Reimbursement & Pricing in Turkey

1. Reimbursement & Pricing in Turkey Association of Research Based Pharmaceutical Companies

2. Agenda • Trends in Turkish HC System at last Decade • Main Indicators • HC Spend Growth • Drug Consumption Growth • Reimbursement Process in Turkey • Evaluation of Current Assessment Model • Global Budget Implementation • Pricing in Turkey • HTA in Turkey

3. Trends in Turkish HC System at last Decade

4. Trends in Turkey HC System at last Decade • Grouping of the Public Hospitals under the MoH (Jan 2004) • Allowing the population to use all health care facilities and pharmacies (Feb 2005) • Prescription drugs extended to Green Card holders as part of their benefit package (May 2005) • Holding the population to equal conditions about access to health care • Generalizing the service procurement from private providers (June 2007) • Establishment of General Health Insurance Scheme • Implementation of Family Physician System

5. Number of Visits to the Health Care Facilities by Years Number of Visit Years Source: Ministry of Health

6. Neonatal Mortality Rate by Years (in 1.000 live births) Mortality Rate Years Source: Ministry of Health

7. Under 5 Mortality Rate by Years (in 1.000) Mortality Rate Years Source: Ministry of Health

8. Maternal Mortality Rate by Years (in 100.000 live births) Mortality Rate Years Source: Ministry of Health

9. Visits per Physician by years Number of Visit Years Source: Ministry of Health

10. Average Length of Stay in Hospitals by Years Years + 26% days Source: Ministry of Health, 2008

11. Bed Turnover Rate by Years Years + 47% Patient Source: Ministry of Health, 2008

12. Satisfaction about Health Care Services Years + 38% - 42% % of Satisfaction TÜİK Life Satisfaction Survey 2003-2008

13. Total HC spend in Turkey vs. GDP + 32% + 32% Source: Turkstat, EIU, OECD, interviews, BCG analysis

14. The reason for increasing of drug usage in Turkey • The leading cause is greater and regular access of patients to physicians and hospitals. The frequency of physician calls in turkey rose from 2.7 in 2002 to 6.3 in 2008. • Aging, Improving wealth, Life-styles and Increasing patient awareness • Allowing the reimbursement of outpatient treatments for green card owners • Physiological increased demand due to Family Physician system

15. Average Drug Utilization per person (Unit) + 67% Source: TUIK & IMS

16. HC spend evolution in Turkey - Projection + 4,6% + 20,4% Source: Turkstat, AİFD estimations

17. Reimbursement Process in Turkey

18. Reimbursement Process • Social Security Institution (called SGK) is the key player in the new assessment system with responsibility for determining what treatments and medicines are reimbursed by the new system. • Companies apply to the Social Security Institution in order to determine the reimbursement status of a pharmaceutical. • The other stakeholders involved in the reimbursement evaluation process alongside the Social Security Institution are the Ministry of Finance (MoF), the Ministry of Health (MoH), the State Planning Organization, the Under secretariat of Treasury, KOLs and industry representatives.

19. Reimbursement Process • The submitted products are primarily evaluated by the Medical & Economic Evaluation Commission and the final decision is taken by Reimbursement Commission. • The final revised list is announced after the official approval of the Head of SGK. • The time from application for reimbursement to a final decision in Turkey is usually up to one year, which is also a cause of delay of market access.

20. Required Documents for Application • Companies apply to the Social Security Institution in order to determine the • reimbursement status of a pharmaceutical. The written request should be • supported by; • The FDA marketing authorization and New Drug Application (NDA) number, • the EMA marketing authorization and co-marketing certificate, • Regulatory and reimbursement status within OECD countries • Clinical data • Safety • Efficacy • Pharmaco-economic data • The pharmaco-economic analysis shall be performed and must be annexed with the appropriate sensitivity analysis. • The comparison should be with the most commonly used alternative • Cost Minimization, Cost Effectiveness, Cost utility (may be submitted by the applicant) as an annex to the pharmaco-economic analysis. • Budget impact model from payer perspective

