Co-authored with Arife Gizem Keskin
Introduction
The Turkish Competition Authority (“TCA”) has published the Preliminary Report on the Pharmaceutical Sector Review (the “Report”) in August 2026, following a sector inquiry initiated by the TCA on 8 December 2021. The inquiry was launched to identify structural competition concerns in the pharmaceutical sector and develop solutions capable of strengthening competitive conditions and, ultimately, consumer welfare.
The pharmaceutical sector presents particular challenges for competition authorities. Unlike many other markets, the person purchasing a pharmaceutical product, the physician deciding which product should be used, the patient consuming the product and the institution ultimately bearing its cost are often different. At the same time, the sector is characterized by significant research and development expenditure, extensive intellectual property protection and a highly regulated market-entry and reimbursement framework.
Against this background, the Report examines competition throughout the pharmaceutical supply chain, focusing principally on production, market entry and distribution. Rather than proposing a fundamental redesign of the sector, the TCA identifies specific areas in which existing legal, administrative and economic mechanisms may generate competition concerns and proposes targeted measures to address them.
The Report is particularly notable for its focus on what it describes as atypical competition infringements facilitated by or carried out through sector-specific regulation, as well as exclusivity arrangements between pharmaceutical manufacturers and wholesalers and the scope for improving public procurement and reimbursement mechanisms.
1. Competition at the Production Stage: Intellectual Property and Pharmaceutical Patents
Intellectual property protection lies at the center of competition in the pharmaceutical industry. Patent rights generally provide pharmaceutical companies with a 20-year period of exclusivity from the filing date of the patent application, intended to reward innovation and encourage investment in research and development. At the same time, the expiry of patent protection is expected to facilitate the entry of generic1 medicines and restore competitive pressure. The Report therefore approaches patent protection through the question of how to maintain a balance between protecting innovation and preserving effective market entry.
Importantly, the Report does not treat the exercise of patent rights as inherently problematic. Rather, it focuses on circumstances in which patent-related mechanisms may be used strategically to delay or otherwise impede competitors’ entry into the market.
The TCA considers several practices through which patent systems may potentially be used in ways that affect competition. These include patent clusters, divisional patent applications, the potentially abusive use of patent litigation, the provision of misleading information to patent authorities and patent settlement agreements.
Patent strategies and regulatory intervention
The Report's discussion of misleading information provided to patent authorities is particularly illustrative of this approach. The TCA refers to the European Commission's (the “Commission”) AstraZeneca2 decision, in which the Commission found that AstraZeneca had abused its dominant position by providing misleading information to patent authorities in order to obtain additional protection for its Losec3 product and thereby delay generic entry.
The significance of AstraZeneca for the Turkish pharmaceutical sector lies not simply in the specific conduct examined in that case, but in the broader principle that the use of a regulatory or intellectual property mechanism may itself become a competition law issue where it is employed strategically by a dominant undertaking to exclude competitors.
The Report also examines patent settlements and pay for delay agreements. These arrangements generally involve an originator pharmaceutical company providing a payment or other economic benefit to a generic manufacturer in exchange for delaying its market entry. The Report notes that such arrangements may resemble restrictions of supply or market-sharing agreements, with the relevant allocation occurring over time rather than across customers or geographic territories.
The TCA refers in this context to the Commission's Lundbeck4 decision, concerning agreements under which generic manufacturers were prevented from entering the market for citalopram5 following arrangements with Lundbeck. The Report also discusses other European enforcement experience concerning pharmaceutical patent settlements, including Servier6, where the Commission examined agreements between the originator and generic manufacturers against the background of potential competition and patent protection.
These cases are relevant to the debate because they demonstrate that the existence of a patent dispute does not necessarily prevent competition law scrutiny of the parties' subsequent conduct. A settlement may resolve a legitimate intellectual property dispute, but its terms and economic effects may nevertheless raise competition concerns where the arrangement effectively removes a potential competitor from the market.
At the same time, the Report makes an important qualification regarding the Turkish market. The TCA examined approximately 350 patent disputes involving pharmaceutical products since 2015 and conducted a more detailed assessment of 26 of these disputes. In doing so, the TCA did not limit its review to the formal terms of the patent litigation itself, but also considered whether the resolution of such disputes could be accompanied by arrangements capable of affecting the timing or conditions of generic market entry. In particular, the TCA examined whether the parties had entered into side arrangements concerning matters such as manufacturing, distribution or joint marketing, which could potentially serve as an additional mechanism for delaying or otherwise restricting the entry of generic products.
