WT/DS583/3

5 August 2019

(19-5118) Page: 1/6

Original: English

TURKEY – CERTAIN MEASURES CONCERNING THE PRODUCTION,

IMPORTATION AND MARKETING OF PHARMACEUTICAL PRODUCTS

REQUEST FOR THE ESTABLISHMENT OF A PANEL BY THE EUROPEAN UNION

The following communication, dated 2 August 2019, from the delegation of the European Union to
the Chairperson of the Dispute Settlement Body, is circulated pursuant to Article 6.2 of the DSU.

_______________

On 2 April 2019, the European Union requested consultations with the government of the Republic
of Turkey (Turkey) pursuant to Articles 1 and 4 of the Understanding on Rules and Procedures
Governing the Settlement of Disputes (DSU), Article XXII:1 of the General Agreement on Tariffs and
Trade 1994 (GATT 1994), Article 8 of the Agreement on Trade Related Investment Measures
(TRIMs Agreement), Article 64 of the Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS Agreement), and Article 4.1 of the Agreement on Subsidies and Countervailing
Measures (SCM Agreement) with regard to various measures concerning the production, importation
and marketing of pharmaceutical products.

The consultations took place on 9 and 10 May 2019 in Geneva with a view to reaching a satisfactory
settlement of the matter. Unfortunately, they failed to settle the dispute. The European Union
therefore requests that a panel be established pursuant to Articles 4 and 6 of the DSU, Article XXIII
of GATT 1994, Article 8 of the TRIMs Agreement, and Article 4.4 of the SCM Agreement to examine
the matter based on the standard terms of reference, as set out in Article 7.1 of the DSU.

The measures at issue are the localisation requirement, the import ban on localised products and
the prioritization measure as explained below. They are put in place and evidenced by, and are
implemented and administered through, inter alia, the following legal and other instruments,
considered alone and in any combination:

− "The Tenth Development Plan 2014-2018" of 2 July 2013, in particular 1.2 (Program for
Reducing Import Dependency) and 1.16 (Healthcare Related Industries Structural
Transformation Program) under Chapter 3.1 (Priority Transformation Programs);1

− "The Structural Transformation Program for Healthcare Industries Action Plan" of

6 November 2014, coordinated by the Ministry of Health and the Ministry of Development,
in particular Actions 2 and 3 under Policy No 5 (Strengthening the capacity of the
procurement bodies (public institutions) to steer and regulate the sector) of Component-1
(Strengthening Public Sector's Steering Capacity) and Actions 1 and 2 under Policy No 1
(Developing Cooperation Models with the domestic Medicines/ Medical Devices Industry

1
Decision No. 1041 of the Grand National Assembly of Turkey of 2 July 2013 on the approval of the
Tenth Development Plan (2014-2018), in accordance with the Law No. 3067, dated 30 October 1984,
http://www.resmigazete.gov.tr/eskiler/2013/07/20130706M1.htm,
http://www.resmigazete.gov.tr/eskiler/2013/07/20130706M1-1.htm and
http://www.resmigazete.gov.tr/eskiler/2013/07/20130706M1-1-1.doc, last accessed on 7 March 2019, and in
English http://www.sbb.gov.tr/wp-content/uploads/2018/11/The_Tenth_Development_Plan_2014-2018.pdf,
last accessed on 7 March 2019.
 WT/DS583/3

-2-

While Devising New Health Schemes) of Component-3 (Improvement of Business and

Entrepreneurial Ecosystems);2

− "The 2016 Action Plan of the 64th Government (Implementation and Reforms)" of
10 December 2015, in particular Action 46 (The reimbursement, pricing and licensing
processes of medical devices and strategic and domestic medicines shall be improved);3

− "The 65th Government Programme" of 24 May 2016, in particular Part 3

(Human Development) and Part 4 (Strong Economy);4

− "The Performance Program for 100 Days" announced on 3 August 2018 by Turkish President
Erdogan for the first 100 days of his Presidency, in particular points 9 and 10 of the actions
falling under the responsibility of the Ministry of Health;5

