VAT Increase Will Have Limited Impact On Drug Market

BMI View: Increases in the VAT paid on medicines and healthcare services in the Czech Republic will lead to moderately higher prices and reduce affordability. While spending on reimbursed pharmaceuticals will be absorbed by the country's health insurers, higher VAT will also increase the prices of over-the-counter (OTC) medicines. While BMI believes the price elasticity of demand for OTCs is relatively low, higher prices will hinder growth and this will hamper revenue-earning potential, particularly in the transition years of 2012 and 2013.

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