LC 224/25 and Its Impacts on the Pharmaceutical Sector: Price Increases and the Principle of Essentiality

Supplementary Law No. 224, enacted on December 26, 2025, came into force with a clear fiscal objective: to uniformly reduce federal tax incentives and benefits.

The issue is that, under the adopted framework, the reduction directly affects one of the main tax relief mechanisms in the pharmaceutical sector, reigniting a debate that goes beyond tax technicalities: how should essential goods be treated within the tax system?

1) Did LC 224/25 reduce the presumed credit under Law No. 10,147?

LC 224/25 establishes that the reduction applies, among other benefits, to the presumed credit of the PIS/Pasep and Cofins contributions provided for in Article 3 of Law No. 10,147.

The mechanism is straightforward: financial or tax credits, including presumed or notional credits, now have their utilization limited to 90% of the originally calculated amount, with the non-utilizable portion being canceled.

In practice, this means that manufacturers and importers of medicines listed under the “positive list” may use only 90% of the presumed credit, calculated by applying a 12% PIS/Cofins rate to the sales revenue of these products. This effectively increases the tax burden, even without a nominal increase in tax rates.

2) Does this raise controversy in light of the principle of essentiality?

By preserving tax relief for basic food items while simultaneously reducing the favorable tax treatment applicable to medicines, LC 224/25 reveals an asymmetry that is difficult to justify from the perspective of the principle of essentiality.

Food and medicines are equally indispensable to human dignity and to ensuring a minimum standard of living. The legislative choice to fully protect one while limiting the treatment of the other exposes a material inconsistency, likely to fuel legal debate—especially given the impact on widely used, continuous-use medications.

3) What has been the inflation trend for medicines over the past 12 months?

Official data from IBGE helps illustrate the inflation affecting medicines over the past 12 months. In 2025, the overall IPCA stood at 4.26%. Meanwhile, “Food and beverages” recorded 2.95%, with significant deceleration and even monthly declines in at-home food consumption. However, the behavior of pharmaceutical products shows a more sensitive trend.

According to Table 7060 from SIDRA/IBGE, the “Pharmaceutical products” subgroup recorded cumulative inflation of 5.42% over the period, above the overall economic average. Some segments saw even higher increases, such as analgesics and antipyretics (5.54%), while continuous-use medications, such as anti-infectives and antibiotics, also posted relevant price increases.

These figures indicate that medicines were already experiencing inflationary pressure above the IPCA even before LC 224/2025 came into force. This is therefore not a “protected” or artificially tax-relieved sector, but rather a market facing rising costs and relatively inelastic demand.

4) How might LC 224/25 further pressure medicine prices?

The economic mechanism is well known: taxes become costs, and costs tend to translate into prices, at least partially. This effect is particularly strong in the pharmaceutical sector, characterized by steady demand and regulated pricing.

By reducing the presumed credit benefit by 10%, LC 224/25 effectively reprices the PIS/Cofins burden on a significant portion of the pharmaceutical market.

Among the most widely sold medicines in the country, several active ingredients are affected, such as losartan, hydrochlorothiazide, and enalapril—continuous-use drugs for which patients typically have no option to forgo consumption.

Although no immediate and significant impact is expected in the annual price adjustment authorized in March of this year, it is clear that the measure increases the sector’s average cost over the coming months, with potential effects on future regulatory cycles and commercial strategies across the supply chain.

5) Illustrative estimate of price impact

Assuming:

• A hypothetical retail price of R$100;

• An estimated manufacturer selling price of R$60;

• A 10% limitation applied to the 12% presumed PIS/Cofins credit;

This results in a potential cost increase passed on to consumers of approximately 0.7% of the medicine’s price.

This is an illustrative estimate intended only to demonstrate the order of magnitude of the economic impact, not an exact price projection.

Conclusion

The reduction of the presumed PIS/Cofins credit introduced by LC 224/2025 increases the effective tax burden on medicines, with the potential to put upward pressure on prices in an essential sector already experiencing above-average inflation.

By protecting food while limiting tax relief on medicines, the legislature has made a choice driven by revenue simplicity, but one that is less sensitive to its concrete social impacts. The final effect is likely to be felt in pharmacy prices and in access to healthcare across the country.