Following this assessment, the TCA states that it did not identify indications of agreements in Türkiye involving payments or other arrangements designed to induce a generic undertaking to delay its market entry. This finding is significant because it distinguishes the Turkish pharmaceutical market, on the evidence reviewed in the Report, from certain international cases in which patent settlements have raised concerns that the originator undertaking provided a financial or other valuable benefit to a potential generic competitor in exchange for delayed entry. Nevertheless, the TCA does not regard the absence of identified cases as eliminating the competition law risks associated with patent settlements. Rather, it considers such arrangements an area requiring continued monitoring, particularly given the potential for settlement agreements to extend beyond the resolution of a genuine patent dispute and to affect competitive conditions in the market. The Report therefore points towards a continued need to assess the substance and economic rationale of patent settlements, rather than treating the existence of patent litigation or a settlement as sufficient, in itself, to rule out competition concerns.
The Report therefore points towards a relatively nuanced approach. Patent settlements should not automatically be regarded as problematic; however, their terms should have a rational connection with factors such as the scope and duration of the patent, litigation uncertainty, technical considerations or legitimate licensing arrangements. Disproportionate financial transfers or other benefits that cannot be justified by the underlying patent dispute may attract closer scrutiny.
2. Competition at the Market Entry Stage
The second major area examined by the Report is market entry. Here, the TCA moves beyond traditional patent concerns and examines the interaction between competition law and regulatory mechanisms governing pharmaceutical authorization and reimbursement. This is one of the Report's most significant contributions from a competition law perspective. The issue is not whether pharmaceutical regulation is necessary but whether the regulatory framework may be used strategically in a manner that makes market entry more difficult for competitors.
Product renewal and “product hopping”
One of the practices considered by the TCA is product renewal, commonly referred to as “product hopping.” The practice generally arises where an originator pharmaceutical company introduces a new formulation, dosage form or other version of an existing product as the expiry of patent protection approaches, while subsequently withdrawing the older version from the market. The potential competition concern does not arise simply from the introduction of an improved product. Rather, the concern may arise where the withdrawal of the older product interacts with the regulatory framework in a way that makes it more difficult for generic manufacturers to enter the market.
This is particularly relevant because generic entry may depend on the continued authorization of the originator product on which the generic application is based. If the originator voluntarily withdraws the existing product and its marketing authorization is consequently removed, generic manufacturers may no longer be able to rely on the regulatory and scientific data associated with that reference product in the same manner. The withdrawal may therefore affect not only the commercial availability of the incumbent product, but also the regulatory pathway available to potential generic competitors. In this way, a commercial decision concerning the lifecycle of a pharmaceutical product may have consequences extending beyond the product itself and may affect the conditions under which generic competition can emerge.
The Report nevertheless does not treat product renewal or the withdrawal of an existing product as inherently anticompetitive. Pharmaceutical companies may have legitimate reasons for developing and promoting a new formulation, including improvements relating to therapeutic efficacy, safety, patient convenience, dosage or technological characteristics. The competition law assessment must therefore distinguish genuine product innovation from strategies that may be designed, or may have the effect, of weakening the competitive constraint that would otherwise arise from generic entry. In this assessment, the TCA points to factors such as the timing of the product change and withdrawal, the characteristics and therapeutic value of the new product, the undertaking’s position in the relevant market, the circumstances surrounding the withdrawal and the actual or potential impact of the strategy on generic entry.
The regulatory dimension is particularly important in this context. The Report considers whether the existing authorization framework could be adjusted so that the voluntary withdrawal of an originator product does not unnecessarily prevent generic manufacturers from entering the market. One of the options discussed is allowing generic manufacturers, for an appropriate period following withdrawal, to continue relying on certain toxicological, pharmacological and clinical studies relating to the withdrawn reference product. Such an approach could preserve the regulatory pathway for generic entry while still allowing originator companies to discontinue products for legitimate commercial or scientific reasons.
The TCA’s approach is therefore not to prohibit product innovation or to require an originator to keep an older product on the market indefinitely. Instead, it seeks to address the potential competitive consequences that may arise when a commercial product lifecycle strategy and the regulatory framework operate together to delay or complicate generic entry. This distinction is important from a competition law perspective which is the relevant question is not whether a company has introduced a new product or withdrawn an old one, but whether the overall strategy, taking into account its regulatory context and effects, has the potential to weaken competition that would otherwise have emerged following the expiry of patent protection.
The discussion of product hopping illustrates a broader principle running through the Report. In highly regulated markets, competition concerns may arise not from the existence of regulation itself, but from the interaction between regulatory requirements and the commercial strategies of undertakings with significant market power. The TCA therefore appears to favor targeted adjustments to the regulatory framework where necessary to preserve the possibility of effective generic entry, rather than treating every product renewal strategy as a competition law infringement.
