With 78 million inhabitants, a universal public health insurance scheme, regulations largely harmonised with EU rules and a growing economy, Turkey – the largest market in the Middle East, North Africa and Turkey (MENAT) region – is too big and important to be ignored by the international pharmaceutical industry.
Encouraging data for 2015 has recently been released by the Pharmaceutical Manufacturers Association of Turkey (IEIS):
- Sales of medicinal products reached TRY16.86bn, an impressive 15.5% increase over 2014 that saw 10.1% year-on-year growth. Since implementation of the global budget system in 2009, the Compound Annual Growth Rate (CAGR) has been 4.2%.
- Demand has been fuelled by a growing and ageing population, and by improvements in access to healthcare and service quality under the government’s Health Transformation Programme. Sales were boosted by volume and price increases with the current portfolio, new launches and changes in distribution.
- Almost the entire pharmaceutical market is made up of prescription medicines (93.8%) with 87% reimbursed. In 2015 there were 8,104 products on the reimbursement list, with 292 new ones added. Medication accounts for 27% of healthcare spend by the single unified payer, the Social Security Institution (SGK).
- Originator brands represent 70% of all sales by value.
- Multinationals continue to make gains, with a combined 67% market share held by the 118 foreign-affiliated companies operating in the country. Imported originals grew in value by 16%. There is also a trend towards more locally-manufactured generics.
This article mainly focuses on recent developments with pricing and market access, but there have been positive regulatory gains too. A guideline published in May 2016 aims to reduce the present ambiguity with timelines. It classifies marketing authorisation applications as ‘normal’, ‘priority’ or ‘high priority’ with target assessment times of 210 days, 180 days and 150 days respectively (excluding any clock stops). Product features considered to favour priority status include innovation, significant impact on preventative or curative public health, pre-existing use in Turkey for named patients, vaccines, biosimilars, a minimum 10% of phase III trial patients recruited in Turkey and local production. While welcoming the promise of a slight acceleration of review time with high priority medicines, industry is disappointed that orphan drugs and non-prescription products did not get specific mention.
Reimbursement pricing
A decree on drug pricing (2015/7752) appeared in July 2015 and was implemented by a communiqué last December. One thing that has not changed is the principle of international price referencing. The reference price in Turkey is determined by the lowest price of the same or similar products at manufacturer selling price (MSP) in a number of European countries (ie France, Greece, Italy, Portugal and Spain plus the country of origin). While single-source originals can command a maximum MSP of 100% of the reference price, an originator and generic that compete against each other are subject to a mandatory 40% cut (ie post-patent the price of both becomes 60% of the reference price) if the pack is priced at TRY3.83 or above.
Each of the five reference countries uses the euro but, rather than the current exchange rate, a ‘periodic euro rate’ applies to calculate the TRY equivalent. To control pharmaceutical expenditure the rate remained unchanged at TRY1.9995/euro from April 2009 to May 2015, despite repeated devaluations of the Turkish currency over this period. Industry successfully filed a lawsuit against the Ministry of Health for the lack of updates. This eventually resulted in 70% of the previous calendar year’s euro average being adopted using the Central Bank of Turkey daily figures. The resultant rate for 2016 is TRY2.1166/euro, which is due to be revised again in January 2017.
Once a producer price has been established by the Ministry, mandatory discounts are applied by SGK to qualify the medicine for reimbursement. Rates for these discounts were revised by decree in February 2016 and changed again by a reimbursement communiqué in May 2016. There were some improvements to the rates, and price increases of 10-20% were given to almost 4,000 very low-price presentations. Twenty-year old medicines priced between TRY5.64 and TRY10.77 also received a 3% rise. The discount burden on newer, higher-priced products remains a problem though. In accordance with the May 2016 communiqué, single-source originals with an MSP of between TRY3.84 and TRY7.32 are subject to a 10% discount, products with an MSP of between TRY7.33 and TRY11.02 are discounted by 31% and those priced higher than TRY11.03 by 41%.
Given the challenging overall P&R environment, it is fortunate there are two other options open to innovative new drugs to access the market at SGK expense.
The reference price in Turkey is determined by the lowest price of the products in a number of European countries
Named-patient use
As long as there is an unmet medical need and the drug to be imported has received regulatory approval from either the EMA or the US FDA, at a physician’s request the Turkish Pharmacists’ Association (TEB) is empowered to source medicines from overseas for individual patient use, if there is no marketing authorisation in Turkey or if the product is otherwise unavailable there. The process is quick and relatively straightforward, and offers several advantages. Full reimbursement is generally available at prices exempt from both international reference pricing and mandatory discounts, and the prevailing exchange rate applies not a fraction of the historical one. The named-patient route has proven especially popular for new orphan drugs. So popular in fact that a 2014 market survey by the Ministry of Health revealed the TEB to have achieved the highest sales in the country, ahead of every individual pharmaceutical company.
Alternative reimbursement models
The SGK was first authorised in September 2014 to develop ‘alternative reimbursement models’ as a new channel through which negotiations on individual high-price products might be conducted. In July 2015 an amendment to the pricing rules was made to allow MSPs and trade margins with alternative reimbursement to differ from those that normally apply.
Such models are already found in several European countries and indeed worldwide, and are generally known as managed entry or risk-sharing agreements. There are two main designs; the first is performance-based and the second is finance-based. Not only is the latter expected to be the dominant type in Turkey, but all experience to date points to this, suggesting cost-containment is the payer’s prime motivation.
Multi-year written contracts need to be drawn up on the terms between individual companies and the SGK, but at least patients would gain quicker access to promising new treatments and industry would see a speedier return on its investment. Proposals can come either from the manufacturer or from a new SGK body, the Alternative Reimbursement Commission. The first schemes – all for products to be imported for named-patient use – have already been agreed. The stated intention, however, is to eventually cover all new healthcare services/treatments funded by SGK. With other important countries, including Russia and Saudi Arabia, referencing Turkish prices, industry hopes the new deals will be non-transparent.