China cuts value-added tax on orphan drugs

In its latest move to spur the availability to Chinese consumers of medicines for rare diseases and life-threatening illnesses, China is cutting taxes on some orphan drugs almost entirely.

China’s State Council will cut the value-added tax (VAT) rate for some rare-disease therapies by more than 80%, authorities announced in February. From March 1 2019, the VAT for 21 of the drugs and four active pharmaceutical ingredients will drop from 16% to 3%, a drop of 81%.

Most orphan drugs marketed in China are produced by foreign manufacturers. The move by China’s government is designed to provide incentives to those manufacturers for new drug development and speed the much-needed drugs to its 20 million Chinese citizens with rare diseases.