Pricing of Pharmaceuticals and the Fixed Exchange Rate

Due to the rapid increase in the current exchange rates, pharmaceutical prices have been one of the most controversial issues in Türkiye in 2023. The price 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 referenced EU countries for the relevant product is taken as the ex-factory price in Türkiye. The currency is then converted into Turkish liras; but to ensure that this calculation is not affected by fluctuations in the exchange rates, it is done at a fixed exchange rate every year. Thus, it is aimed that the exchange rate applied to the reference price taken from the respective EU country is fixed for one year, and the applied exchange rate is considerably lower than the current exchange rate.

As of the Decision of 2017, a number of changes were made to the ratio of the fixed exchange rate to the current exchange rate. Pursuant to the final version of the Decision, the exchange rate is determined as 60% of the average value of the Euro during 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 Turkish lira equivalent to 1 Euro based on a calculation of 60% of the average value of the previous year.

Pursuant to this rule, the exchange rate to be used in the pricing of pharmaceuticals should be increased once a year, whereas it has increased 5 times in the last 2 years.

Average Euro/Turkish lira exchange rates 2018-2023

Source:

The Central Bank of the Republic of Türkiye (CBRT) - https://www.tcmb.gov.tr/

Pharmaceuticals and Medical Devices Agency of Türkiye - https://www.titck.gov.tr/

However, the rapid increase in the value of the exchange rate required quick measures to be taken in updating the prices of pharmaceuticals to ensure the availability of products in the market. Therefore, it was deemed necessary to update the prices again in July 2023, and with an increase of 30.5%, the exchange rate determined as TRY 14.0387. Similarly, to be in force on December 25, 2023, the value of 1 Euro was increased by 25% to TRY 17.5483.

On February 23, 2024, a provisional article was added to the Decision stating that no adjustment will be made for the year 2023 with the calculation procedure stipulated in the Decree. It is anticipated that a new exchange rate will be determined later in the year.

* First published by Gün + Partners in Aug 14, 2024.