News and developments

Turkey Amends its Legislation on Pricing of Human Medicinal Products

Early this year, on February 6th, 2017, the

Ministerial Cabinet has published its decision on Pricing of Human Medicinal

Products ("Decision") and announced that the requirements of the Communiqué on

Pricing of Human Medicinal Products (published in 2015) that do not conflict

with the Decision, shall remain applicable.

This transition process has come to an end at the end

of last week when, on September 29th, 2017, the Ministry of Health

("Ministry") has published the new Communiqué on Pricing of Human Medicinal

Products ("Communiqué") on the Official Gazette.

Upon publication of the Communiqué, the predecessor

Communiqué on Pricing of Human Medicinal Products (published in 2015 - "Abolished

Communiqué") has been abrogated.

II - What's New?

The Communiqué adopts a simpler and reader-friendly

language regarding the technicalities of pricing principles, while governing

Turkish drug pricing system and encouragement of domestic drug manufacturing.

The most striking amendment introduced with the Communiqué is that the prices

will be amended once a year, rather that the "twice a year" arrangement that

was governed with the Abolished Communiqué.

Some of the other major amendments introduced with the

Communiqué can be outlined as the following:

- The Communiqué, while preserving the reference

countries as is[1],

has abandoned the "reference price" wording and introduced the "real source

price" term. Although the mechanism behind the reference price calculation is

preserved, its definition is now changed. Article 3 of the Abolished Communiqué

defined the reference price as "The

lowest price of the source product in the reference markets and the market in

the countries where the batch is released / imported, respectively, or the

lowest price of the product on the market in EU countries, or the ex-factory

price of the product on the market in any country in the world". Whereas, under

Article 3 of the Communiqué real source price is described as "Wholesale sales price of the product

(announced in Euros in the price list) which is licensed and put on the market

in the country of origin". Real source price will be calculated in line with

the principles set forth under Article 5 of the Communiqué.

- As per Article 3 of the Communiqué "Price (specified in Euros on the price list)

which is the basis of the wholesale sales price in Turkey and is determined in

line with the procedures in this Communiqué" will be accepted as the source

price and its calculation will be made in accordance with Article 6.

- Pricing principles are regulated under Article 7 of

the Communiqué. In this sense, compared to the Abolished Communiqué, it is clearly

seen that the Ministry has developed and detailed the pricing principles.

- As to price increase requests, as per the Abolished

Communiqué, price increase requests due to reference price increases up to 100%

of the current ex-factory price, were assessed by the Turkish Medicine and

Medical Devices Institution ("Institution") and  price increase requests of more than 100% were

assessed by the Commission[2]. The

Communiqué has amended this rule and regulated that,

(i) In the event of a change in the source country, an

increase request of up to 20% of the current

selling price to wholesalers, shall assessed by the Institution.

(ii) If there is no source country change, increase

requests up to 50% of the current sales price to the wholesalers, shall be

assessed by the Institution.

(iii) The increase requests more than the rates

specified in subparagraphs (i) and (ii) shall be assessed by the Commission, if

the application is made during the Commission evaluation period.

In this respect, the upper limit for an increase in

the sales prices to wholesalers has been amended to 20 % where there is a

change in the source country; and to 50 % in cases where this request does not

result from a change in the source country prices. This will enable to control

the effect of a change/increase in the source country prices on the prices in

Turkey.

III - Transition Period

The Ministry has announced its transition schedule

under Provisional Article 1. In this respect, the sales prices to the

wholesalers for the products falling within the scope of the provision of "The changes in the selling price to the wholesalers

approved in Turkey due to the reference price or reference country change shall

not be reflected in the price unless it exceeds 3%. Only reference and

reference country information shall be updated." abolished by the Decision will

be updated during real source price amendment period of 2017, in line with

their source prices. Changes which lead to an increase in the prices will be

made upon the request of the license-holders, while changes which lead to a

decrease will be made by the Institution ex

officio.  These updated prices will

be effective as of the effective date of the final interim list issued at the

end of the actual source price amendment period.

Finally, amendments introduced with the Communiqué on

real source price amendment period shall not be applied to real source price amendment

period of 2017, except for paragraphs 1, 4, 5 and 7 of Article 10[3]. Provisions

under the Abolished Communiqué will be taken into account for real source price

amendment period of 2017.

[1]

As per Article 4 of the Communiqué, reference EU countries countries are

France, Spain, İtaly, Portugal and Greece.

[2]

The Price Evaluation Commission

established, under the coordination of the Ministry, with participation of the

representatives of the Ministry of Finance, the Ministry of Development, the

Undersecretariat of Treasury and the Social Security Institution.

[3] Please see a detailed

announcement of the Ministry on 2017 real source amendment period at this link:

http://www.titck.gov.tr/Duyurular/DuyuruGetir?id=3124

Gönenç Gürkaynak, Esq., Ceren Yıldız and Ecem Elver, ELIG, Attorneys-at-Law.

First published in Mondaq on October 2, 2017.