21. Market Access Steps - Today

22. Reimbursement Journey - Today

23. Evaluation of Current Assessment Model • Positive Aspects of Current System • Allowing participation of industry representatives to the assessment process. • Negative Aspects ofCurrent System • SGK compares the package prices with alternatives and omits total treatment cost. • Comparative medical evaluation of products with therapeutic alternatives has not been used in real terms by SGK at current situation • Pharmaco-economic analysis in the reimbursement dossier is not taken into account in discussions • Budget impact discussions dominate the decision

24. Global Budget Implementation in Turkey

25. GLOBAL BUDGETGovernment granted a 7% growth for the next 3 years according to 2008 realization

26. Global Budget Protocol; Pricing

27. Global Budget Protocol; Acquisitions • For the new molecules and the innovative treatment products to be introduced into the market, a base public institute discount will be 11% for the application to the List of Drugs to Be Reimbursed. • During the period 2010-2012 when the medium-term fiscal program will be implemented, the therapeutic equivalence will not be applied.

28. If the Actual expenditures exceeds the budget At the first step; The discount of original products with no generics will be increased to 13% At the second step; The reference rate will be decreased from 66% to 60% incrementally for products with generics.

29. AİFD Estimation and Actual for 2010 * * * Source: SSI, IMS (ex factory+ SSI factor) & AIFD *: 10% Safety Margin has been added to first 3 months

30. 2010 Drug Expenditure Realization (AİFD Budget – Actual/IMS+SSI Data) February March April January Source: IMS; SSI

31. Pricing in Turkey

32. Pricing in Turkey / Conditions before 4 December 2009 – (1) Pricing based on external reference: The ex-factory price (PTW) is determined by the MoH on the basis of the lowest of the below: * The price in 5 reference countries (France, Greece, Italy, Portugal and Spain) / August 31 * the price in the country the drug was imported from * the price in the country where the drug was manufactured (place of batch release) *if the drug is not sold in the countries above, the lowest STS in the EU. Pricing based on internal reference: Reimbursement amount is determined by the Social Security Institution taking into consideration the prices of the equivalent products with the same indication.

33. Any change occurring in Turkey exceeding 3% due to fall in the reference price is reported to the MoH and reflected on the prices in at least 3 months. For originator products, companies may claim an amount up to maximum 100% of the reference price. For generic products, companies may claim an amount up to maximum 80% of the reference price. Both generic and originator drug manufacturers may claim prices under the determined price. 20-year-old products: The products that were placed upon the world market before 01.08.1987 for the first time 20-year-old products are excluded from reference-based pricing and their present prices are maintained. Reductions in the prices do not apply to products with PTW under 3 TL. Pricing in Turkey / Conditions before 4 December 2009 – (2)

34. The changes implemented by the new pricing decree – (2) * Originator/generic products with PSS over 3.56TL ** 20-year-old products with PSS over 6.79TL

35. HTA in Turkey • New concept for Turkey • 3 different models were developed (SSI, Hacettepe Uni and AIFD) • AIFD’s proposal is based on therapeutic improvement, burden of illness, pharmaco-economic evaluation and budget impact • The collaboration of all stakeholders will be crucial to implement best model for Turkey • AİFD and SGK will establish a platform to create mutual understanding on the principles and terminology. At the second step we are going to start on creation a sustainable model for Turkey.

36. Back up Slides

37. The Medical & Economic Evaluation Commission • The Medical & Economic Evaluation Commission has been composed with 13 members. Social Security Institution has 4 members, the Ministry of Health has 2, the Ministry of Finance, the State Planning Organization and the Treasury has 1, two pharmacologists and 2 industry representatives are regular members of the Medical & Economic Evaluation Commission. • The meeting schedule should be announced at the beginning of each year and The Medical & Economic Evaluation Commission meets 4 times in a year. The decisions are taken by the polling and all participants including industry representatives have one vote. • After Medical & Economic Evaluation Commission meetings, the final decision is taken by Reimbursement Commission according to suggestions of Evaluation Commission. The final revised list is announced after the official approval of the Head of Social Security Institution.