− "Presidency Decision No. 108 on the New Economy Program for the period 2019-2021" of
20 September 2018, in particular Part 4 (Current Account Deficit) and 7 (Programs and
Projects – Health);6

− "The SSI Regulation on Drug Reimbursement" of 10 February 2016;7

− "The SSI Regulation on Alternative Reimbursement for Universal Health Insurance" of

10 February 2016;8

− "Regulation amending the Regulation on the Working Procedures and Principles of the Social
Security Institution Healthcare Services Pricing Commission" of 10 February 2016;9

− "Circular 2018/1" from the Prime Ministry of 24 January 2018 on the Localisation Board; 10

− "The Health Implementation Notification/Communique", in particular "Annex-4/A";11

2
http://strateji.gtb.gov.tr/haberler/10kalkinma-plani-oncelikli-donusum-programlari-aciklandi,
http://strateji.ticaret.gov.tr/data/54a2957ef29370219c5db800/1.%20grup%20eylem%20planları.docx,
http://strateji.ticaret.gov.tr/data/54a2957ef29370219c5db800/2.%20grup%20eylem%20planları.docx,
http://www.sbb.gov.tr/oncelikli-donusum-programlari-eylem-planlari/ and http://www.sbb.gov.tr/wp-
content/uploads/2018/10/16Saglik_Endustrilerinda_Yapisal_Donusum_ProgramiBASKI.pdf, last accessed on 7
March 2019.
3
http://bypass.teskilat.akparti.org.tr/Site/haberler/64.-hukumetin-eylem-plani/81171#1 and
https://www.tusev.org.tr/usrfiles/files/64.HukumetEylemPlaniKitapcik.pdf, last accessed on 7 March 2019.
4
http://reformlar.gov.tr/ui/pdf/65._hukumet_program.pdf, last accessed on 6 June 2018.
5
https://www.tccb.gov.tr/assets/dosya/100_GUNLUK_ICRAAT_PROGRAMI.pdf, last accessed on 7
March 2019.
6
http://www.resmigazete.gov.tr/eskiler/2018/09/20180920M2.htm,
http://www.resmigazete.gov.tr/eskiler/2018/09/20180920M2-1.pdf and
http://www.bumko.gov.tr/Eklenti/11246,yeni-ekonomi-programipdf.pdf?0, last accessed on 7 March 2019, and
in English https://ms.hmb.gov.tr/uploads/sites/2/2019/01/Turkey-NEP-2019-21.pdf, last accessed on 7 March
2019.
7
Published in the Official Gazette of 10 February 2016, page 23,
http://www.resmigazete.gov.tr/eskiler/2016/02/20160210.htm and
http://www.resmigazete.gov.tr/eskiler/2016/02/20160210-7.htm, last accessed on 7 March 2019.
8
Published in the Official Gazette of 10 February 2016, page 16,
http://www.resmigazete.gov.tr/eskiler/2016/02/20160210.htm and
http://www.resmigazete.gov.tr/eskiler/2016/02/20160210-6.htm, last accessed on 7 March 2019.
9
Published in the Official Gazette of 10 February 2016, page 37,
http://www.resmigazete.gov.tr/eskiler/2016/02/20160210.htm and
http://www.resmigazete.gov.tr/eskiler/2016/02/20160210-8.htm, last accessed on 7 March 2019.
10
Published in the Official Gazette of 24 January 2018, page 8,
http://www.resmigazete.gov.tr/eskiler/2018/01/20180124-5.pdf, last accessed on 7 March 2019.
11
In Turkish the "Sağlık Uygulama Tebliği" (SUT), published in the Official Gazette Number 28597 of 24
March 2013,
http://www.mevzuat.gov.tr/Metin.Aspx?MevzuatKod=9.5.17229&MevzuatIliski=0&sourceXmlSearch and its
annexes http://www.mevzuat.gov.tr/MevzuatMetin/yonetmelik/9.5.17229-EKK.zip, last accessed on 7 March
2019. Latest amendments published in the Official Gazette of 28 December 2018 Number 30639,
http://www.resmigazete.gov.tr/eskiler/2018/12/20181228M1.htm and
http://www.resmigazete.gov.tr/eskiler/2018/12/20181228M1-1.pdf, last accessed on 7 March 2019; published
 WT/DS583/3

