Governments maintain tax exemption for chloroquine and do not grant benefits to effective drugs against Covid

Medicines such as chloroquine and ivermectin, which were widely used in Brazil in the treatment of Covid-19, encouraged by the administration of Jair Bolsonaro (PL), continue to receive tax benefits granted to products to combat the coronavirus, although they are useless against the disease.

The exemptions, which affect federal and state taxes, are not linked to the health emergency decree of the Ministry of Health and, even with the announcement of their end, will remain valid until they are revoked.

The case draws attention because drugs proven to be effective against Covid do not receive such benefits. Without exemptions, useful drugs such as baricitinib and paxlovid, which are starting to reach the SUS, will cost more to health secretariats and patients in the private network.

Chloroquine and azithromycin, which are part of the so-called Covid kit — a basket of ineffective products that was the flagship of the Bolsonaro administration in combating the pandemic — have been exempt from the Tax on the Circulation of Goods and Services (ICMS) since July 2020. , as a way of “prevention of contagion and coping with the pandemic”. The exemption runs until April 2024.

The measure is valid in 20 states and has already been extended three times by the National Council for Finance Policy (Confaz), the last time in October. The body is formed by the Minister of Economy, Paulo Guedes, and the state finance secretaries. The agreements signed must be later approved by the state legislatures to enter into force, since ICMS resources are destined for the state coffers.

The agreement grants zero circulation tariff to medicines containing chloroquine and hydroxychloroquine, which are effective against malaria and lupus, but not against the virus that causes Covid, as well as the antibiotic azithromycin, which is effective against bacteria, not viruses.

Sought, the Ministry of Economy stated that the exemption was proposed and approved by the state secretariats, that the list of medicines is “the responsibility of the federated units” and that it does not know the amount that has not been collected. THE Reporter Brazil sought out the national committee of state finance secretaries (Comsefaz) and did not receive a position until the publication of this text.

“What is the logic of these tax exemptions?”, asks researcher Maria Angélica Borges dos Santos, from the Oswaldo Cruz Foundation (Fiocruz), a specialist in health economics. “In the name of health it is very easy to pass measures like these, because the threat to life is a central argument. But this appeal can facilitate bad practices”, she says.

“It is difficult to justify the exemption for a drug without scientific evidence”, criticizes Francelino Valença, director of Fenafisco, an entity that represents state tax inspectors.

Ozone therapy devices are also exempt from ICMS. It is an experimental therapy that is registered with Anvisa only for aesthetic and dental procedures. However, during the pandemic, it was applied in the treatment of Covid, even without scientific proof, from the application of ozone via the rectum. Defenders of the practice were even received by the then Minister of Health, Eduardo Pazuello, to discuss its adoption in the SUS.

The exemption list also includes important products to face Covid, such as gloves, masks, syringes, needles, Ecmo devices (which work as an artificial lung), intubation kits and lung ventilators.

free import

In addition to ICMS, chloroquine, ivermectin and nitazoxanide have been exempt from import tariffs since March 2020. “This reduction also extends to other products and will make all the difference in our fight!” Bolsonaro said at the time.

The measure is signed by the Chamber of Foreign Trade (Camex), of the Ministry of Economy, and has already been extended five times – the last of which was last November, when the zero rate was extended until June 2022.

The Camex list has 533 exempt products and was last updated on April 1, 2022, without, however, chloroquine and ivermectin being withdrawn.

The Ministry of Economy did not comment on the import tax waiver.

The Fiocruz researcher points out that the import tax corresponds to less than 1% of the final price of medicines, while the ICMS reaches 14%, according to data from the 2019 Health Satellite Account. access?”, asks Santos. “As the final price of medicines is proposed by the company, the tax-free margin can be built into the product as far as the consumer can afford to pay and the legislation allows, which is usual practice in the sector”, he adds.

“When the federal government removes the tax on chloroquine and ivermectin, it also reduces transfers to states and municipalities”, says the director of Fenafisco.

With the encouragement of the Bolsonaro government, ivermectin has become one of the best-selling drugs in Brazil: it was the fourth most sold in 2020, according to data from consultancy IQVIA, reaching the same position in 2021, when 45.1 million units were sold. .

On the other hand, really effective drugs against Covid have been marketed for several months without the incentives.

Baricitinib, for example, which has just been incorporated into the SUS, has been approved by Anvisa since September to treat severe Covid patients, but is not on the Confaz or Camex list.

Tocilizumab, which is used off-label in private services, also received no incentives. Only rendesivir, the first anti-Covid drug to arrive in Brazil, has tax exemption, but only from the import tax.

With the current rules, the Ministry of Health will pay more to offer baricitinib in the SUS, medication indicated for critically ill patients. According to the pharmaceutical company Lilly, each pill offered to the federal government costs R$ 27.22 without ICMS and PIS/Cofins, or R$ 37.72 with taxes.

But, last year, the folder acquired this medication for the treatment of rheumatoid arthritis (its original indication in the package insert) for R$ 32.80 a unit (without PIS/Cofins, but with ICMS). Of the 530,000 pills purchased, 400,000 have already been delivered. It is from this stock that the first pills for the treatment of Covid in SUS should come out. At this price, the total cost of the treatment (made with a daily pill for 14 days) is R$459, when it could cost R$381.

Lilly says that Saúde has not yet been contacted to negotiate the sale of new lots and that the incidence of taxes on the price will only be discussed in the event of a new purchase.

Asked, the Ministry of Health did not answer why ineffective drugs were benefited for so long, nor commented on whether the new drugs will be exempted. The folder said that the issue of exemptions “is under review”.