Pharmaceuticals, Medical Devices, Digitalization: What Awaits the Healthcare Sectors in the 12th Development Plan and the 2025 Presidential Annual Program?

The 12^th Development Plan 2024–2028 (“Development Plan”) and the 2025 Presidential Annual Program (“Program”) set the development goals and strategic policies for various sectors in Türkiye.

In line with the Development Plan and Program, the pharmaceutical and medical device sectors are among those that emphasize key goals to increase Türkiye’s sustainability in the healthcare field, enhance domestic production capacity, and reduce dependency on imports. Overall, the aim is to increase domestic production and the efficiency of healthcare services while supporting innovative technologies.

In this context, a significant transformation process is indicated for Türkiye’s healthcare sector and, consequently, for the Turkish economy. This article provides an overview of the main policies and measures outlined in the Development Plan and Program, and how these will affect the pharmaceutical and medical device sectors.

Pharmaceuticals and Medical Devices Sectors in Türkiye: Current Situation and Emerging Dynamics

The pharmaceutical sector saw a 2.7% increase in production in 2023. However, during the period from January to July 2024, there was a 5.2% decrease compared to the same period of the previous year. As of 2023, pharmaceutical imports rose by 8.8% to reach 5.4 billion USD, while pharmaceutical exports increased by 15.8%, reaching 2.2 billion USD. In the first half of 2024, exports rose by 1.9%, and imports increased by 4.9% [1].

In 2023, the Turkish pharmaceutical market reached 222.5 billion TRY with a 90.9% growth rate in terms of value in hospitals and pharmacies. In this context, the proportion of domestic production also increased: the share of domestically manufactured drugs, which was 75% in terms of units and 42% in terms of value in 2016, rose to 90.6% in units and 57.8% in value by 2023 [1]. These figures reflect the increase in Türkiye's pharmaceutical production and the changes in capacity utilization rates.

The medical device sector also exhibited similar growth. By 2023, the global medical device market surpassed 530 billion USD, while Türkiye's medical device exports amounted to 1.25 billion USD. The export-to-import coverage ratio in Türkiye’s medical device sector was 23% in 2017, but by the first half of 2024, this ratio had risen to 48% [1]. These developments can be considered as concrete indicators of the importance placed on policies supporting domestic production.

However, it should not be overlooked that there are still significant questions regarding sustainability, quality, innovation, and dependency on imports, especially in the pharmaceutical sector. The exchange rate determined by the Turkish Medicines and Medical Devices Agency (“TİTCK”) for imported drugs and the import of raw materials for domestic production significantly affect both product prices and the balance of production and exports. Additionally, counterfeit drugs, smuggled drugs, or drugs out of legitimate supply chain negatively impact the sector in various ways. Evaluations made without considering these factors will make it difficult to fully understand the developments in the sector. Therefore, linking growth and export increases in the sector solely to an increase in production capacity could be misleading.

In the medical device sector, since product prices are not determined by TİTCK, pricing depends on market conditions. However, considering the exchange rate and inflation increases, the purchase prices for reimbursed products are often insufficient. Comments regarding the increase in the export-to-import coverage ratio may not fully reflect the real dynamics of the sector if factors such as the inability of new technologies to enter the market and the withdrawal of imported products from the market due to exchange rate fluctuations are not considered.

Financing the Healthcare System: Effective Pricing and New Models

The sustainability of the social security system is critical for the implementation of the healthcare policies set by the Program. In this context, the goal is to make pharmaceutical and treatment expenditures more predictable and sustainable, with effective management of healthcare expenditures emerging as a key objective. Several measures have been proposed in this regard, including the following:

▪️ Utilization of Alternative Reimbursement Models for High-Cost Drugs and Innovative Treatments: The use of alternative reimbursement models in the reimbursement of high-budget drugs and innovative treatments is crucial for ensuring sectoral sustainability. While this practice already exists, an increase in its use can be seen as a positive development. Additionally, considering that drug prices in Türkiye are lower compared to the global average, it can be said that such agreements provide some relief to drug manufacturers. Alternative reimbursement models will reduce budgetary pressure and allow Türkiye to integrate global practices into its own system.

