Clawback provisions block EUR 50 M investments in drugs plants


The clawback tax has become one of the most disputed legal provisions of the past three years. Moreover, due to the clawback, the investors who intended to build plants in Romania blocked their investments.
“Romania risks missing on investments in amount of EUR 50 million this year meant for local production facilities… I know of four major producers who intended to build plants in Romania. On the one hand the governmental aids encourage investments on the other hand the taxes pull one back,” says president of the Association of Generic Pharmaceutical Drugs Producers in Romania (APMGR) Dragos Damian who also holds the position of CEO of the drug producer Terapia-Ranbaxy. He refused to reveal the name of the four international producers but said that also the company he leads blocked the investments to new production facilities in Romania, and the ongoing developing facilities such as the research and development centre for the production of generic pharmaceutical drugs in Cluj will continue. “Instead of building a new plant, we pay clawback tax of RON 50 million a year. We had plans to invest in new production facilities but we stopped them,” said Damian without revealing the amount of planned investments. According to Damian, the profits gained by the pharmaceutical producers come from exports and over-the-counter drugs but those who do not export incur losses and can even go insolvent. “This clawback provision which we talk about for so long now, irreversibly compromised the pharma industry. The accessible drugs disappear from the market and the increase of the clawback provision to more than 20 percent over the past three quarters will accelerate this dramatic process both for patients and for the local producers,” said the APMGR president.
According to the association which quotes the Cegedim data, a number of 1,332 drugs disappeared from the market between 2011 and 2014, half of which cost less than RON 50 and 45 percent were made in Romania. Most of these are for the cardiovascular, anti-rheumatic and central nervous system and some of them even had a reference price.
Damian claims that the only reason to increase the clawback provision is the increase in the consumption of expensive compensated drugs. Currently, the clawback provision accounts for 38 percent of the price of a drug and is applied regardless of the product’s price.