VZCZCXRO0263
RR RUEHDA
DE RUEHAK #0143/01 0281142
ZNR UUUUU ZZH
R 281142Z JAN 10
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 1905
INFO RUEHIT/AMCONSUL ISTANBUL 6851
RUEHDA/AMCONSUL ADANA 4437
RHEHAAA/NSC WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAUSA/DEPT OF HHS WASHDC

UNCLAS SECTION 01 OF 03 ANKARA 000143 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EEB/TPP/BTA, EUR/SE 
DEPT PLEASE PASS USTR FOR MARK MOWREY 
COMMERCE FOR CHERIE RUSNAK AND KRISTIN NAJDI 
 
E.O. 12958: N/A 
TAGS: ECON EINV EIND ETRD KIPR USTR TU
SUBJECT: TURKISH REGULATION MAY HALT APPROVAL OF NEW DRUGS 
 
REF: A. 09 ANKARA 1352 
     ¶B. 09 ANKARA 1503 
     ¶C. 09 ANKARA 1693 
     ¶D. 09 ANKARA 1740 
 
 This cable is sensitive but unclassified.  Please protect 
accordingly. 
 
¶1. (SBU) Summary.  A new Turkish Ministry of Health (MOH) 
regulation that takes effect March 1, 2010 will make 
marketing approvals for new pharmaceuticals contingent upon 
either an inspection by the MOH itself (which MOH admits it 
does not have the capacity to perform) or an inspection 
certificate issued by a "competent authority of a third 
country that is party to a mutual recognition agreement with 
Turkey."  As there are not currently any countries meeting 
that criterion, this will effectively stop all new marketing 
approvals.  The intent of this regulation appears to be 
fourfold: 1) boost local production, 2) allow easier access 
for Turkish generic pharmaceutical exports to third country 
markets, 3) build up Turkey's internal inspection capacity, 
and 4) help control costs.  Particularly relevant to the cost 
control goal is an exception that the MOH can grant for 
"lifesaving drugs" and vaccines, and MOH officials have 
already hinted that companies willing to be flexible on the 
price of their products may find the drugs more easily 
classified as lifesaving.  Although foreign pharmaceutical 
firms are trying to engage the MOH in negotiation, coming on 
the heels of last year's rancorous pricing negotiations, this 
new regulation is yet another blow to the already fragile 
position of the pharmaceutical industry in Turkey.  End 
summary. 
 
¶2. (SBU) We recently met with representatives from various 
pharmaceutical firms (both U.S. and European), who raised 
concerns about a Turkish MOH regulation on marketing approval 
for pharmaceuticals issued on December 31, 2009 and effective 
on March 1, 2010.  The principal point of concern with this 
new decree is that the MOH will only accept Good 
Manufacturing Practices (GMP) certificates issued by the 
Ministry itself or by "competent authorities of third 
countries that are parties to a mutual recognition agreement 
with Turkey."  This is a sharp change from the previous 
regime, where the MOH had been willing to accept GMP 
certificates issued by reputable foreign inspection agencies, 
including the FDA and European Union inspectorates. 
 
¶3. (SBU) GMP certificates attest that a specific production 
line for a specific drug has been inspected by a competent 
inspection authority and found to be up to international 
standards.  Even if a given facility has already been 
inspected for a different drug, it must still be re-inspected 
whenever a new drug is introduced.  If the manufacturer 
changes the production site, a new inspection is also 
required.  Because these inspections are time-consuming and 
most inspectors are looking for the exact same things, many 
countries will accept certificates issued by foreign 
agencies, especially those belonging to the Pharmaceutical 
Inspection Cooperation Scheme (PIC/S), which certifies that 
inspecting agencies meet international standards for 
education and training of their inspectors and quality of 
inspections.  Note: FDA is not a member of PIC/S, but its 
inspections are considered to be of similar quality and are 
accepted by many countries.  End note. 
 
¶4. (SBU) The issue with the new regulation is not that Turkey 
would like to conduct its own inspections, but rather that it 
lacks the capacity to actually perform them.  The MOH 
currently has only 11 inspectors for the entire country, and 
they are also charged with inspecting non-pharmaceutical 
sites such as food production facilities.  The majority of 
their time is therefore absorbed with inspecting local 
production sites, leaving very little possibility that they 
will be able to travel overseas to inspect the 273 foreign 
plants that industry says currently produce for the Turkish 
market. 
 