▪️ Widespread Adoption of Value-Based Reimbursement Methods and Retrospective Analyses: It is well known that innovative product manufacturers have long awaited the implementation of such measures. Transitioning reimbursement methods to a value-based approach and regularly conducting retrospective analyses to enhance the effectiveness of reimbursement lists will be a strategic step toward increasing transparency and efficiency within the system.

▪️ Development of AI-Supported Risk Analysis Systems: The use of AI-supported risk analysis systems in healthcare reimbursements to enhance audits will help prevent fraud and incorrect payments in the sector. However, the challenges faced by the European Union (“EU”) health systems may lead to similar legal and operational difficulties in Türkiye. Structural problems such as the aging population, chronic diseases, and healthcare workforce shortages could limit the effectiveness of such systems. Furthermore, the risks that AI may introduce to these challenges in the healthcare system should be carefully analyzed.

The implementation of such systems requires not only technological infrastructure but also the updating of healthcare sector regulations to align with these developments. The effectiveness of AI-supported risk analysis systems depends on key legal principles such as the security of health data, protection of personal data, and ensuring privacy. It is crucial for Türkiye's existing regulations to be fully aligned with personal data protection regulations, such as the EU's GDPR (General Data Protection Regulation). Moreover, relevant regulations should be carefully crafted to prevent inefficiencies and inequalities that may arise during the implementation of AI, particularly to avoid legal issues for disadvantaged groups.

In this context, it can be said that the success of AI systems will rely not only on technological advancements but also on a revision of the legal framework, particularly in the fields of healthcare and data protection. Drawing from the EU experience, the applicability of such systems in Türkiye will depend on strengthening the relevant legal frameworks and anticipating and solving potential legal barriers in practice.

▪️ Including Cost-Effective Options for Drug Supplied from Abroad in the Reimbursement List: The inclusion of cost-effective drugs in the reimbursement list under the named patient program mechanism and the revision of payment conditions contribute to the more effective management of healthcare expenditures. However, the primary purpose of this exceptional drug import regime is to provide access to drugs that are not licensed in Türkiye or are unavailable on the market. Therefore, the effective use of this mechanism, which offers cost advantages, should be supported by regulations aimed at accelerating patient access to treatment.

▪️ Expanding the Scope of the Healthcare Products Market Application: The expansion of the Healthcare Products Market (Sağlık Market) application, which has been used since 2018 to procure pharmaceuticals, medical supplies, and medical devices through the State Supply Office ("DMO"), is planned, with the aim of increasing the number of products. While expanding the scope, it is also critical to ensure market competition. Therefore, a careful strategy should be followed to ensure the sustainability of competition and maintain price balances.

The financing model of the healthcare system and the effective management of pharmaceutical treatment expenditures are critical for sustainable growth in Türkiye's healthcare sector. To successfully implement the set objectives, strengthening the legal infrastructure of healthcare policies and overcoming practical barriers are essential. In particular, it is important to rapidly develop the regulatory framework needed to effectively implement exchange rate impacts, alternative reimbursement models, and AI-supported audit systems. Additionally, while expanding the scope of applications like the Healthcare Products Market, the balance between domestic producers and importers must be taken into account. It should be remembered that focusing solely on reducing costs could jeopardize the quality and effectiveness of the healthcare system in the long term. Therefore, it is crucial to carefully set the objectives in alignment with the principles of sustainability and equity.

While increasing domestic production is important for economic sustainability, the distinction between domestic and imported products/producers may pose an obstacle to quality and access to innovative products in the long run. It is a well-known fact that certain drugs and medical devices are either unavailable or scarce in the market. Since Türkiye's healthcare services need to grow not only with a cost focus but also with technological and innovative solutions, the widespread adoption of modern healthcare financing models, such as value-based reimbursement methods, will play a critical role in ensuring the sustainability of healthcare services.

