Over 16% of the NHIF drug budget goes toward VAT

16.7% of the funds paid by the National Health Insurance Fund for medicines represent value-added tax. According to the Executive Director of ARPharM, Deyan Denev, reducing or eliminating VAT on medications paid for by the NHIF would allow more patients to be treated with the same budget. This was reported by zdrave.net.

The topic was discussed during a media meeting dedicated to the sustainability of pharmaceutical provision and access to modern treatment in Bulgaria.

“Unlike all other non-regulated goods, there is no way for supply chain participants to absorb a VAT reduction. It would be entirely for the benefit of the Fund and the patients. Personally, I believe that no VAT should be charged at all on medicinal products paid for by the NHIF,” Denev stated.

According to IQVIA data, approximately 160 million packs of prescription medicines were dispensed in Bulgaria in 2025, with 57 million of them—or 36%—being fully or partially paid for by the NHIF.

Denev also pointed out that hospitals purchase about 11 million packs of medicines annually, the value of which is included in the price of clinical pathways, amounting to approximately €200 million. According to him, this is a relatively small part of the total consumption of medications in the country.

ARPharM presented an analysis showing that Bulgaria has significantly lower public resources for medicines compared to other EU countries. The total cost of treatment with medications prescribed through the NHIF is about €220 per person annually, while actual public funding is around €150 per person. The difference is compensated through discounts and reimbursement mechanisms from pharmaceutical companies.

At the same time, public spending on medicines in EU countries reaches an average of about €500 per person annually.

The Chairman of ARPharM, Pavel Kolev, warned that the current model is becoming increasingly difficult to maintain.

“The combination of the lowest manufacturer prices, increasing discounts, the lack of a cap, and budget unpredictability creates a real risk of delaying the introduction of new therapies, limited interest in registering innovations in Bulgaria, and risks to the continuity of patient treatment,” Kolev said.

According to the association, the amount of discounts already reaches about 30% of the value of medicines paid for by the NHIF, and for some of the new therapies, the levels are economically difficult to sustain for manufacturers.

According to Arkadi Sharkov, the Bulgarian healthcare system is operating under an increasing deficit, and without structural changes, the problems will worsen.

“The health budget is a ticking time bomb because it operates under conditions of an increasing deficit. We are currently financing the consequences instead of investing in prevention and screening,” Sharkov stated.

He pointed out that public funds cover only 63% of healthcare costs, while direct payments from citizens reach 36%—the highest share in the European Union.

Among the proposed measures to increase revenue in the system are reducing the number of uninsured individuals, targeted transfers from excise duties, guaranteed growth in health expenditures, and an increase in the health insurance contribution from 8% to 10%.