Domaç, who was elected as an İstanbul deputy of the AK Party in 2007 after serving as the president of the Turkish Pharmacists Union (TEB) between 1995 and 2007, spoke to Today’s Zaman about developments in the pharmaceutical sector.

Turkey’s spending on medication has exceeded TL 15 billion. Will there be further increases?

Turkey’s pharmaceutical expenditure was TL 15.4 billion in 2010. The spending targeted for the period between 2011 and 2012 is around the same figure. Given the current Pharmaceutical Decree, which fixes the drug prices, it is very unlikely that this will change over the next two years. From now on, it may only be possible to intervene in the event of a surge in drug prices. In 2010, the Social Security Institution (SGK) signed an agreement with pharmaceutical companies to increase the discount rates to be applied to the public procurement of drugs. With a decrease in drug prices, public spending is also fixed.

What is Turkey’s position with respect to drug consumption?

Turkey is able to produce the pharmaceuticals it needs and its pharmaceutical market is growing due to population increase. Pharmaceutical consumption per capita in Turkey varies between $160 and $180 per annum. In comparison, this figure is $1,000 in the US, $350 in Germany, $320 in Greece and $280 in France. In other words, the argument that Turkey consumes too much medicine is wrong.

What is the situation in the drug production sector?

There are about 300 companies operating in the country’s pharmaceutical sector. Of them, 53 have their own production facilities. Of the 42 foreign companies, 14 produce their products at their own facilities. Turkey is the 13th biggest market in terms of pharmaceutical consumption. It is also one of 36 countries that produce pharmaceuticals domestically. Most drugs that do not require advanced technology can be produced in Turkey. Domestic production can supply about 20 percent of domestic consumption.

The statistics imply there has been a large increase in drug consumption.

True, drug consumption in Turkey has increased significantly in recent years. This is because people have started to visit physicians more frequently. The rate of consultations with a physician rose from 2.8 in 2002 to 6.3 today per capita per annum. The increased frequency of physician consultations correlates with the increased expenditure on pharmaceuticals.

How can drug prices decrease despite an increase in physician consultations?

The main factor that influenced the decrease in drug prices is the amendment to the Pharmaceutical Decree. Medications that were sold at TL 30-40 in the past are now priced below TL 10. Prices in Turkey are determined with reference to five European countries, namely Greece, Portugal, Spain, Germany and France. The lowest price in these five countries is taken as a reference in seeking further discounts. Prices can be lowered as a result of such negotiations.

Hasn’t this pruned the profits of pharmaceutical companies?

If they don’t sell their products then they won’t make any profits. In other words, they had profits in the past and they still have profits today. Another reason for the reduction in drug prices was the introduction of certain limits on profit margins.

There have also been limits introduced concerning medication use.

The Health Ministry and the SGK took certain measures which effectively limit the number of medications that can be prescribed. The practice of prescribing cheaper generic equivalents in place of expensive medications was also introduced. The SGK also changed the terms and conditions for consulting a physician; you cannot visit more than one hospital or physician for the same condition or disease within 10 days. All these moves helped the country stabilize its spending on pharmaceuticals. For the last two years, there has been no increase in drug spending. These measures ensured that Turkey could save about $2 billion in that period. In 2010, $1.2 billion was saved.

What are the causes of the occasional abrupt increases in drug prices?

Newly marketed drugs constitute the major reason for increases in drug prices and drug expenditure. New drugs are introduced to the pharmaceutical market due to the discovery of new treatments. Most of these drugs are intended to cure chronic conditions.

What do you say about that claim that there are experimental drug trials occurring in Turkey?

No, I certainly do not agree with that. No experimental drugs are prescribed to the Turkish people before they are available on the international market. That is, there is no drug used in Turkey that isn’t already being used around the world.

It is said that Turkey could become Europe’s most advantageous country in terms of affordable drugs and medical treatment. Do you agree?

Yes, it is true. Turkey may become a treatment center for Europe and the world. Europe is aging rapidly and has very high treatment costs. The treatment costs of European countries will increase further. By striking agreements with social security institutions and private health insurance companies in Europe, Turkey may be made into a treatment center for the aging population of Europe. There are examples to prove this point. Significant progress has been made with respect to eye diseases and physical therapy. There is also increased interest from Europe in Turkey’s health services for cardiovascular diseases.

Why do Turkish pharmacies frequently protest the government?

With the decrease in drug prices, the profit margins of pharmacies have decreased considerably. First of all, there are too many pharmacies in Turkey. For a country with a population of 72 million, Turkey has more than 23,000 private pharmacies. Due to this high number, most pharmacies can hardly make enough money to break even. Therefore, a cap on the number of pharmacies should be introduced.

What can be done?