Reimbursement mechanisms and market access
The Report identifies reimbursement as another potentially significant barrier to effective market entry. Given the substantial role of the Social Security Institution (“SSI”) in pharmaceutical expenditure, inclusion in the reimbursement system may be critical to a product's ability to compete effectively in practice.
The TCA focuses particularly on the internal reference pricing system and the mechanism for rapid entry into the reimbursement list. The Report notes that these mechanisms may produce unintended competitive effects where a product that is recorded as the lowest-priced product is not actually available to patients but nevertheless remains relevant for the operation of the reimbursement system.
The distinction between formal availability and actual accessibility is therefore important. A product that technically remains within the system but cannot realistically be obtained by patients may nevertheless affect the competitive position of other pharmaceutical products.
The Report accordingly suggests that the regulatory framework should take actual market accessibility into account rather than relying exclusively on formal criteria such as market share or registration status. This is another example of the TCA's broader approach to pharmaceutical regulation which is mechanisms designed to achieve legitimate regulatory objectives should also be assessed according to their actual effects on market access and competitive conditions.
3. Competition at the Distribution Stage: Exclusivity and Public Procurement
The third major area of the Preliminary Report concerns distribution. Pharmaceuticals reach patients through a multi layered distribution structure involving wholesalers, pharmacies and, in the public procurement channel, various tender mechanisms.
The TCA focuses in particular on exclusivity arrangements between manufacturers and wholesalers, the structure of public procurement and the role of pharmacies and public institution discounts.
Manufacturer and wholesaler exclusivity
The Report recognizes that exclusivity may generate legitimate efficiencies. In particular, pharmaceutical distribution requires significant logistical capabilities, reliable delivery and the ability to monitor and respond to numerous procurement opportunities. However, the TCA emphasizes that general or hypothetical efficiency claims should not be sufficient to justify exclusivity. The claimed efficiencies should be concrete, substantiated, directly linked to the exclusivity arrangement and necessary to achieve the claimed objective.
This approach is particularly relevant for pharmaceutical manufacturers when structuring distribution arrangements. Exclusivity provision should not be assessed only from a commercial perspective. Companies should also be able to explain why exclusivity is necessary, what specific investment or efficiency it is intended to generate and why less restrictive alternatives would not achieve the same result.
The Report also recognizes that changes in the public procurement system may affect the competition assessment of existing distribution arrangements. In particular, the centralization of public procurement through the Health Market (“Sağlık Market”)7 has reduced some of the logistical difficulties that historically supported the use of exclusive wholesalers.
Single authorized seller and intra-brand competition
One of the Report's most concrete competition concerns relates to the requirement for a single authorized seller in certain public procurement arrangements.
Historically, the fragmented structure of public hospital procurement created logistical and monitoring difficulties. In that environment, manufacturers' appointment of exclusive wholesalers could facilitate participation in numerous small-scale tenders and ensure timely delivery. However, the TCA observes that the introduction of more centralized procurement mechanisms changes this assessment. Where a single wholesaler is appointed as the authorized seller, competition between wholesalers selling the same pharmaceutical product may disappear altogether.
The Report therefore considers a shared exclusivity model, under which more than one wholesaler could be authorized to sell the same product. In particular, the TCA considers allowing up to five authorized sellers in each province, subject to appropriate safeguards against the concentration of competing products in the same wholesaler. This proposal is supported by the TCA's quantitative analysis of more than 50,000 procurement line items involving 175 active substances during 2022 and 2023. The analysis indicates a relationship between greater participation and higher discount levels.
The proposed model is therefore intended to preserve the logistical advantages of organized distribution while allowing greater intra-brand competition among authorized wholesalers.
4. Public Institution Discount and the Role of Competition-Sensitive Information
The Report also examines the Public Institution Discount (“PID”)8 mechanism at the retail distribution stage. The TCA identifies several practical problems concerning the application and verification of PDI, including uncertainty over when and by whom the discount should be applied and difficulties arising where the discount is not fully or correctly implemented.
From a competition law perspective, the Report also draws attention to the information generated by the operation of the system. The availability of information concerning prices, discounts and commercial conditions may create risks where competitors can gain access to competitively sensitive information.
The Report further considers the establishment of a guarantee mechanism through which pharmacies could be compensated where the required discount is not properly applied. Appropriate enforcement and incentive mechanisms could also be introduced.
Importantly, the TCA does not present PDI itself as a competition law infringement. Rather, it identifies weaknesses in the design and implementation of the system that may negatively affect consumers and the functioning of the market and proposes mechanisms to address those weaknesses.
