Pharma firms seek peace with Poland

Date: 22/07/04

MULTINATIONAL pharmaceutical companies are stepping up efforts to end a dispute with the Polish government that has threatened them with €1 billion in fines.

Companies of the European Federation of Pharmaceutical Industries and Associations (EFPIA) met in Warsaw last week to discuss their difficulties operating on the Polish market.

EFPIA wants the European Commission and the Dutch EU presidency to exert pressure on the Polish government to lift the threat of fines. It has called on Enlargement Commissioner Günter Verheugen to appoint an arbitrator, using procedures laid down in the association agreement which governed Poland's relations with the EU before 1 May.

Polish rules on pricing restricted the wholesale margin on pharmaceuticals to 11%. For years, the international companies transferred credits to their Polish subsidiaries to subsidize marketing and distribution. But in 2001, the Polish authorities ruled that the credits were not permitted and that the companies owed excess margins, unpaid VAT and fines.

Around 100 legal cases are pending against importers of pharmaceuticals, with potential fines estimated at between €250 million and €1bn.

EFPIA is concerned that once the authorities formally calculate the level of allegedly unpaid tax and fines, the companies might have to make provisions and inform investors on the New York and London stock exchanges.

Benjamin Gannon, director of government affairs in central and eastern Europe for GlaxoSmithKline, said: "The margins issue is blocking progress on a number of issues affecting Polish health care reform. We want to get this off the table. The proper way to do this is to use the EU's dispute settlement mechanism."

The multinationals are also unhappy that Polish authorities have not approved any foreign product for reimbursement by the national health system for more than five years.

http://www.efpia.eu/ http://www.efpia.eu/

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