Cablegate: Turkey: Health Ministry Proposes Scenarios for Drug

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R 170936Z FEB 10
FM AMEMBASSY ANKARA
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DEPT PLEASE PASS USTR FOR MARK MOWREY
COMMERCE FOR ITA/MAC CHERIE RUSNAK AND KRISTIN KNAJDI

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EINV ECON ETRD EFIN TU
SUBJECT: TURKEY: HEALTH MINISTRY PROPOSES SCENARIOS FOR DRUG
APPROVALS

REF: A) ANKARA 143, B) 09 ANKARA 326

This cable is sensitive but unclassified. Please protect
accordingly.

1. (SBU) Summary. The Ministry of Health (MOH) recognizes
that its new rules on Good Manufacturing Practices (GMP)
certificates for new drug approvals (described in Ref A) will
have some impact on trade in the short term, but is sanguine
about the long-term effect. According to Saim Kerman,
Director General of Pharmaceuticals and Pharmacies at MOH, the
procedural change is aimed at stemming the flow of new generic
drugs of questionable quality, for which there are nearly 2000
pending applications, by increasing inspection requirements.
He admitted that Turkey does not have the inspection capacity
to carry out this new rule, however, and as such may endanger
the flow of vital innovative drugs. The GOT has proposed to
the pharmaceutical industry five scenarios under which the
requirement for an MOH-issued GMP certificate could be waived.
Industry analysts tell us the scenarios are problematic,
however, and the industry associations are composing a letter
to the GOT outlining some of those problems. In addition,
recent statements to the press by Kerman's deputy, Halil Akar,
suggest a far more protectionist intent to the new rule. He
was reported as saying, "Our objective is to encourage local
manufacture. We want to make imports of generics more
difficult, thereby encouraging the production of original
drugs." End summary.

2. (SBU) Econ Counselor, Commercial Counselor, and Econoff
recently met with Saim Kerman, Director General of
Pharmaceuticals and Pharmacies at MOH, to discuss changes to
Turkey's rules on accepting GMP certificates issued by other
countries that would effectively halt new drug approvals (Ref
A).

MOH Looks to Add Flexibility on GMP Acceptance
-------------------------

3. (SBU) Kerman acknowledged that Turkey's inspection capacity
(currently at around 20 inspectors dedicated to drug
facilities, not 11 as previously reported) is insufficient to
conduct a GMP inspection of all foreign production plants, and
that Turkey is not yet at a stage where it could join a
multilateral reciprocal recognition agreements such as the
Pharmaceutical Inspection Cooperation Scheme (PIC/S). He
noted that the goal of the rule is to stem the flood of
applications for generic product imports of questionable
quality, many from China and India, the number of which has
mushroomed to nearly 2000 over the past year. By increasing
the inspection requirements, the GOT hopes to ensure the
safety of products entering its market and also discourage the
lowest-quality producers from even applying. He recognized,
however, that new drugs would be caught in the same net and so
there is a need to introduce some flexibility in the system to
allow access for drugs that Turkey needs.

Approval Scenarios
------------------

4. (SBU) Kerman observed that the GOT had provided to the
Association of Research-Based Pharmaceutical Firms (AIFD) a
list of scenarios under which the requirement for an MOH-
issued GMP certificate could be waived (a GMP certificate
issued by another competent authority would still be
required). According to Kerman, once AIFD accepts the list it
will go to the Undersecretary for approval and then MOH will
restart licensing of products that fit the scenarios. The
list includes (in order of priority):

-- A pharmaceutical product that is "vitally important";

-- A product that provides a clear medical advantage over
existing products, such as increased patient compliance, a
more convenient method of administration, a new form of
treatment, or a hitherto unmarketed health benefit of a
currently marketed product;

-- A product that cannot be manufactured in Turkey, whether
for technical reasons (vaccines, blood products,
biotechnological products, or a product that requires special
manufacturing facilities or packaging) or because the low
prescription level of a product or the structure of the

ANKARA 00000256 002 OF 003

producing company warrants global production;

-- A product that can be manufactured in Turkey where the
producer is willing to transfer all or part of the
manufacturing process to Turkey (in the case of a product to
be manufactured entirely in Turkey, conditional approval can
be granted even prior to the submission of relevant test
data); or,

-- A product that provides an economic advantage in terms of
daily treatment or the cost of treatment, or products that
will not apply for reimbursement listing by the Social
Security Institute (SSI).

Comment: The list does seem to be geared toward screening out
generic products, but the last two categories are illustrative
of the GOT's less obvious goal of increasing local production
(and thereby adding new jobs) and containing burgeoning health
care costs. End comment.

Industry Reaction
-----------------

5. (SBU) Jeffrey Kemprecos, Executive Director of Public
Policy and Corporate Responsibility at Merck, described the
MOH proposal as problematic at best. He was especially
concerned that the list would not be used as a positive tool
to exempt needed drugs but rather as a pretext for denying a
drug because it is not, for example, sufficiently "innovative"
or did not add to "patient convenience." (Note: Merck has
previous experience with MOH's use of vague terms like
"innovative", as MOH in 2009 violated the data exclusivity of
one of Merck's products and then responded to Merck's
complaints by arguing that the product in question was
insufficiently innovative to merit protection, as described in
Ref B. End note.)

6. (SBU) Kemprecos noted that the proposals also conflate what
should be two separate processes - the decision on whether a
drug is safe and effective and the haggling over the specific
price. In Turkey, the role of MOH is to determine the former,
he argued, with the latter function falling to SSI. He
conceded that MOH's concerns about generics may be valid, but
proposed that the way to deal with this is to adopt a risk-
based approach to drug approvals rather than a broad change to
the rules that seems more focused on cost containment and job
creation than on health and safety. He informed us that AIFD
had held a meeting in Prague with representatives from the
Pharmaceutical Research and Manufacturers of America (PhRMA)
and the European Federation of Pharmaceutical Industries and
Associations (EFPIA). The conclusion of that meeting was that
the industry associations would compose a letter offering to
support MOH in its goal of improving its inspection capacity
and working toward mutual recognition of GMP certificates, but
that they would not agree to MOH's offer of exemptions.
Comment: It is not clear whether MOH will simply go ahead with
the classification system anyway even if AIFD does not agree.
End comment.

Blatant Protectionism?
----------------------

7. (SBU) Lending some validity to Kemprecos' fears are recent
press statements by Halil Akar, Deputy Director General within
Kerman's department. In a statement to the semi-official
Anadolu Ajansi, Akar observed "Setting out from the idea that
there are very good manufacturing sites in Turkey, we decided
to make our country a medicine manufacturing hub of the Middle
East and Balkans...Our objective is to encourage local
manufacture. We want to make imports of generics more
difficult, thereby encouraging the production of original
drugs." Akar went on to say that there would be exemptions
for some products and that when inspections are necessary
priority would be given to essential medicines.

8. (SBU) Comment: From discussions with interlocutors at the
Foreign Trade Undersecretariat (FTU), it is clear that MOH did
not discuss its protectionist ideas with the trade-related
agencies (the rule was published in a form that did not
require clearance through the Prime Ministry). Kerman
acknowledged that the new rule probably violates Turkey's EU
Customs Union obligations to allow for the free transit of
goods, but waved that problem away with a statement that the

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EU ignores its own obligations to Turkey when it is
convenient. Should the European Commission decide to insist,
this argument is unlikely to pass muster. End comment.

JEFFREY

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