5. Meaning of the Report for Pharmaceutical Undertakings
Although the Report does not itself establish new binding rules, it provides important indications of how the TCA may approach competition issues in the pharmaceutical sector going forward. In particular, the Report suggests that pharmaceutical companies should assess their commercial and regulatory strategies not only against sector specific rules, but also against their potential effects on competitive conditions and market entry.
First, pharmaceutical companies should consider the implications of their patent and intellectual property strategies, particularly where those strategies may affect the timing or conditions of generic entry. The Report demonstrates that the TCA is prepared to look beyond the formal existence of patent rights and to examine how patents are obtained, maintained and enforced, including the use of patent clusters, divisional applications and litigation strategies. The legitimate exercise of intellectual property rights therefore does not necessarily remove the need for a competition law assessment where the overall strategy may have exclusionary effects.
Second, patent disputes and settlement agreements should be assessed not only from an intellectual property perspective, but also from the perspective of potential competition. The fact that a settlement is intended to resolve a genuine patent dispute does not, by itself, exclude competition law considerations. Companies should therefore be able to demonstrate a clear and legitimate connection between the terms of a settlement and the underlying patent dispute. In particular, payments, licensing arrangements, manufacturing or distribution agreements, joint marketing arrangements and other forms of economic benefit should have a rational basis linked to the resolution of the dispute and should not operate as a means of postponing or otherwise restricting generic entry. The TCA’s finding that it did not identify indications of pay for delay arrangements in Türkiye should not be understood as removing this issue from the competition law agenda; rather, the Report expressly identifies patent settlements as an area for continued monitoring.
Third, companies holding strong market positions should carefully consider the competitive implications of product modifications, product withdrawals and their interactions with regulatory authorities. The Report’s discussion of product hopping illustrates that conduct may become relevant from a competition law perspective where a commercial product-lifecycle strategy interacts with regulatory rules in a manner that makes generic entry more difficult. Legitimate regulatory procedures and product improvements remain permissible, but their competitive implications may nevertheless be examined where the regulatory framework is used strategically, or where the combined effect of several actions is to weaken potential competition.
Fourth, distribution arrangements, particularly exclusivity arrangements involving pharmaceutical manufacturers and wholesalers, should be supported by concrete and demonstrable efficiency justifications. The Report indicates that general references to logistical efficiencies, investment requirements or the need for reliable supply may not be sufficient where exclusivity restricts intra-brand competition. Undertakings should be able to identify the specific efficiencies generated by the arrangement, demonstrate that those efficiencies are directly attributable to exclusivity and explain why less restrictive alternatives would not achieve the same objective. This is particularly relevant in light of the Report’s discussion of changes in public procurement and the proposed move towards shared exclusivity, which suggests that historical reliance on exclusive distribution models may need to be reassessed as market conditions and procurement mechanisms evolve.
Fifth, companies participating in public procurement should take into account the TCA’s finding that greater participation in procurement processes may be associated with higher levels of discounting. The Report’s analysis of more than 50,000 procurement line items covering 175 active substances indicates that the structure of procurement arrangements can have a direct impact on competitive outcomes. Accordingly, restrictions on the number of authorized sellers or arrangements that unnecessarily concentrate competing products within the same distribution channel may attract greater scrutiny where they reduce the number of effective competitors participating in tenders.
Finally, the Report sends a broader compliance message which is pharmaceutical companies should not equate regulatory compliance with competition law compliance. An undertaking may act within the formal boundaries of a sector-specific regulatory framework while nevertheless adopting a strategy that raises competition concerns. This is particularly important in a sector where market access, reimbursement, patent protection, authorization and distribution are all heavily regulated. Going forward, companies should therefore assess the interaction between their regulatory strategies and their competitive effects, rather than analyzing each action solely by reference to whether it is formally permitted under the applicable pharmaceutical regulations.
Taken together, these observations suggest that the TCA’s approach is likely to focus increasingly on the economic and competitive effects of conduct at the intersection of intellectual property rights, regulatory rules and commercial strategy. For pharmaceutical companies, this means that competition law compliance should be integrated into decisions concerning patent strategy, product lifecycle management, regulatory submissions, settlement negotiations and distribution structures, particularly where such decisions may affect actual or potential generic competition.
Legal Insight
Taking into account all the aspects addressed in the Report, one of the most significant things is that the TCA has adopted a broader approach in assessing competition concerns in the pharmaceutical sector. Rather than confining itself to identifying which conduct is anticompetitive, the TCA has also taken into account the particular structure of the sector and the commercial strategies of its undertakings. The Report demonstrates how regulatory mechanisms such as marketing authorization, reimbursement, pricing and distribution can affect the ability of new competitors to enter and remain in the market, and that these effects carry considerable weight in such a highly regulated sector.
