THE IMPACT OF SUPPLY CHAIN MARGINS AND VAT ON THE PRICES OF MEDICINES IN BULGARIA AND GREECE

Cherneva, D.¹˒², Benisheva, T.¹˒²

¹ Medical University - Sofia, Faculty of Public Health,

² Bulgarian Association for Drug Information

OBJECTIVES: The VAT rates for medicines across EU usually differ from the standard ones and range from 0% (UK & Malta) to 25% (Denmark & Norway). The present study investigated the supply chain margins against the VAT rates in the two neighbor EU member states - Bulgaria and Greece - to survey and to analyze margins’ and VAT rate’s impact on the prices of the medicines for the public and for the business.

METHODS: To investigate the wholesale, retail margins and the VAT rate and their impact on the prices of medicines a review of the VAT legislation, guidelines and notes, the pricing of medicinal products in Bulgaria and Greece was performed. Price comparison model for both countries was developed and analyzed.

RESULTS: The VAT rate on medicines in Bulgaria doesn’t differ from the standard VAT rate (20%), while Greece uses differentiated VAT rate for medicines of 6% (compared to standard VAT rate of 24%). A price comparison model in the two countries is presented with the same ex-factory prices in Euro. The results show that the lower the VAT, the lower the retail price of the medicine is in Greece compared to Bulgaria, while the retail margins are significantly higher. With ex-factory price in the range 3-75 Euro, the retail prices in Greece are 8-13% lower than in Bulgaria.

CONCLUSIONS: The results of our review would contribute to assess the need of differentiation of margins and VAT rate on medicines in Bulgaria and the other MSs and provide suggestions for legislative update in order to use the public and personal financial resources better.