The government’s stabilisation package has passed its second reading in the Chamber of Deputies, making a change in the VAT rate from 10 to 12%, among other things for medicines, slightly more likely. Remember that the rate change can have a significant negative financial impact on products for which you have contracts with health insurance companies. In fact, the insurance companies’ cost of the higher VAT rate may in some cases be paid by the holder – either by an earlier or higher payback, or by a lower price (because the values in the contract are usually calculated with VAT on the day of signing) – the payers’ contract models are exactly this way. And only some of them provide for a change in the text in case of a change in the VAT rate. The biggest risk we have identified is in the contracts:
- for the compensation of VILP/LPVO costs;
- risk-share in the form of a budget cap, or a discount on each package;
- on the price to the final consumer;
- the price in the form of a price declaration to the CAP.
In contrast, reimbursement agreements and manufacturer’s maximum price agreements, which are negotiated without VAT, are virtually free of this risk. We therefore recommend the following approach:
- Check the signed texts of all contracts with payers, especially the 4 types described above;
- verify that the limits and prices are actually agreed with VAT as assumed in the templates and
- Check whether the contract contains an obligation to enter into an amendment in the event of VAT/legislative changes;
- if yes, propose to the VZP/SZP to negotiate an amendment under such a provision (at the latest after the rate change is published in the Collection of Laws, but the discussion can be opened now, at worst the amendment will not be signed then),
- if not, propose to the VZP/SZP to negotiate the amendment anyway, although in this case the VZP/SZP is not obliged to negotiate or conclude it,
- if the VZP/SZP refuse to negotiate the amendment (which we consider quite unlikely), then the following procedure is proposed:
- o If the contract contains an obligation to enter into an amendment, judicial protection for breach of duty may be considered, the details of which may be discussed further;
- o If the contract does not contain an obligation to conclude an addendum, a court settlement of the contractual relations may be considered, the details of which may be discussed further.
This article is for informational purposes only and does not constitute legal advice or guidance for any particular case. If you would like more information in this regard, please do not hesitate to contact us.