Memorandum submitted by GlaxoSmithKline
UK TRADE AND INVESTMENT RELATIONS WITH TURKEY
INTRODUCTION
1. GSK welcomes the Business and Enterprise
Committee's Inquiry into the contribution of UK trade and investment
relations with Turkey and possible economic consequences of Turkish
membership of the European Union. We welcome also the opportunity
to provide input on this topic, particularly in light of our longstanding
and strong presence in Turkey, where we are one of the leading
pharmaceutical companies.
GLAXOSMITHKLINE
AND ITS
PRESENCE IN
TURKEY
2. GSK is one of the world's leading research-based
pharmaceutical and healthcare companies. The company's mission
is to improve the quality of human life by enabling people to
do more, feel better and live longer. We are involved in the research,
development, manufacture and commercialisation of prescription
pharmaceuticals, vaccines, over-the-counter medicines, and health-related
consumer products.
3. GSK has been operating in Turkey for
almost 50 years. The cmpany employs at present over 700 people,
and focuses on two business areas: Pharmaceuticals (including
non-prescription products and vaccines) and Consumer Healthcare
(oral healthcare).
4. With a total annual turnover of £146.6
million in 2006, GSK is ranked 7th by sales value and is the leading
pharmaceutical company in several therapeutic areas such as anti-asthmatics,
oral anti-diabetics, HIV products and antivirals (excluding HIV
products and topical antivirals). GSK is also the second biggest
pharmaceutical company in the Turkish vaccines market with a 30%
market share in value.
BUSINESS ENVIRONMENT
5. Its privileged geographical situation,
its large population, and its economic growth makes Turkey a key
market offering significant opportunities to UK business. GSK
strongly supports the EU accession process which will harmonise
and integrate Turkish law with European and international standards,
thereby providing Turkey a significant opportunity for economic
development.
6. GSK has noticed significant and positive
reforms in Turkey since 2005, probably linked to the opening of
EU Accession negogiations in October of that year. This has led
to a progressive opening of the Turkish market to foreign companies
while initiating legal, social, economic and administrative reforms
to align with international and in particular European standards.
7. These reforms are encouraging for UK
business operaring in Turkey and we urge Turksih authorities to
continue to work in this direction. Further progress on transparency,
predictability and enforcement would significantly improve the
current business environment and make of Turkey an even more attractive
market in terms of trade and investment.
8. Continues strong support by the British
Government for the accession and reform process would be welcome,
as will ensure that British companies can be successful in this
important market.
KEY ISSUES
9. While GSK has managed to stay at the
top of the international pharmaceutical companies operating in
Turkey, it has sometimes been confronted with a difficult business
environment. A lack of transparency and predictability due to
continuous and unexpected legal reforms and deficiencies in the
intellectual property system have been some of the key constraints
faced.
PRICING
10. In order to fully comply with the Acquis,
Turkey should adopt criteria for making pricing and reimbursement
decisions that are objective and verifiale.
11. In June 2007, a new Pricing Decree was
adopted, followed by the adoption of implementation guidelines
in September 2007. Transparency of the decision-making process
has been improved through this Decree. However, there are still
significant concerns. Turkey operates a reference pricing system,
where the price is referenced to the cheapest price in a basket
of five countries. This is unique in Europe, and adds uncertainty
to the business environment. We would therefore strongly suggest
that Turkey adopt a system based on the average price, in line
with those European and most international markets that have such
a system. Furthermore, the fact that the implementation guidelines
can be reviewed on an annual basis allows Turkey, among other
amendments, to change the basket of countries and increase it
to up to 10 European markets, raising concerns in terms of predictability
but also feasibility.
REIMBURSEMENT
12. One of the developments of the new 2007
Pricing Decree is the introduction of a new Reimbursement committee
as part of a wider reform of the reimbursement system, which follows
the merger of the three Social Security Institutions into one
institution covering 90% of the population. The working Procedures
and Principles of the new Reimbursement Commission were issued
on 13 November 2007 and the Committee members were announced on
29 November 2007.
13. This should in principle bring improvements
in terms of transparency of the decision-making process: ie, clear
timelines; justified decisions and possibility yo appeal. However,
transparency and timing of reimbursement devisions is an ongoing
issue and should be improved as a matter of urgency. Furthermore,
significant uncertainties remain relating to the criteria that
will be used and the implementation timelines of the new reimbursement
systems, which might not be fully in place for the next two years.
Industry and GSK have engaged in a constructive dialogue with
Turkish authorities to develop this new system and we hope business
will continue to be closely associated with this process.
INTELLECTIAL PROPERTY
RIGHTS
14. Although improvements have been made
in recent years, several aspects of Turkey's intellectual property
regime should be improved in order to ensure full compliance with
Turkey's EU and WTO commitments.
15. The innovative pharmaceutical industry
must generate extensive data to establish the safety and efficacy
of medicinal products as a condition of their approval and registration
by regulatory agencies. Since 2001, Turkey has been obliged to
protect this sata against disclosure and unfair commercial use
(known as Regulatory Data Protection) under both TRIPs Article
39.3 and the EU-Turkey Customs Union (CU) Agreement.
