Pricing of Pharmaceuticals and the Fixed Exchange Rate

Pharmaceutical prices in Turkey have always been a controversial issue. The prices of medicines for sale 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 calculation 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.

When the Decision entered into force in 2017, the rate was determined as 60% of the average value of the euro during the previous year. The Price Evaluation Commission gathers in the first 45 days of each year and announces the applicable exchange rate for the 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 a new exchange rate was set as TRY 7.8656 an increase of %25. Subsequently, on December 14, 2022, the rate was increased again by 36.77% to TL 10.7577.

It was stated that the December 2022 rate would be kept for 2023, and that the Price Evaluation Commission would not announce a new value in the first 45 days of the year. Still, one can expect an increase to be made again in 2023 due to continuing 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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