¶5. (SBU) If Turkey actually had any mutual recognition 
agreements for GMPs, its own lack of capacity would not be a 
problem, but we and industry are unaware of any country that 
has signed such an agreement with Turkey.  Nor is it likely 
that any country would be willing to do so, as such an 
agreement would mean that Turkey's own pharmaceutical 
exporters would be able to use their MOH-issued GMP 
 
ANKARA 00000143  002 OF 003 
 
 
certificate to apply for marketing approval in that third 
country.  As MOH's inspection unit does not meet the 
standards for inclusion in PIC/S, this would mean a country 
would have to be willing to open its market to potentially 
unsafe or inferior drugs.  Industry analysts estimate that it 
would take 5-7 years of effort to get MOH's capacity to the 
level where a mutual recognition agreement could even be 
discussed. 
 
¶6. (SBU) Why, then, is Turkey pursuing this path?  From 
discussions between MOH officials and industry 
representatives, there appear to be four principal 
motivations: 
 
-- Boost Local Manufacturing: If a new drug cannot be 
imported, locally-produced generic alternatives will be able 
to capture greater market share.  The MOH also has claimed it 
has the discretion to waive the requirement for foreign drugs 
produced locally, so if a firm is willing to locate its 
manufacturing facility in Turkey it may be able to obtain 
either an exemption or a quick inspection by MOH.  If 
companies agree to this, it would help boost employment and 
presumably lower costs.  The downside of this strategy is 
that the most innovative and effective drugs will simply not 
be sold in Turkey, posing significant risks to public health 
and raising the possibility that Turks will seek treatment or 
try to purchase drugs outside of Turkey. 
 
-- Allow Easier Access for Turkish Exports to Third-Country 
Markets:  Turkey has a relatively large generics industry 
that is keen to export to other markets, especially in the 
U.S. and Europe, but these firms have had difficulty 
obtaining inspections from FDA and/or European inspectors. 
The MOH appears to believe that it can pressure foreign 
regulators into accepting Turkish GMP certificates instead of 
conducting inspections and is basing its stance on the 
principle of reciprocity, ignoring the differences in the 
quality of inspections. 
 
-- Build Up Turkish Inspection Capacity:  MOH officials 
acknowledge that they lack the capacity to perform the 
required inspections (there is already a backlog of nearly 
300 marketing approvals), but are keen to improve their 
capability.  They believe (with some justification) that the 
new regulation will provide a greater incentive for industry 
to work with them on improving their inspection arm.  They 
ignore, however, the estimated 5 to 7 years it would take to 
build up that capacity. 
 
-- Control Costs:  As was clear during the recent 
negotiations on pharmaceutical pricing (reftels), the GOT is 
serious about trying to control its pharmaceutical 
expenditures and the MOH views marketing approval as a 
bargaining tool in price discussions.  Under the regulation, 
the MOH can waive the requirement for a local inspection for 
MOH-defined "lifesaving drugs" and vaccines.  As almost all 
drugs can in some way be classified as "lifesaving", MOH 
officials have already hinted to industry representatives 
that those companies most willing to be flexible on price 
might find their drugs exempted.  This safety valve also 
ensures that if there is a drug that Turkey genuinely wants 
to have on the market, they can allow it in while still 
observing the letter of the law. 
 
¶7. (SBU) Comment: At this point, the industry is still hoping 
to arrive at a negotiated compromise with MOH, although they 
have asked us to raise the issue with our GOT interlocutors 
as appropriate.  As the GOT appears to be emboldened by its 
recent "success" in forcing an onerous compromise pricing 
deal on the industry, however, there is reason to be 
pessimistic that it will back down on this issue.  From the 
GOT perspective, it gets the best of both worlds -- access to 
drugs that they truly want and a powerful bargaining tool to 
lower prices.  In the event that some country calls the bluff 
and actually signs a mutual recognition agreement, then 
Turkish exporters get easier access to a new market and the 
only cost to Turkey is in returning to the status quo ante. 
The pharmaceutical industry has been remarkably willing to 
accept abuse from the GOT over the past year (suggesting that 
their profits are still healthy enough to make Turkey 
interesting), but at some point their tolerance will dry up 
and Turkey will find itself cut off from the most innovative 
and effective drugs.  End comment. 
 
 
ANKARA 00000143  003 OF 003 
 
 
 
Jeffrey 
 
           "Visit Ankara's Classified Web Site at http://www.intelink.s 
gov.gov/wiki/Portal:Turkey"