-3-

− "The Social Security Institution Law Number 5502" of 16 May 2006, as amended by
Article 88 of "Decree Law 703 Amending Certain Laws and Decree Laws for the Purposes of
Compliance with the Amendments to the Constitution" of 2 July 2018;12

− "The Social Insurance and Universal Health Insurance Law Number 5510"of 31 May 2006;13

− "Decree Law No. 663 on Organization and Duties of Ministry of Health and its Affiliated
Agencies" of 11 October 2011;14

− "Presidential Decree Number 1 on Organization of Presidency" of 10 July 2018;15

− "Decree Law 703 Amending Certain Laws and Decree Laws for the Purposes of Compliance
with the Amendments to the Constitution" of 2 July 2018;16

− "Presidential Decree Number 4 on Organization of the Ministries, Affiliated, Linked and

Related Agencies and Other Institutions and Agencies" of 15 July 2018;17

− "Regulation on the Registration of Medicinal Products for Human Use" of 19 January 2005;18

− "Notification/Communique on the Pricing of Medicinal Products for Human Use" of

29 September 2017;19

on the Social Security Website on 11 February 2019,

http://www.sgk.gov.tr/wps/portal/sgk/tr/kurumsal/merkez-
teskilati/ana_hizmet_birimleri/gss_genel_mudurlugu/anasayfa_duyurular/guncel_sut_01022019 and
http://www.sgk.gov.tr/wps/wcm/connect/4cd197fc-aa36-45cb-9090-ee8c525b6c18/2019.02.01-
+De%C4%9Fi%C5%9Fiklik+Tebli%C4%9Fi+%C4%B0%C5%9Flenmi%C5%9F+G%C3%BCncel+SUT.zip?MOD
=AJPERES&CONVERT_TO=url&CACHEID=4cd197fc-aa36-45cb-9090-ee8c525b6c18, last accessed on 7 March
2019.
12
Published in the Official Gazette Number 26173 of 20 May 2006,
http://www.resmigazete.gov.tr/eskiler/2006/05/20060520.htm and
http://www.resmigazete.gov.tr/eskiler/2006/05/20060520-2.htm, last accessed on 7 March 2019, including its
amendment by Article 88 of Decree Law 703 of 2 July 2018, "Law on Certain Amendments to the Social
Security Institution Law",
http://www.mevzuat.gov.tr/Metin1.Aspx?MevzuatKod=1.5.5502&MevzuatIliski=0&sourceXmlSearch=&Tur=1&
Tertip=5&No=5502 and http://www.mevzuat.gov.tr/MevzuatMetin/1.5.5502.pdf, last accessed on 7 March
2019.
13
Published in the Official Gazette Number 26200 of 16 June 2006,
http://www.resmigazete.gov.tr/eskiler/2006/06/20060616.htm and
http://www.resmigazete.gov.tr/eskiler/2006/06/20060616-1.htm, last accessed on 7 March 2019.
14
Published in the Official Gazette Number 28103(bis) of 2 November 2011,
http://www.resmigazete.gov.tr/eskiler/2011/11/20111102M1.htm and
http://www.resmigazete.gov.tr/eskiler/2011/11/20111102M1-3.htm, last accessed on 7 March 2019.
15
Published in the Official Gazette Number 30474 of 10 July 2018,
http://www.resmigazete.gov.tr/eskiler/2018/07/20180710.htm and
http://www.resmigazete.gov.tr/eskiler/2018/07/20180710-1.pdf, last accessed on 7 March 2019.
16
Published in the Official Gazette Number 30473 of 9 July 2018,
http://www.resmigazete.gov.tr/eskiler/2018/07/20180709M3.htm and
http://www.resmigazete.gov.tr/eskiler/2018/07/20180709M3-1.pdf, last accessed on 7 March 2019.
17
Published in the Official Gazette Number 30479 of 15 July 2018,
http://www.resmigazete.gov.tr/eskiler/2018/07/20180715.htm and
http://www.resmigazete.gov.tr/eskiler/2018/07/20180715-1.pdf, last accessed on 7 March 2019.
18
Published in the Official Gazette Number 25705 of 19 January 2005,
http://www.hukukturk.com/en/official-gazette-of-tr?Sayi=25705&Tarih=19%2f01%2f2005 and
http://www.resmigazete.gov.tr/eskiler/2005/01/20050119-7.htm, last accessed on 18 July 2019, and in
English https://titck.gov.tr/storage/legislation/QEv7VEBH.pdf, last accessed on 18 July 2019. For greater
clarity, this Regulation puts in place and evidences the measures already identified and included in the request
for consultations by the European Union in this dispute and explained below.
19
Published in the Official Gazette Number 30195 of 29 September 2017,
http://www.hukukturk.com/en/official-gazette-of-tr?Sayi=30195&Tarih=29%2f09%2f2017 and
http://www.resmigazete.gov.tr/eskiler/2017/09/20170929-11.htm, last accessed on 18 July 2019. For greater
clarity, this Notification puts in place and evidences the measures already identified and included in the request
for consultations by the European Union in this dispute and explained below.
 WT/DS583/3