Accordingly, one of the misleading aspects of the sector’s regulated nature may be the assumption that full compliance with regulations gives rise to no concern under competition law. Indeed, even where a conduct appears permissible within the applicable regulatory rules, competition concerns may arise when the manner in which it is implemented and its effects on competitors are considered together. By way of example, in the product hopping discussed in the Report, the launch of a new formulation or derivative of a medicine may be regarded as legitimate under competition law where it delivers genuine innovation or therapeutic benefit. However, where a product is withdrawn from the market and the regulatory rules make entry by competitors materially more difficult than necessary, competition law should not be overlooked. In short, in our view, examining how regulatory rules and commercial strategies operate together, rather than assessing individual conduct in isolation, may pave the way for a well-founded shift in competition law analysis.
These remarks should not be understood to suggest that the TCA regards patent protection or exclusive distribution arrangements as inherently problematic. Pharmaceutical companies need to be supported by certain regulatory rules in order to make substantial investments in research and development, which is entirely normal and necessary. The relevant question should therefore remain whether the conduct has a legitimate commercial or technological rationale, whether the claimed efficiencies are concrete and substantiated, and whether the conduct goes beyond what is reasonably necessary to achieve those efficiencies. Maintaining this distinction will be particularly important in ensuring that measures intended to facilitate generic entry do not inadvertently undermine incentives for pharmaceutical innovation.
In our view, the Report indicates that competition law assessment in the pharmaceutical sector is evolving towards a greater focus on effects. Companies will therefore need not only to establish whether a given strategy complies with pharmaceutical legislation, but also to separately consider how that strategy may affect market entry, the competitive process or the position of existing and potential competitors. In practice, this means that competition law analysis will come into play at much earlier stages of business decision-making, notably in patent and product lifecycle management, regulatory strategies, product withdrawals and distribution arrangements. Ultimately, the significance of the Report may lie not in the introduction of new prohibitions, but in its indication that the TCA will, going forward, assess the competitive effects of regulatory and commercial strategies together.
Conclusion
The TCA's Report provides a broad assessment of competition in the pharmaceutical sector, extending from patent protection and production to regulatory market entry and the distribution of medicines.
Three themes are particularly prominent. First, the TCA identifies the potential for atypical competition infringements to be carried out by relying on or strategically using sector-specific regulation. Second, it highlights exclusivity arrangements between pharmaceutical manufacturers and wholesalers as an area requiring careful competition assessment. Third, it emphasizes the possibility of improving existing regulatory mechanisms without fundamentally restructuring the sector.
The Report does not advocate dismantling the existing regulatory, administrative or financial framework. Instead, it proposes targeted and practicable interventions designed to address specific competition problems. Strengthening the regulatory framework against strategic misuse, introducing shared exclusivity in public procurement and developing improved guarantee and data-sharing mechanisms for PID are examples of this approach.
The Report therefore signals a broader understanding of pharmaceutical competition law in Türkiye. The TCA's focus is not limited to traditional horizontal or vertical restraints; it also extends to the ways in which intellectual property rights, regulatory procedures, reimbursement mechanisms and distribution structures interact with the competitive process.
For pharmaceutical companies, the practical implication is clear: competition law compliance will increasingly require consideration of not only what a company does, but also how it uses the regulatory and legal mechanisms available to it and how those mechanisms affect actual and potential competitors' ability to enter and compete in the market.
As the sector inquiry moves beyond the Report, the TCA's final conclusions and subsequent enforcement and advocacy activities will be important in determining how these principles will translate into concrete competition law standards and regulatory reforms in the Turkish pharmaceutical sector.
Footnotes
1. A pharmaceutical product created to be the same as an already marketed brand-name drug in its active ingredient, dosage form, strength, route of administration, safety, quality, and performance characteristics.
2. Case COMP/A.37.507/F3
3. a brand name for omeprazole, a medication classified as a proton-pump inhibitor
4. Case AT.39226
5. A prescription antidepressant that belongs to the class of selective serotonin reuptake inhibitors
6. Case AT.39612
7. Refers to the procurement system through which the pharmaceutical needs of public hospitals are centrally procured by the State Supply Office (DMO) through electronic tenders.
8. a mandatory discount mechanism applied to medicines reimbursed by the Social Security Institution (SGK), with the aim of reducing public healthcare expenditure and ensuring access to medicines at lower cost.
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.
