Since March 1st, 2019, China will reduce taxes on rare disease drugs: the importation is taxed at 3% reduced rate, and the domestic production, wholesale and retail can adopt 3% rate according to the simple calculation method. The first tax-reduction rare diseases list includes 21 drug preparations such as Bosentam Tablets, Iloprost solution for inhalation and Pirfenidone Capsules, plus 4 APIs including Bosentan, Pirfenidone, Penicillamine and Riluzole. This list of rare disease drugs will be jointly updated by the China Ministry of Finance, General Administration of Customs, State Taxation Administration and National Medical Products Administration.
The above-mentioned tax reduction notice was issued by Ministry of Finance, which is the implementation of the tax reduction decision made at the State Council executive meeting held on February 11th, 2019. In addition to the tax reduction for rare disease drugs, it’s also proposed on the meeting that the registration approval of new anti-cancer drugs should be accelerated in China to benefit the early market entry of new drugs in China, besides, more anti-cancer drugs should be added into national medical insurance.
The tax reduction of rare disease drugs this time is another tax benefit in the pharmaceutical field since 2018, when the tax of anti-cancer drugs was cut. The continuous tax reduction trend of drugs can be predicted and it is expected that there will be more health care field related tax reductions in the near future.