Turkey’s ‘too cheap drugs’ smuggled to neighboring countries

Güneş Kömürcüler - ISTANBUL

People have been purchasing medicine from Turkish pharmacies, where medicine prices are quite low, and then selling them in neighboring markets with higher margins, according to sector representatives.  

“They take the products from Turkey and sell it in Iran or Kazakhstan or other neighboring countries for instance for three to four times higher prices. As the sector representatives, we lose profit. The product is also stolen from Turkish consumers, as the access to many medicines may become limited from time to time,” Roche Turkey General Manager Adriano Treve said in an interview with Hürriyet Daily News. 

Such cases were reported earlier in the country. For instance, a vitamin supplement which is important for bone health could not be found in pharmacies last autumn. While the manufacturing company was claimed to have not sold enough of the product to meet demand, the company said there was no problem with the supply. Besides, such problems were seen in regard to drugs for much more serious diseases, such as cancer. 

Treve said another serious problem in the sector is that it takes too long to bring a brand new product into the Turkish market due to the overburden of regulations, and sector players should be able to take up such issues with government representatives. 

Turkey’s price positioning matters for many pharmaceutical companies as the country has been seen as a reference country for Middle Eastern countries. The cheaper the prices become in Turkey’s drug sector, the higher the discounts Middle Eastern countries ask for, according to sector reports. Turkey uses a reference pricing system in the industry. This pricing system formulates the price on the basis of the lowest price offered to the warehouse in Turkey by a foreign drug provider and the lowest price in the country where the pharmaceutical product was produced or imported from. Under the 2007 pricing decision, reference prices were determined in euros, and then converted into Turkish Liras at a fixed exchange rate. The 2007 decision required a commission to convene quarterly and, as needed, extraordinarily, to revise the exchange rate if needed. In 2009, the commission fixed the parity rate at 1.95. Since then, however, the Pricing Commission failed to convene and revise the exchange rate, although Turkey’s Lira lost huge value to the euro. 

Revised policy to come online

This put many pharmaceutical companies under pressure regarding the pricing of their products, according to sector players.  

Between 2009 and 2014, the sector saw a regression in growth. According to a sector report by the Pharmaceuticals Employers’ Union (İEİS), the sector’s volume stood at 14.6 billion liras in 2014 from around 13.2 billion liras in 2009, representing a regression of around 20 percent. Due to continuously decreasing prices in the market, a number of companies exited the market or decided to merge with others.  Huge increases in generic products at lower costs also spread around the sector. 

In the meantime, the prices of some vitamins or painkillers became so cheap that the country saw overconsumption in such products or undersupply in the market. 

A wider revision over the pricing was made in July to become effective this September. The government revised the pricing rules to set a 70 percent coefficient for the euro-lira exchange rate to avoid implementing the previous pricing rules, which did not include a coefficient, as published in the Official Gazette. The value of 1 euro will be 70 percent of the annual average euro value, calculated based on the Central Bank of Turkey’s daily indicative exchange rate in the previous year. With the revision, the prices are expected to increase around 5 percent, but the sector players now ask whether this will prevent some groups from buying drugs in the market at cheaper prices and selling them abroad for higher margins.