Localization of Imported Products

Following the announcement of the Structural Transformation Program Action Plan for Healthcare Industries on 7 November 2014, Turkey commenced adopting measures to localize the production of a substantial number of pharmaceutical products sold in Turkey. On 10 December 2015, the 64th Government announced the 2016 Action Plan (64th Government Action Plan), which included a statement that measures would be taken to prioritize domestically produced medical supplies and medical devices. This statement, “Import products to be removed from the reimbursement list will be identified provided that the provision of medical treatment is duly guaranteed,” in the 2016 Action Plan implies that imported products with a locally produced equivalence will be delisted from the reimbursement list.

The policy requires foreign producers to commit to localize their production of certain pharmaceutical products in Turkey. If not, those products concerned are excluded from any reimbursement, which affects most sales in Turkey by the Social Security Institution (“SSI”). The localization process for each producer who accepts localization is managed specifically and non-transparently.

The EU claimed that the various measures implemented by Turkey via legal and administrative tools do not comply with Turkey’s obligations covered under the provisions of the General Agreement on Tariffs and Trade 1994 (“GATT 1994”), Trade Related Investment Measures (“TRIMs Agreement”), Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS Agreement”), and Agreement on Subsidies and Countervailing Measures (“ASCM”), and requested consultation with the World Trade Organization (“WTO”).  After the EU and Turkey came together to solve the problem in good faith, but their search for a solution failed, a panel was established to evaluate the issue on 17 March 2020. On 15 September 2020, it was announced that the panel is not expected to prepare its final report before the second half of 2021 due to the delays caused by the COVID-19 pandemic.

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