Pharmaceuticals pricing in Türkiye
1. Institutional Structure of the Pharmaceutical Sector in Türkiye
The pharmaceutical sector in Türkiye is regulated through various governmental institutions. The Ministry of Health and its affiliated bodies play a main role in overseeing organizations within the pharmaceutical sector and formulating policies relevant to the industry. The Ministry of Health is responsible for regulating activities within the sector, managing licensing processes, and determining policies related to the functioning of the healthcare system in general.
The Turkish Medicines and Medical Devices Agency ("TİTCK") is an organization that ensures compliance with international standards by granting licenses and marketing authorizations to pharmaceutical companies, conducting compliance audits according to regulations, enforcing necessary sanctions, and approving clinical trials. Additionally, TİTCK takes measures to increase accessibility of products and makes relevant regulations.
The Social Security Institution (“SGK”) is an institution responsible for the reimbursement of companies for medicines provided free of charge by the state to its citizens and aims to provide effective, fair, accessible and sustainable healthcare services within the scope of general health insurance. The SGK is authorized to determine the pricing and reimbursement terms of pharmaceuticals.
2. Pharmaceutical Pricing System in Türkiye
Pharmaceutical pricing in Türkiye has been a matter of significant discussion over time due to its importance in public health. The pricing of medicinal products is regulated by the Turkish Ministry of Health, which was authorized to make regulations in this field by the Decree on the Pricing of Human Medicinal Products ("Decree") in Turkish Law and the Communiqué on the Pricing of Human Medicinal Products published in the Official Gazette numbered 30195 on 29.09.2017 ("Communiqué").
Pharmaceutical pricing in Türkiye has been conducted according to the "Reference Price System" since 2004. Under this Reference Price System, drug prices are determined by selecting the lowest price among five European Union ("EU") member countries determined by the Ministry of Health and the country from which the drugs are imported, along with the country where "parallel importation" is carried out.
The actual source price is used in determining prices, which is the sales price of the product to the warehouser, and this price is considered as the lowest sales price to the warehouser of the source product that is licensed and sold in the market among the determined countries, excluding discounts. The actual source price is denominated in euros, and calculations are made based on the determination of the value of 1 (one) Euro.
The source countries determined by the Ministry of Health among EU member countries are France, Spain, Italy, Portugal, and Greece. Although the designated source countries are taken into account, countries where the product is manufactured or imported, outside of these reference countries, and if there is a warehouse sales price lower than the reference country prices in those countries, the price in the country with the lower warehouse sales price is accepted as the reference price.
Official or generally accepted databases can be used to determine source country prices. Monitoring of databases allows for the identification of all aspects declared by applicants and explanatory information and documents may be requested from applicants or official institutions regarding all matters declared.
3. Pharmaceutical Pricing Process in Türkiye
a. Price Evaluation Committee
Price Evaluation Committee ("Committee") is formed under the coordination of the Ministry of Health with the participation of representatives, at least at the level of general director or authorized representatives, from the Ministry of Finance, Ministry of Development, Undersecretariat of Treasury, and Presidency of the SGK. The Committee convenes at least once a month during the first six months of each calendar year. However, in the event of extraordinary circumstances, the Committee may also convene upon the invitation of one person.
The Committee makes decisions regarding the increase, decrease, maintenance, or determination of prices for products whose prices cannot be determined according to the provisions of the Decree. Accordingly, increases in drug prices can be made based on rates determined by the Committee. General increase decisions made by the Committee can also be applied to other products upon request by the Ministry of Health.
In order to protect public health and ensure accessibility to medication, it is regulated in Article 3, Paragraph 3 of the Decree that, before the increase in the Euro value used in pricing human medicinal products, specific price increases for products for which price changes have been made, except for changes in the actual source price determined by the Price Evaluation Committee, will not result in additional increases if the specific product price increase rate is higher than the increase rate in the Euro value. However, if the specific product price increase rate is lower than the increase rate in the Euro value, an additional increase can be applied to the product price for the difference rate. However, products for which requests for reaching the source price have been considered appropriate by the Committee will not be subject to offsetting based on the increase in the Euro value.
As an exception, the Committee may determine drug prices and/or profit margins differently or use different pricing models, such as differentiating prices or paying box-based service fees to warehouses/free pharmacies, for drugs subject to purchases made using alternative reimbursement models under Article 73 of Law No. 5510 dated 31/5/2006 on Social Insurance and General Health Insurance ("Law No. 5510"), without adhering to the provisions of the Decree and the Communiqué.
b. Determination of the Value of 1 (One) Euro
As per current legislation and explicitly regulated in the Decree, the value of 1 (one) Euro in Turkish Lira to be used in pricing human medicinal products is determined by multiplying the annual average Euro value calculated based on the daily Euro exchange sales rate announced by the Central Bank of the Republic of Türkiye, which is indicative and published in the Official Gazette of the previous year, by the adjustment coefficient set at 60%.
The Committee convened within the first 45 days of each year to announce the value of 1 (one) Euro to be used in pricing human medicinal products, in accordance with the aforementioned procedures.
