Pricing of Pharmaceuticals and the Fixed Exchange Rate

Pharmaceutical prices in Turkey have always been one of the most controversial issues. The prices of medicines that are to be marketed are set under the Decision on Pricing of Human Medicinal Products (“Decision”) and the Communiqué on the Pricing of Human Medicinal Products (“Communiqué”) of September 29, 2017, issued by the Ministry, which is vested with the competencies to regulate this area.

The Decision provides a reference pricing system, whereby the least-expensive ex-factory price in one of the listed EU countries for the relevant product is taken as the ex-factory price in Turkey. The currency is then converted into Turkish liras; however, this transaction is done at a fixed value every year so that it is not affected by fluctuations in the exchange rates. Thus, the exchange rate applied to the reference price taken from the respective EU country is fixed for one year, and the price reached is considerably lower than the current exchange rate.

With the Decision entered into force in 2017, the rate was determined as 60% of the average euro value of the previous year. Accordingly, the main rule is that the Price Evaluation Commission gathers in the first 45 days of each year and announces the value of euro 1 based on a calculation of 60% of the average value in the previous year.

According to this rule, on February 14, 2022, the exchange rate to be used in the pricing of medicines was set as TL 6.2925. However, due to the rapid change in the exchange rate in 2022, with the provisional article added to the Decision, on July 8, 2022, the value of 1 Euro was increased by 25%, and the new exchange rate was set as TRY 7.8656. Subsequently, on December 14, 2022, the value of 1 Euro in Turkish Lira to be used in the pricing of pharmaceutical products for human use was increased by 36.77% to TL 10.7577 in December 2022.

For 2023, it was stated that this last amount would continue to be applied and that the Price Evaluation Commission would not announce a new value in the first 45 days of the year. However, although it has not been regulated in the legislation yet, one can expect an increase to be made again in 2023 due to the fluctuations in the current exchange rate.

Graphic 1 TCMB and the Ministry Average EUR/TRY, TURKEY, 2018-2022

Source: https://www.tcmb.gov.tr/ and https://www.titck.gov.tr/

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