Quality, Sustainability, and Access for a Healthy Society

Considering the increasing trend in health tourism, it is clear that the healthcare services offered by Türkiye should be effective and of high quality, not only for foreign patients but also for patients who receive reimbursement under the social security system.

In the Development Plan, various policies have been adopted to ensure the provision of high-quality, reliable, effective, data-driven healthcare services, supported by high levels of preparedness and adaptability, and financially sustainable.

One of these policies is ensuring financial sustainability within the healthcare system. In this regard, efforts will be made to ensure the effective use of diagnostic and therapeutic services reimbursed by the TİTCK under the Health Implementation Communiqué, as well as to conduct necessary data analysis, model development, and pilot studies for the integration of personalized medicine into routine healthcare services.

Another policy is to facilitate access to drugs and medical devices by developing methods to strengthen the traceability of drug movements in the field, integrated into the Drug Tracking System (İTS), and by developing new digital solutions based on international standards for rational procurement management in pharmaceuticals.

Digitization, Production, and Export-Oriented New Era

The Development Plan aims to reduce import dependency in the medical device and pharmaceutical sectors, increase domestic production, and strengthen international market competitiveness. In this context, various goals have been set to accelerate production processes, increase efficiency, and promote exports.

▪️ Strengthening Institutional Structure: To encourage domestic production and exports in the pharmaceutical and medical device sectors, ensuring data sharing between institutions and speeding up export processes through digital platforms is planned. Additionally, improvements to customs procedures for medical devices are also foreseen.

▪️ Increasing Export and Production Capacity and Integration: Through digitization processes, the goal is to increase domestic production and export capacity. The integration of health data into electronic health records and supporting telemedicine applications with mobile e-prescriptions are planned.

▪️ R&D and Domestic Production Support: To increase exports and domestic production, digital transformation processes must be accelerated to develop technological infrastructure. Supporting local producers and promoting technological innovations are essential in this process. The goal is to develop new technologies for the production of vaccines, pharmaceuticals, and medical devices and to support entrepreneurship activities by collaborating with the private sector. Moreover, support is foreseen for local medical device manufacturers to complete the mandatory MDR registration process for exporting to the EU market.

▪️ Developments in Biotechnological Products: In line with Türkiye's goal of becoming a producer and exporter of biotechnological drugs, new regulations on licensing, pricing, and reimbursement systems are planned. High-value-added biotechnological products will be prioritized, and R&D activities will be incentivized. Türkiye also aims to support more entrepreneurs and innovative projects in this field.

All these objectives aim to accelerate digitization processes to enhance Türkiye's global competitiveness in the healthcare sector and strengthen its innovation potential. However, for the successful implementation of these goals, it must be reviewed whether Türkiye is ready for digitization, both in terms of legislation and infrastructure. Updating the legislation to align with digital transformation and strengthening the digital infrastructure of the healthcare system is critical for the effective progress of this process.

General Evaluation and Forecast

The steps outlined within the Program to achieve development goals in the pharmaceutical and medical device sectors provide important guidance to support sustainable growth and development in the sector. However, for these goals to be effectively implemented, the legislation must be rapidly updated to align with digital transformation and the advancement of healthcare technologies.

Effective communication among healthcare stakeholders and ensuring that policies are implemented in accordance with the sector’s requirements are fundamental elements for a successful digitization process. Furthermore, strengthening public-private sector cooperation and establishing functioning feedback mechanisms will enhance the effectiveness of the process.

The year 2025 could mark a significant turning point for Türkiye's healthcare sector in terms of digitization, domestic production, and biotechnological products. For this potential to become a reality, there must be an increase in investments and innovative solutions, alongside the swift adaptation of legislation to these developments. Moreover, ensuring quicker and more efficient access to imported innovative treatments for patients should not be overlooked, and it is crucial to develop rapid approval mechanisms for innovative products and update pricing policies and reimbursement systems to make imported products more accessible.

[1] 2025 Presidency Annual Program, p. 126, 2.2.1.1.2. Pharmaceuticals and Medical Devices.

First published by Gün + Partners in Dec 24, 2024.