WRITTEN QUESTION No. 1191/97 by Shaun SPIERS to the Commission. Public health policy
Date: 1997-04-03
Institutions: European Parliament, SPIERS
Subjects: AIDS, VAT, blood transfusion, cost-benefit analysis, health policy, pharmaceutical product, public health, substitute product, tax exemption, therapeutics













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91997E1191

WRITTEN QUESTION No. 1191/97 by Shaun SPIERS to the Commission. Public health policy  


Official Journal C 391 , 23/12/1997 P. 0049 





WRITTEN QUESTION E-1191/97 by Shaun Spiers (PSE) to the Commission (3 April 1997)Subject: Public health policyDoes the Commission recognize the contradictions between its policy of promoting better public health, and in particular EU funding of types of activity for limiting the spread of AIDS/HIV, and the charging of VAT on man-made Factor VIII?Does the Commission accept that charging VAT on man-made Factor VIII provides an incentive to health care providers to use human factor VIII which results in a higher risk of infection?Accordingly, will the Commission consider amending the Sixth VAT Directive to exempt man-made Factor VIII from being subject to VAT?Answer given by Mr Monti on behalf of the Commission (3 June 1997)In managing their budgets, doctors, hospitals and health authorities are increasingly presented with difficult decisions about the costs and benefits of new and often expensive medical procedures and pharmaceutical products. No doubt the introduction of a man-made alternative to blood-clotting agent, Factor VIII, which has hitherto been derived from human blood is one such example. In this respect the possibility of risk of infection involved in the use of Factor VIII derived from human blood is a matter for Member States' medical authorities to assess.The Commission does not accept that there is a contradiction or indeed any connection between its policy of funding activities for limiting the spread of acquired immune deficiency syndrome/human immunodeficiency virus (AIDS/HIV) and the fact that man-made recombinant factor VIII is subject to VAT. It would be neither desirable nor practical to manipulate the VAT system to provide special treatment of goods or services on the basis that this might, arguably, be of some benefit to a Commission funded project.Article 13A(1)(d) of the Sixth VAT Directive (77/388/EEC) provides for a Community-wide exemption of supplies of human blood and organs ((OJ L 145, 13.6.1977. )). As recombinant Factor VIII is a man-made product and not derived from human blood, it does not come within the scope of this exemption. It therefore falls to be taxed as a pharmaceutical product. However, Member States may apply a reduced rate of at least 5% to supplies of pharmaceutical products and some Member States are entitled to maintain reduced rates below 5% existing prior to 1 January 1991. Member States therefore have considerable latitude and the majority do in fact apply reduced rates to pharmaceutical products. Although Factor VIII derived from human blood is exempt from VAT, it must be remembered that such exemption does not entitle the supplier to recover input VAT incurred in connection with its production. On the other hand, recovery of input tax is permitted where positive rates apply. It is therefore wrong to conclude that VAT is always a significant element in the cost of Factor VIII. Indeed in some cases, if exemption were to be applied to man-made Factor VIII the incidence of VAT could be increased.For these reasons the Commission does not envisage making any proposal to extend the scope of the exemptions under Article 13A(1)(d) to include man-made blood substitutes.