“These mechanisms stifle a sector that is strategic for the country’s sovereignty and run counter to the government’s ambition, shared by pharmaceutical companies, to make France a world leader in healthcare,” Leem complained. 

In 2008, France was Europe’s leading producer of medicines, but now ranks sixth, behind Switzerland, Belgium, Germany, Italy, and the UK, according to the government’s official data.

Leem called for this situation to be rectified as a matter of urgency, as part of a “new deal” to rebuild France’s attractiveness, its health sovereignty, the competitiveness of its companies, and the conditions of patient access to medicines.

Contacted by Euractiv, Mélanie Heard, health expert at Terra Nova think thank, admitted that public health cannot depend on private companies that do not make enough profits.

“However, the study only vaguely mentions the research tax credit, and is not transparent about the importance of the various forms of public support for private research and innovation”, she outlined.

[Edited by Zoran Radosavljevic]

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