Reimbursement & Pricing in Turkey Association of Research Based Pharmaceutical Companies

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

Trends in Turkish HC System at last Decade

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

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

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

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

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

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

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

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

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

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

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

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

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

Reimbursement Process in Turkey

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.

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.

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

Market Access Steps - Today

Reimbursement Journey - Today How the reimbursement procedure works What is the average period of time necessary for the completion of this process? 22

Evaluation of Current Assessment Model Positive Aspects of Current System Allowing participation of industry representatives to the assessment process. Negative Aspects of Current 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

Global Budget Implementation in Turkey

GLOBAL BUDGET Government granted a 7% growth for the next 3 years according to 2008 realization

Global Budget Protocol; Pricing

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.

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.

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

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

Pricing in Turkey

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. 32

Pricing in Turkey / Conditions before 4 December 2009 – (2) 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. 33

Reference price is not applicable to 20-year-old products The changes implemented by the new pricing decree – (2) Before the decree After the decree 100% of the reference until the generic is placed upon the market 100% of the reference until after the generic is placed upon the market (80% for generics) 66% of the reference after the generic is placed upon the market (the rate is the same for generics)* Reference price is not applicable to 20-year-old products 20-year-old products** shall be priced over the 100% of the reference price as of 1 January 2010. * Originator/generic products with PSS over 3.56TL ** 20-year-old products with PSS over 6.79TL 34

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. 35

Back up Slides

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.