16. Legislation on Regulatory Data Protection
(RDP) was passed in 2005 further to strong interventions from
the EU and Member States. The support of the UK was particularly
helpful in this process. However, there are still significant
concerns regarding the implementation and enforcement of these
provisions:
— Turkish authorities refuse to grant
RDP to combination products and vaccines, which is an obligation
under the EU-Turkey Customs Union Agreement and should therefore
be respected.
— Turkish authorities have allowed
generic applications to be submitted before the approval of the
original products, while a large number of generic dossiers seem
to have been submitted just a few days before the news RDP provisions
were approved, raising concerns about their completeness. No generic
dossier should be approved unless due process and due form have
been fully respected.
— The current period of RDP is of six
years linked to the first registration in the EU. Given the current
registration delay in Turkey, this significantly shortens the
period of protection. Furthermore, the need for a Free Sale Certificate
from the country of origin makes it impossible to make a parallel
submission therefore delaying access to new medicines compared
to EU countries. The date of reference should be the date of registration
in Turkey. Furthermore, the current RDP period should progressively
align with the period established with the EU Acquis, ie, 10 years
with an additional year for new indications, and no linkage should
be established between the RDP and Patent protection periods since
these are two independent rights.
17. The issue is currently being discussed
between European and Turkish authorities in the context of an
ongoing European Commission investiaging under the EU Trade Barrier
Regulation. The support of the UK and other EU Member States will
be key to ensure a successful outcome.
18. Furthermore, as mentioned above, IP
enforcement is also a significant industry concern, with counterfeiting
arising as an important issue during the last year. Industry is
working in close cooperation with the Turkish Government to find
a solution which is implementable and effective to fight against
this problem. Traceability systems are a good option but it is
important to allow enough time for the implementation of any new
system, particularly when there is not sufficient experience in
Turkey and outside Turkey. The full enforcement of a new traceability
system before 2010 does not seem feasible.
REGULATORY
19. Product registration criteria should
be limited to safety, efficacy, and quality, while economic and
price criteria should be removed from the product registration
procedure as is current practice in the most EU Member States.
20. Furthermore, while some steps have already
been taken to align current regulatory provisions with the EU
Acquis, more should be done to complete this process in a timely
and effective manner. At present, due to lack of staff and infrastructure,
evaluations cannot be finalised within the 210 days set in the
Turkish regulation.
21. There have been indications that Turkey
might be considering setting up a new and independent regulatory
agency. This could provide a significant opportunity to improve
efficiency and transparency, and we would find it extremely valuable
if the EMEA and also national agencies like the MHRA could assist
Turkey in this important process.
VACCINES
22. As part of the ongoining reforms on
the healthcare area, Turkey should also consider increasing its
budget for prevention. At present, Turkey spends around US$130
(European levels are $400-600) per capita for pharmaceuticals
to treat diseased and less than US$2 for prevention of diseases,
Figures for vaccination per capita in Turkey is four time less
than vaccination per capita in France and nine times less than
in Germany.
23. It is obvious and proven by the many
scientific health economic studies that prevention of diseases
is far superior to a treatment approach in economic terms. Some
increase in spending would clear the way for more preventable
diseases to be dealt with through the national vaccination programme,
with clear positive implications from both a social and economic
point of view. It would be helpful if the UK could share its experience
with Turkey of why greater investment in preventive healthcare
is a cost-efficient formula.
FUTURE EXPECTATIONS
24. While the frequent legislative changes
and the lack of enforcement have been two significant barriers
for business operating in Turkey during the last years, authorities
seem committeed to improvement, particularly as part of the EU
Acquis implementation process.
25. With a unique strategic geographical
situation and a growing market, Turkey is one of the most attractive
economies for European countries. Enlargement provides a unique
opportunity to create a level playing field for all companies
regardless of their origin, brining the Turkish healthcare and
pharmaceutical system and in line with European standards, with
significant positive implications not only for business but for
Turkish patients.
26. Key stakeholders including business
should be closely involved in this process. GSK welcomes the increasing
and constructive cooperation with local authorities and jopes
this will continue in the coming years. However, an ambitious
agenda needs to be accompanied by sufficient mechanisms to ensure
its adequate enforcement. There are concerns about the sometimes
perceived disconnection between the political will and technical
means.
27. In order to succeed on the planned reforms,
we believe it is imprtant for Turkey to evaluate options, take
advice from other countries' experiences and consult fully with
all stakeholders including industry, and then adopt a sound approach
based on cost-benefit analysis. Furthermore, it is key that Turkey
builds enough capacity before implementing reforms like the new
reimbursement or traceability systems, with a long enough lead
time to make implementation realistic. Both the UK and the EU
could have a very helpful role in supporting this process.
28. GSK would like to thank BERR and UKTI
for all the support provided over the last few years to improve
the business environment in this very important high growth market.
We urge UK authorities to continue to play a leading role in assisting
Turkey throughout this important but also challenging Accession
Process that GSK fully supports.
January 2008
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