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Turkey's New Moon

Pharmaceutical policy has been at the heart of the entire healthcare reform process, but will pricing controls stifle this dynamic market?

Turkey is reforming its healthcare policy on a massive scale. Yet, while numerous radical steps have already been taken to significantly improve its healthcare system, many of the changes have been confined to operational adjustments and preparations towards larger reforms.

The current healthcare reform package has been delineated in the Health Transformation Programme (HTP), outlined by the Ministry of Health (MoH) in 2003. Accordingly, the aim of the programme, and hence the reforms, is to organise, finance and deliver health services based on the principles of equity, efficiency and effectiveness.

Financial sustainability, continuous quality improvement, community participation, consensus building, decentralisation and provider competition were also stated as other principles to be observed during the reform process.

The main principles supporting the HTP are based on eight complementary components:

  • Restructuring the Ministry of Health towards a stewardship role

  • Introducing a General Health Insurance Scheme (GHIS)

  • Improving the healthcare workforce and provision of incentives for higher performance

  • Improving the healthcare delivery system through strengthened primary care, including the introduction of a family practitioner who would occupy a gate-keeping role to a hierarchical referral chain, and also via public hospitals, which would have both financial and administrative autonomy

  • Creating/improving institutional and educational capacity to help undertake reforms and manage the system effectively

  • Introducing systems to ensure quality improvement, including accreditation

  • Developing policies and structures towards rational use of medicines and other health technologies; and

  • Building a comprehensive health information system.

Some of these areas of reform have been given higher priority within the reform process, producing visible outcomes. Plans to introduce a general insurance scheme and improve primary care through a family practitioner system have been implemented, while the process of building a comprehensive health information system is ongoing. To date, however, only preparatory work has been carried out with regard to granting administrative and financial autonomy to public hospitals.

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Leading the way in reforms
Universal coverage of the General Healthcare Insurance Scheme (GHIS) has long been a national policy aspiration in Turkey. The previous system, with its highly fragmented structure, not only heavily undermined equity in terms of finance and access, but also hindered effective and efficient utilisation of resources.

There have, historically, been five different schemes financing health services for different population segments. The Social Insurance Institution (SSK) is responsible for active and retired blue collar workers with their dependents. The Government Employees Retirement Fund (GERF) finances healthcare services for retired civil servants and their dependents, while active civil servants and their dependents benefit from a separate system, financed out of a general budget. The fourth scheme, Bag-Kur, covers the health expenditures of artisans and the self-employed; the Green Card scheme, on the other hand, covers indigents.

In addition, private insurance represents around 1 per cent of the population, most of whom effectively complement their available public coverage.

All of these schemes collectively cover about two-thirds of the population, leaving the rest uninsured. Against this background, the government has begun streamlining policies and procedures of the current schemes, while preparing the legislation for the GHIS.

The most radical and visible steps taken in this period included allowing SSK beneficiaries (potentially about half of the entire population) to get their outpatient prescriptions from community pharmacies instead of queuing up in pharmacies of SSK facilities, and expanding Green Card coverage to include outpatient care. These two, together with some other complementary arrangements, have served to bring all public schemes closer to each other in terms of a benefit package before the introduction of the GHIS.

Legislation went through Parliament in May 2006 and the current schemes have now been effectively merged under one new single administrative body, called the Social Security Institution (SSI) under the Ministry of Labour and Social Security. With the creation of the GHIS, the entire population will be covered by the end of 2008 at the latest.

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Improved primary care
The Turkish healthcare delivery system has had a referral chain since the beginning of 1960s, but it has not been particularly effective, mostly due to inherent problems with the organisation of primary care, as well as with the (perceived) quality of services. To redress the balance, the government has developed a family practitioner system to replace the current one, which is based on health centres staffed with a team headed by a so-called general practitioner (medical school graduate with no specialisation).

By contrast, the new system assigns the responsibility of primary care to a family practitioner, who co-ordinates the healthcare needs of those enrolled within his/her practice.

Faced with the reality of having fewer than required family practitioners with proper specialty training, the government plans to rely largely on the current general practitioners to play the role after intense training programmes. Family practitioners will be remunerated by a formula based on a fixed salary and per capita payment.

The pre-pilot phase has now been completed in one of the total 81 provinces in Turkey and the pilot is to be expanded to 10 more provinces in 2006.

Autonomy for public hospitals
Insofar as granting public hospitals administrative and financial autonomy is concerned, preparatory work has been done but to date nothing has been implemented. As an interim step, the SSK healthcare delivery network, including about 120 hospitals nationwide, was transferred to the Ministry of Health in 2005.

This has given SSK beneficiaries greater access to all public hospitals. Once hospital reform is completed, the government plans to separate purchasing from provision where the GHIS, as monopsony, would purchase hospital care through contracts from competing public and private providers; ie, an internal market.

Health Information System
A developed information system is seen to be of paramount importance to manage the system effectively and efficiently. The information systems in place are highly fragmented, with each following different standards and procedures.