The value of 1 (one) Euro in Turkish Lira to be used in pricing human medicinal products was increased by 25% in December 2023, and the new periodic Euro value was determined as 17.5483 TRY. It has been decided to continue applying this amount for the year 2024, and a new valuation of 1 (one) Euro has not been made for the year 2024. In the current economic situation in Türkiye, the average Euro selling rate for 2023 was 26.025 TRY, and the average Euro selling rate for 2024 is currently 33.844 TRY.
In the case of countries with different currencies;
- For currencies for which the Central Bank of the Republic of Türkiye officially announces the foreign exchange selling rate, the foreign exchange selling rate on 13/2/2009,
- For currencies for which the Central Bank of the Republic of Türkiye has not officially announced a foreign exchange selling rate, the conversion rate on the relevant date from the official representative office of that country in our country or from the website of the central bank of that country or from the website of the European Central Bank based on the Euro equivalent.
c. Profit Margins
The profit margins for warehousers and pharmacists are applied as indicated in the table below when determining the retail selling price of products other than drugs subject to purchases made using alternative reimbursement models specified in Law No. 5510 and mentioned above.
d. Price Applications
License or applicants submit an application to the Ministry of Health along with the Price Declaration Form for initial price acquisition and real source price change requests. These price applications are finalized within 90 (ninety) days.
e. Pharmaceutical Reimbursement System in Türkiye
In Türkiye, pharmaceutical companies apply to the SGK for reimbursement after obtaining product licensing approval. Accepted applications are evaluated clinically, technically, and financially by the Medical and Economic Evaluation Committee ("MEEC"). Based on the evaluations conducted by the Pharmaceutical Reimbursement Committee, reimbursement applications are decided upon and submitted to the SGK Presidency. Upon approval by the SGK President, the decisions deemed appropriate are published in the Official Gazette. Pharmaceuticals licensed and reimbursed in Türkiye are published in the Health Implementation Communique ("SUT") List 4/A[1] .
4. Implementation of Regulations and Current Situation in Türkiye
Pharmaceutical pricing in Türkiye has been a contentious issue due to both economic fluctuations and meeting the public's healthcare needs. Consequently, it has been subject to frequent revisions over time. As a result of Türkiye's economic characteristics, the basis for pricing, which is 1 (one) Euro, has fluctuated over the years, ultimately being increased by 25% in December 2023, with the new periodic Euro value set at 17.5483 TRY. It has been decided to continue applying this amount for the year 2024, and this value is used in calculations. All these processes have widened the gap in the sector even further.
The current implications of pharmaceutical pricing made in line with all these regulations manifest as medication shortages and supply issues. As briefly mentioned above, although the determination of the value of 1 (one) Euro is made under certain conditions, these criteria do not meet the needs of current economic conditions.
4.1. Regarding Pharmaceutical Imports
The rapid rise in the Euro exchange rate compared to the Euro rate set for pharmaceutical pricing has led to significant difficulties in the supply of imported drugs. As a result of pharmaceutical pricing in Türkiye, the determined amounts cannot cover the cost of imported drugs, causing financial strain on foreign drug manufacturers, and ultimately leading foreign drug suppliers to withdraw from the Turkish market. It is alleged that foreign drug manufacturers find the pharmaceutical pricing system in Türkiye income-restrictive, leading to their withdrawal from the Turkish market to prevent Türkiye from setting an example to other countries and to prevent parallel exports[2].
As a result, patients are directed to equivalent drugs for drugs that cannot be imported. In cases where equivalent drugs are not available, patients experience significant hardships. Given that the difficulties in the pharmaceutical sector threaten public health, it is evident that pharmaceutical pricing is becoming increasingly important every day.
4.2. Regarding Pharmaceutical Exports
The problems in the pharmaceutical pricing system in Türkiye also have a significant impact on domestic trade. The stability of pharmaceutical prices amid rapid and substantial changes in foreign exchange makes it difficult for some drugs to be manufactured in Türkiye. Turkish companies producing equivalent drugs for drugs that cannot be imported state that the cost exceeds profit due to the procurement of many technologies from abroad.
Due to the increase in costs of items such as glass bottles, aluminum foil, and paper used in pharmaceutical packaging, Turkish pharmaceutical manufacturers suffer losses. It is crucial for Türkiye to reduce its dependency on imports in pharmaceutical production and produce both drugs and the by-products used in drug production domestically to reduce production costs.
The increase in foreign exchange rates in the Turkish economy and the determination of a fixed Euro value for pharmaceutical pricing in Türkiye have a chain effect deeply impacting the pharmaceutical sector and public health.
In light of all these explanations, it is necessary to align the value of 1 (one) Euro with the current Euro exchange rate to resolve the economic difficulties in the pharmaceutical sector and protect public health. Currently, medication supply shortages have been increasing since 2021, posing a chronic threat to public health.
Authors: Adil Ali Ceylan, Selin Çelik.
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[1] IQVIA - Turkish Pharmaceutical Industry Report, 2023, p. 40
[2] Parallel Exports: This refers to buying products from low-priced countries and selling them to high-priced countries.
