Turkey: Turkish Competition Board Launches Investigation Into "Named Patient Sales"

The Turkish Competition Board has launched an investigation into the alleged blocking by the Turkish Pharmacists Union (known by its Turkish acronym "TEB") of "named patient sales" by pharmaceutical warehouses, further complicating the fight between elements in the Turkish government seeking greater competition and private sector involvement and those wishing to maintain centralized control. At stake is the rapidly growing and lucrative market for named patient pharmaceuticals.

Background

Many medicines, including those critical to treat illnesses like leukemia, tuberculosis and hepatitis, are not readily available on the Turkish market. The reasons for this include the lack of approval for sale in Turkey, low profitability due to government pressure on medicine prices, and logistical hurdles.

To make these medicines available to patients in Turkey, for years TEB had the exclusive authority to procure them abroad, if prescribed by a physician and permitted by the Ministry of Health. This exceptional supply route for medicines, known as "named patient sales," has grown enormously over the last several years, creating a market of approximately TRY 1.2 billion (approx. USD 450 million) annually.
TEB's monopoly on named patient sales was further strengthened by its protocol with the Social Security Institution ("SSI") which allows reimbursement by the government of medicines imported for named patient sales.

In 2013, as a first step towards eliminating TEB's monopoly, the SSI's Communiqué on Health Practices was amended to permit private entities to import unauthorized medicines for named patient sales. This was followed by the Turkish Medicine and Medical Device Authority ("TITCK"), the semi-independent authority under the Ministry of Health's umbrella, issuing its controversial Guidelines on the Importation of Medicines and Their Use (the "Guidelines"), which authorized 22 pharmaceutical warehouses to import unauthorized pharmaceuticals. TEB, however, remained the only importer entitled to government reimbursement, giving it a significant competitive advantage over the private pharmaceutical warehouses.

Suspension of the Guidelines

After the Guidelines granted private warehouses permission to import medicines, on 6 August 2014, TEB filed an administrative lawsuit at the Council of State, seeking cancellation of the Guidelines and a stay of their implementation. TEB's main argument is that the Guidelines allow pharmaceutical warehouses to conduct retail sales even though they are prohibited from doing so under the Regulation on Pharmaceutical Warehouses and Products Stored at Pharmaceutical Warehouses (the "Warehouse Regulation"). On 2 April 2015, the Council of State ruled in TEB's favor and suspended the Guidelines. The decision was publicly announced on 16 July 2015.

TITCK's response

Just two weeks after the announcement of the Council of State decision, on 31 July 2015, TITCK issued a revised Warehouse Regulation, exempting named patient sales from the prohibition on pharmaceutical warehouses engaging in retail sales. This cured the legal defect which the Council of State cited as the reason for suspending application of the Guidelines. It further revised the Guidelines in a way to expressly refer to the Warehouse Regulation's provisions which permit named patient sales by pharmaceutical warehouses.

The Competition Authority enters the fray

Complicating the legal maneuvering between TEB and TITCK, the Turkish Competition Authority announced on 23 July 2015 that it had launched an investigation into TEB's alleged abuse of its dominant position in the named patient sales market. Although not clear in the Competition Authority's announcement, the basis of the investigation may be that TEB somehow prevented SSI from entering into reimbursement agreements with private warehouses.

Implications for pharmaceutical companies

Despite TITCK's amendments to the Warehouse Regulation, the Council of State's decision to suspend application of the Guidelines remains in force. Named patient sales through private pharmaceutical warehouses, therefore, continue to be prohibited. The Competition Authority's investigation is ongoing with few details available.

In this fluid legal environment, legal advice should be sought when supplying medicines from abroad directly to private pharmaceutical warehouses.

Baker & McKenzie provides multidimensional advice on all aspects of pharmaceutical and healthcare law, including pharmaceutical and healthcare regulations, compliance, employment and pharmaceutical sector-specific contracts.

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