SGK Announces New Reimbursement Rates for 30 Drugs

SGK Announces Reimbursement Rates

Turkey's Social Security Institution (SGK) has announced new reimbursement rates for 30 drugs, in accordance with the Social Insurance and General Health Insurance Law Number 5510, Article 63. The SGK announced additional special discounts of 3–28% on 10 products across a range of therapeutic segments, including antibiotics, anti-diabetics, and hypertension and gastrointestinal disease treatments. The social insurance provider increased reimbursement coverage to six products: four locally manufactured generics, as well as two 20-year-old products. The reimbursement rates for products priced at 5.23 Turkish lira (USD2.86) are in the 26–47% range, while those priced at less than TRY5.23 had rates ranging from 4% to 31%, both with pharmacy discounts in the 0–2.5% range and special discounts ranging between 14% and 27%, except for antibiotic Mikonafin (terbinafine hydrochloride) and antidepressant Redepra (mirtazapine/titanium dioxide), which do not bear special discounts. There was no added or change of reimbursement rate for innovative drugs in this announcement. All reimbursement rates are applicable from the date of notification on the SGK website (23 February). The complete list of the drugs affected can be accessed here. A list of the newly added drugs is listed in the table below.

Outlook and Implications

SGK reimbursement rates and discounts have been consistent with similar levels seen in 2011 and earlier this year, as a measure to close the healthcare budget deficit and decrease healthcare spending (see Turkey: 20 January 2012: SGK Announces New Reimbursement Rates for 49 Drugs and Supportive Care and Turkey: 21 February 2012: Turkey's SGK Announces New Reimbursement Rates for 13 Drugs). Pharmacies and pharma companies continue to witness reduced turnover as a result of reimbursement rate changes, as more drugs in Turkey are 30–50% cheaper than the lowest European price following the SGK announcement, with smaller companies being hit most. Price reduction in the form of increased special discounts offered by pharmaceutical companies to the government is not new to the Turkish market and has in fact been implemented in December 2009 and 2010. The implications of these measures are negative for pharma companies, who have to offer increased special discounts to the government, while they benefit the patients by decreasing their drug expenditure. The discounts and reimbursements this time round have affected local firms and generics, as well as foreign manufacturers. Newly added drugs to the list are mostly locally manufactured generic drugs, however, following the trend of the SGK, which is dedicated to increasing the number of generics and locally manufactured products, as this is both a cost-containment measure and a boost to domestic pharmaceutical production and utilisation rates (see Turkey: 27 October 2011: Turkey Proposes Health Policy Shift Towards Own Medicines and Medical Devices Production). IHS Global Insight expects the government to continue to decrease health spending, but not without harm to the Turkish pharmaceutical industry, which is expected to reduce in value in the near future as a result of squeezed margins. In the medium-to-long term, however, the government's measures are expected to increase volume-based drug sales as they become more affordable and restore the Turkish pharmaceutical market, especially considering its imminent accession to the EU, and given its strategic geographical position between Europe and Asia.