The Health Ministry is currently developing a new project and preparations are largely complete. The number of pharmacies will be reduced so that there is one pharmacy per 3,000 people. A legislative change will be enacted that will also protect the rights of those who have graduated from pharmacy faculties at university and the students still attending those faculties. Pharmacies will be required to employ pharmacists in proportion to their turnover. Unfortunately, there is an unequal distribution of pharmacists in Turkey. Currently, all pharmacies, including those that have high turnover and those that can barely manage to get by, must employ at least one pharmacist to meet the legal requirements.

How much can a pharmacy earn from selling drugs?

According to the Pharmaceutical Decree, there are three options: 25, 20, or 16 percent, which correspond, respectively, to, cheap drugs, mid-priced drugs and expensive drugs.

Why are they unhappy then?

Although drug prices fell steeply, the pharmacies had supplies of medications which they had acquired at high prices. Thus, for example, the price of a drug which a pharmacy had bought at TL 60 decreased to TL 30. In Turkey, the daily inventory of all pharmacies in Turkey is worth TL 1.5 billion. As a result of this lowering of prices without taking the appropriate measures beforehand, pharmacies could no longer sell these high-priced drugs. This problem should be addressed. To this end, a fixed price can be set. Spain and France have successfully implemented such as policy.

You used to be a harsh critic of the government when you were chairman of the TEB.

The criticisms I voiced at that time were not just for the sake of criticism. I intended to rectify errors. Thanks to my criticisms, the problems of pharmacists were addressed to a great extent. In the past, they would face great difficulties when collecting payments for the drugs they sold to the state. Now, any pharmacy can collect payments within 45 days. I believe that the measures taken in relation to the pharmaceutical sector have been appropriate over the last seven years. This apparently pleases ordinary citizens as well. The preferential system in health care was abolished. Discrimination in hospital and pharmacy procedures has been removed. Any person can attend any hospital and obtain medications without complications. This is the ideal situation.

It is being claimed that large pharmacy chains are being created.

These claims are manufactured intentionally. We do not have such a thing on our agenda. These claims are intended to unleash fears in people and to manipulate them and urge pharmacists to revolt against the government. This applies to the claim that some drugs will be sold in supermarkets. No prescription drugs intended for treatment can be sold at a supermarket. Some vitamins can be sold in stores but these fall under the jurisdiction of the Ministry of Agriculture not of the Ministry of Health.

Although drug prices are falling, foreign pharmaceutical companies are investing in Turkey. What do say about that?

Currently, the world’s largest pharmaceutical companies are investing in Turkey. Pharmaceuticals sold in the US are the same with those sold in Turkey. For a country that is growing by 8.2 percent it is impossible for its domestic pharmaceutical sector not to grow. Russia, China, Turkey and Brazil are considered as the countries where the highest rates of growth in the pharmaceutical sector are expected. People are aging rapidly. The rate of visits to the physician per person per year is 5.5 until the age of 60, but after then, this figure rises to nine. If pharmaceutical giants continue to operate in Turkey despite the introduction of these strict measures, then they do so because they know that Turkey’s pharmaceutical market will grow.

Many Turkish pharmaceutical companies were acquired by foreign companies. Isn’t this dangerous?

The period with highest rates of increase in spending on drugs occurred during the years between 1984 and 2003. In this period pharmaceutical companies maximized their profits in Turkey. During the period of growth, many domestic companies were acquired by foreign investors. There were many acquisitions in this period. Turkish companies were sold at high prices. Eczacıbaşı, Deva, İbrahim Ethem, Biyofarma, and Munur Şakir were sold. Some pharmaceutical companies, which were originally worth $2-3 million, could be sold for $25-30 million. There was a similar process in Italy and France. I think this trend is positive. Gains from these sales were put into investments in other sectors of the economy, including the pharmaceutical sector itself. There were many mergers around the world. There has been such a trend. Indeed, high costs are involved in the development of drugs. There are 30 major companies that dominate about 60 percent of the world pharmaceutical market.

After dominating the market completely, won’t these companies monopolize drug prices?

Companies are not able to arbitrarily increase drug prices. This is because the state is the biggest buyer of drugs in Turkey. Most pharmacies sell drugs primarily to the state. There are also anti-trust laws. If any company breaches these laws, the state may opt to cancel the patents of particular drugs. This is what the US did. So there is nothing to fear. No company can impose drug prices in Turkey. This is unimaginable.

What can Turkey do to promote pharmaceutical research?

Turkey should increase its share in research and development [R&D] activities in the international pharmaceutical sector to 1 percent. To do this, it must attach importance to R&D activities. Around the world, $100 billion is spent on R&D. Japan, the US, Germany and Switzerland are currently the hotbeds of R&D in the pharmaceutical sector. Turkey has certain advantages in this regard. It is an attractive country for investment. Turkey may become one of world’s 10 largest economies in future. It aims to boost the national income per capita to $25,000. Its health spending will increase from $45 billion to $60-65 billion by 2023. It has very attractive in terms of resources with regards to researchers and labor. Turkey may replace Ireland in terms of R&D.