Tax break offer to drugs firms

Many developing countries cannot afford Aids drugs

Pharmaceutical companies could get tax breaks if they put more money into researching lethal Third World diseases like Aids, Chancellor Gordon Brown has said.

Every year, about 11 million people, mostly in the developing world, die from preventable diseases.

Mr Brown believes that much more research needs to be done into these diseases and says he is prepared to offer tax incentives in next month's Budget to encourage this.

He was talking ahead of an international conference on child poverty, being held in London next week.

Mr Brown said the measures could be introduced in the Budget

The chancellor wants pharmaceutical companies to expand their research into affordable medicines which can prevent or treat conditions such as Aids, malaria and TB.

As well as providing tax incentives, he says he is prepared to change the tax status of donations of drugs and vaccines which firms make to developing countries, to encourage such initiatives.

The chancellor says the tax breaks could be introduced in the Budget on 7 March.

But he says he wants to know how the drugs companies view his proposals, so that he can be sure they will respond positively and do more to combat these diseases.

"There is a gap here that has got to be bridged. Clearly we have not moved far enough and we have not moved fast enough," he said.

"If we can move forward with a great deal more urgency than in the past, this is literally an issue where we can save lives.

"It is important that the drugs companies are prepared to respond to any initiative that would cost public funds, so we are looking to a response from the pharmaceutical companies."

The chancellor's Budget is expected to include a set of vote-grabbing initiatives aimed at attracting electoral support for Labour in the run-up to an expected May poll.

These include a pledge to cut fuel duty, an above-inflation rise in pensions and a £50 boost in winter fuel payments for OAPs.

The chancellor recently hinted that he may also introduce targeted income tax cuts to benefit families, pensioners, low-paid workers and savers.