A new decision, On the Pricing of Medicines for Human Use, published on 10 July 2015, has revoked the controversial 2007 pricing decision and has introduced a reference price for pharmaceuticals of 70% of the previous year's average EUR/TRY exchange rate.
Background
Prior to the publication of the new pricing decision, a 2007
Council of Ministers decision established the general framework for
Turkish medicine pricing rules. Further detail of the pricing rules
was set out in the Ministry of Health Communiqué, On the
Pricing of Medicines for Human Use.
Turkey uses a reference pricing system. The "reference
price" for a medicine is the lowest of the sale-to-warehouse
prices in (i) the five EU reference countries, (ii) the country
where the product is manufactured, and (iii) the country from which
the product is imported, provided the product has received
marketing authorization and is actually sold in these countries.
Discounts are not considered.
Under the 2007 pricing decision, reference prices were
determined in Euro, and then converted into Turkish lira at a fixed
exchange rate. The 2007 decision required the Medicine Price
Evaluation Commission ("Pricing
Commission") to convene quarterly and, as needed,
extraordinarily, to revise the exchange rate in line with exchange
rate fluctuations. On 2 April 2009, the Pricing Commission fixed
the EUR/TRY exchange rate at 1.9595. Since then, however, the
Pricing Commission failed to convene and revise the exchange rate,
even though the lira devalued substantially against the Euro,
putting severe pressure on pharmaceutical companies with regard to
pricing medicines.
In response, the Research-Based Pharmaceutical Companies
Association (Tr. Araştırmacı İlaç
Firmaları Derneği or
"AIFD"), a Turkish pharmaceutical
industry association, sued the Ministry for the Pricing
Commission's failure to revise the exchange rate. The court
ruled in AIFD's favor, ordering the Pricing Commission to
convene. Following this ruling, the Pricing Commission convened but
did not revise the exchange rate, prompting AIFD to bring another
action against the Pricing Commission for failure to adjust the
exchange rate. The court again ruled in AIFD's favor and
annulled the Pricing Commission's decision not to revise the
exchange rate.
What the new decision says
The new pricing decision's most significant provision,
Article 2(2), states the reference price is now 70% of the
previous year's average EUR/TRY exchange rate. Rules
on reference countries, maximum sale-to-warehouse prices, and
warehouse and pharmacy profit margins remained generally the same,
with only slight numerical changes. The Turkish government revised
the pricing rules to set a 70% coefficient for the EUR/TRY exchange
rate to avoid implementing the previous pricing rules which did not
include a coefficient.
The new pricing decision is effective immediately. As a
transitional matter, under Provisional Article 1, the Pricing
Commission is to publish the average EUR/TRY exchange rate for the
last 90 days (rather than the previous year) by 21 July 2015, which
will be the basis for reference prices until January 2016.
Implications for pharmaceutical companies
Pharmaceutical companies must revise their product prices in line with the new pricing rules.
Conclusion
While the long-running discussion on fixing the exchange rate
appears to be resolved, the result is not favorable for
pharmaceutical companies, which will continue to feel pressure from
the pricing rules due to the relatively low 70% coefficient.
Baker & McKenzie provides multidimensional advice on all
aspects of pharmaceutical and healthcare law, including
pharmaceutical and healthcare regulations, compliance, employment
and pharmaceutical sector-specific contracts.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
