French government revives r&d sales tax rebate

The French government has tabled an amendment to create a sales tax rebate for r&d carried out in France, in a bill containing various measures to adapt French law to EU medicines legislation.

The tax rebate measure was initially approved as part of the French 2007 social security financing bill but was removed by the Constitutional Council for procedural reasons. Health Minister Xavier Bertrand, who had insisted on the need for a major measure to support the pharmaceutical industry, had said that the rebate would return in another bill.

The EU legislation adaptation bill, introduced in the Council of Ministers in May 2006, transposes EU directive 2004/27/CE and allows the government to issue decrees to transpose other directives on health products and to adapt the French public health code to EU law. The amendment filed by the government is identical to that of December.

The sales tax rebate is for research and development expenditure by companies eligible for research tax credit in France, and will thus 'favour companies which invest in research in France'.

The tax credit will be the sum of two components - 1.2% of the current annual wage bill for pharmaceutical r&d jobs in Europe plus 40% of the increase in this wage bill. The allowance will not be able to exceed the amount due in sales tax. It will be applied to tax paid in 2008 on investments made in 2007.

The measure, which requires publication of a decree, will be able to take effect only after approval by EU authorities, as it must be notified to the European Commission.

Another measure removed from the social security financing bill is also included as a government amendment to the EU adaptation bill. This measure concerns the provision of information to holders of patents of branded medicines about the licensing progress of potential generic competitors.

The amendment modifies the French social security code by adding a clause to the Framework agreement between the economic committee on health products (CEPS) and the industry. The framework agreement would in future be able to 'lay down ways in which holders of patents for a branded medicine can be informed about the progress towards inclusion on the reimbursement list of generic versions of this medicine'.

The objective is for the CEPS to be able to act to 'facilitate information exchanges between the patent holder and the generics marketing company, as long as these do not affect the marketing of the generic products'.

Ruling UMP party parliamentarian Laurent Wauquiez intends to file an amendment to reinforce generics manufacturers' respect of the expiry date on medicines patents.