Changes Brought with the New Communiqué on the Pricing of Medicinal Products for Human Use


The new Communiqué on the Pricing of Medicinal Products for Human Use (“Communiqué”) has been enacted on 29.09.2017. The Communiqué keeps the general framework of the pricing of pharmaceuticals, although it brings a few changes as foreseen in the Decision dated 24 February 2017 the Council of Ministers No.  2017/9901 (“Decision”)

The Communiqué introduced two new terms: “real source price” and “source price” which does not change the pricing system. The “real source price” is used instead of the term “reference price”, i.e. the lowest ex-factory as defined in the 2015 Communiqué. There are detailed provisions as to how “real source price” should be calculated under Articles 5 and 7 of the Communiqué. “Source Price” is the price of the Product calculated on the basis of “real source price” as per Article 6 of the Communiqué. For instance, the source price of an original (reference) product is 100% of the real source price when there is no generic entry. When a generic product is launched to the market, the source price of the reference product will be 60% of the real source price.

The Communiqué brings into play “exactly equal” products, which it defines as products with the same active substance, pharmaceutical form, amount of active substance, and package size. Further, there are also “equal”, “similar”, “equivalent”, and “similar equivalent” products defined in the Communiqué, which all serve a more cascaded reference pricing system.

The Communiqué abandons the term “twenty-year old product” and brings in the term “price-protected product”, which incidentally has different criteria for pharmaceuticals that are to qualify. The 2015 Communiqué defined “twenty-year-old products” as those the active ingredient(s) of which entered the market before the August of 1987, whereas the Communiqué defines “price-protected products” as those the pharmaceutical form of which had entered the market before the August of 1987.

The Turkish Medicines and Medical Devices Agency had published two announcements on 23.04.2017 and 15.06.2017 in which it has been announced that the status of “twenty-year old products” will be re-evaluated as per the new definition (which had already been declared in Decision).

The five reference countries from the European Union (France, Spain, Italy, Portugal, and Greece) have not been changed.

The sub-paragraph under the provision titled “reference countries” attempts to clarify the scenario where products placed on the market by a firm other than the commercially active firm via a license, co-promotion agreement or likewise cannot be taken as reference products. In doing that, the provision fails to clarify what terms such as “active commercial activities” or “economic integration” mean. In short, the changes brought with the Communiqué attempts to clarify the expression of the rule but unfortunately have not made it sufficiently clear.

The minimum ex-factory prices for products for which there will be no reference pricing controls are updated to be TL 8,09 (as opposed to TL 6,93) for price-protected products (twenty-year-old products under the old Communiqué), and TL 4,24 (as opposed to TL 3,63) for other products.

In the determination of reference prices, the new Communiqué provides that special taxing practices will not be taken into account when determining the reference prices. This is thought to cover marketing taxes and likewise.

A brand new provision on the determination of reference prices has been added to provide a more detailed overview of the initial pricing system. The cascaded system, as mentioned above, includes “similar equal” products and likewise in the pricing system. With this brand new provision, the Ministry of Health foresees that the entering into market of not only equivalent (i.e. generic) products but also “similar equal” products will cause a drop of 40% in the reference prices of those original products. This means that when a product that has been priced through a similar equivalent product (that is, a product with the same active ingredient and pharmaceutical form but with different dosages of the active ingredient, with same or similar package size) enters the market, the prices of the reference (original) product also drops.

The Ministry of Health has included non-prescription drugs in the application of its provision that regulates products for which special conditions apply. This provision provides for another pricing system; whereas it used to refer to non-reimbursed products, it now refers to non-reimbursed/non-prescription drugs. Along the same lines and in the same provision, locally manufactured non-prescription drugs, alongside locally manufactured non-reimbursed drugs, may be priced in accordance with own declaration. Imported non-prescription and non-reimbursed drugs, may be priced with up to 100% of the real source price which will be calculated on the basis of highest ex-factory price.

The Communiqué excludes the rule that locally manufactured products may be priced for up to %25 more than the reference price. Locally manufactured plasma products may be priced upon and in accordance with declaration.

The Communiqué related to reference price changes will be done once a year. The calendar as set in the Communiqué is as follows:

 

Application  period for reference products that are connected to real source price or priced by cost card and manufactured / imported equivalent products that do not have reference products in our country 15 August – 1 September(until the end of working hours)
Application evaluation period and publication of intermediary list 2 September- 7 October
Acceptance of the objections to the intermediary list 1 October – 7 October(until the end of working hours)
Evaluation of the objections to the intermediary list 8 October – 21 October
Publication of the final of the intermediary list 21 October
The application period of equivalent products receiving a price based on the cost card, the equivalent products having a reference product in out country and other products 22 October – 30 October(until the end of working hours)
Application evaluation period and publication of second intermediary list 31 October – 21 November
Acceptance of the objections to the second intermediary list 22 November – 28 November(until the end of working hours)

 

The transitory article 2 rules that this calendar will apply immediately for 2017 Reference Price change term.   The reference price that should be notified is the reference price effective as per July 1st of the relevant calendar year.

The Decision had already abolished the exemption for price changes under 3%. Accordingly this exemption will not be applied.  The transitory article 1 of the Communiqué states that any changes below 3% should be notified during 2017 Reference Price Change term as per the above calendar. The changes decreasing the price will be made ex-officio but the changes increasing the price will be made upon the company’s demand.

With regards to changes to currency exchange rates, where the Pricing Commission considers that the product is suitable for the price to be increased to the level of the reference price, no offsetting between the increase in the value of euro and the increase in the value of the product may be made.

One of the important changes is that the increase requests more than 20% if there is a change in the source country and more than 50% if there is not any change in the source country shall be evaluated by Pricing Commission. This rule will be immediately applied.

The Turkish Medicines and Medical Devices Agency published an announcements on 29.09.2017 that the price increase approval letters sent to companies are not valid and the price increase request shall be re-assessed as per the Communiqué.

The Communiqué also states that a real source price shall be sought every year in accordance with subparagraph 3 of Article 7, which is describing the adjustment to be made while calculating the real source price, for the products on the price list and for which real source price tracking is made. An application shall be made to the Agency in the relevant period for products with amendments.