Building a comprehensive health information system is designated as a high priority with multiple projects running at the same time, including a diagnosis-related group (DRG) system for hospitals to monitor healthcare expenditures effectively at a central level. When completed, the new comprehensive system is expected to enable the GHIS to better manage its resources and, more specifically, radically reduce waste; drug utilisation reviews, for example, would become possible.

As well as having direct benefits for patients, through both better access to primary care and improved insurance facilities, all the changes planned by the government have had, and will have, major implications for pharmaceutical policies.

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What the changes mean for pharma
Pharmaceutical policy has been the main focus of the entire healthcare policy reform process in recent years. Turkey is still trying to recover from its deep economic crisis of 2001 and the recovery programme is characterised by tight fiscal and monetary policies, with particular emphasis on containing public health expenditures.

Cost-containment is not only relatively easier, but also politically more acceptable. When coupled with an unsubstantiated general perception that pharmaceutical expenditure accounts for too great a proportion of total healthcare spend, which leads to gross inefficiencies, this has led to an unprecedented focus on pharmaceutical policy.

Turkey is a dynamic and fast-growing market with more than 300 companies operating within its borders, either as importers or manufacturers. With a total outpatient pharmaceutical market of $6.9bn in 2005, Turkey ranked 13th among the world's 35 leading pharmaceutical-producing countries, according to figures given by Frank-Ulrich Fricke at the General Health Insurance and Pharmaceutical Policy conference in May 2006.

There are more than 20,000 pharmacies and pharmacists mainly working in the private sector. The General Directorate of Pharmaceuticals and Pharmacies at the Ministry of Health is the main authority responsible for registration, marketing approval/authorisation, pricing, legal classification and inspection.

Pharmaceutical expenditure in Turkey has always been the most debated area in health spending. Figures on the share of medicines as part of total healthcare spend, float between 25 per cent and 60 per cent. However, according to a National Health Accounts (NHA) study, the share of pharmaceutical spend in total expenditures was 25 per cent in 2000. As the NHA study followed the Organisation of Economic Co-operation and Development (OECD) System of Health Accounts (SHA) methodology, at the moment this is the only figure that can technically be used for international comparisons.

Although this is still high, compared with other OECD countries (see graph opposite), it needs to be treated with caution with regard to the following issues:

  • Access to non-pharmaceutical health services is limited, hence greater reliance on self-treatment and medication, as is evident from the NHA household survey

  • Pharmaceutical prices reflect international prices (original prices referenced to the cheapest of five EU countries), whereas other cost-components (especially labour) have much lower prices compared with OECD countries

  • Generic prices are much higher in Turkey than OECD countries

  • OECD-SHA methodology where outpatient pharmaceuticals alone are taken into account:

  1. Hospital expenditures, as a share of total health spend in Turkey, are lower than in OECD countries

  2. Hospital (inpatient) pharmaceutical spending is artificially shifted to outpatient pharmacies in Turkey (about 30 per cent, according to the NHA household survey).

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Intellectual property
Intellectual property rights, in particular data protection and exclusivity, have been one of the most hotly-debated issues in recent years. Turkey in 2005, some four-to-five years later than its trade-related aspects of intellectual property rights (TRIPs) and EU Customs Union Agreement obligations, adopted data exclusivity protection of a maximum of six years.

Pricing and reimbursement
In 2004, Turkey replaced its old so-called cost-plus pricing system with one based on international referencing. Accordingly, prices of original products are referenced to the cheapest of five EU countries (currently Italy, France, Portugal, Greece and Spain). For generic products, the reference price is determined as 80 per cent of the reference price provided for the original. This policy has resulted in lower prices, benefiting the payers.

In the same year, the rate of value-added tax on pharmaceutical products was reduced from 18 per cent to 8 per cent.

Until recently, all reimbursement organisations had set and managed their own drug benefit plans. Hence, prescriptions, as well as reimbursement policies and procedures, varied from one organisation to another. As a result of recent efforts, all of these have been almost fully streamlined as follows:

  • All public reimbursement agencies now implement a common reimbursement policy based on generic referencing, where reimbursement is set at the cheapest plus 22 per cent

  • All public sector organisations follow a common set of prescription rules, as delineated in the so-called Budget Implementation Guidelines

  • The government has successfully partnered with sectoral stakeholders for discounts of up to 14.5 per cent; and

  • Instead of a negative list approach there is now a positive drug list which is applicable in all public reimbursement agencies. This policy shift has ended automatic reimbursement of new products and entails the introduction of a decision-making system based on cost-effectiveness principles, although this has yet to be developed.

Pricing and reimbursement policies in Turkey have offset the dramatic growth (as measured in total units sold) experienced by pharma - a by-product of enabling SSK beneficiaries to get prescriptions from community pharmacies and allowing Green Card beneficiaries access to outpatient care in 2005 - resulting in a modest growth in value, which remained at 10 per cent in 2005.

However, as the reform process continues, both coverage and utilisation will continue to expand, having a further impact on market expansion. This, in turn, will invite more public policy initiatives towards cost-containment in a tighter fiscal environment.

 

The Author
Mehtap Tatar is Professor of health policy at the Faculty of Economics and Administrative Sciences, Hacettepe University, in Ankara, Turkey

2nd September 2008

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