-4-

− "Protocol on the Procurement of Medicines from Pharmacies which are Members of the
Turkish Pharmacists' Association by Persons Covered by the Social Security Institution" of
2016 and amendments;20

− "Circular 2015/19" from the Prime Ministry of 23 December 2015 on the Health Industries
Steering Committee;21

− Public announcements on localisation published on: (i) March 2016,22 April 2016,23
8 February 2017,24 16 February 2017,25 April 2017,26 January 201827 and May 201828
informing that the imported medicines listed in the annex(es) to the announcement would
no longer be reimbursed;

− Other instruments through which Turkey implements and administers the measures at issue,
including presentations made by Government officials and letters or other documents
making requests, communicating decisions or imparting instructions addressed by the
Turkish authorities to individual companies exporting pharmaceutical products to Turkey
(or importing pharmaceutical products in Turkey)".

This request also covers any annexes or schedules thereto, amendments, supplements,
replacements, renewals, extensions, implementing measures or any other related measures.

20
https://www.teb.org.tr/content/74/TEBLIGER and http://teb.org.tr/versions_latest/457/protokol2016,
last accessed on 18 July 2019, and the 2017, 2018 and 2019 amendments,
http://teb.org.tr/versions_latest/657/tebsgk-protokolu_20160401_ek-20170503,
https://www.teb.org.tr/versions_latest/856/tebsgk-protokolu_20160401_ek-20180416_y_20180401 and
https://www.teb.org.tr/versions_latest/1042/tebsgk-protokolu_20160401_ek-20190522_y_20190401, last
accessed on 18 July 2019. For greater clarity, this Protocol and its amendments put in place and evidence the
measures already identified and included in the request for consultations by the European Union in this dispute
and explained below.
21
Published in the Official Gazette Number 29571 of 23 December 2015,
http://www.hukukturk.com/en/official-gazette-of-tr?Sayi=29571&Tarih=23%2f12%2f2015 and
http://www.resmigazete.gov.tr/eskiler/2015/12/20151223-9.pdf, last accessed on 18 July 2019. For greater
clarity, this Circular puts in place and evidences the measures already identified and included in the request for
consultations by the European Union in this dispute and explained below.
22
https://www.titck.gov.tr/duyuru/2521, https://titck.gov.tr/storage/announcement/fzzD3Hwn.pdf and
https://www.titck.gov.tr/PortalAdmin/Uploads/UnitPageAttachment/fzzD3Hwn.pdf, last accessed on 7 March
2019.
23
https://www.titck.gov.tr/Duyurular/DuyuruGetir?id=2593, last accessed on 23 July 2018.
24
http://www.sgk.gov.tr/wps/portal/sgk/tr/kurumsal/merkez-
teskilati/ana_hizmet_birimleri/gss_genel_mudurlugu/anasayfa_duyurular/duyuru_08022017_00 and
www.sgk.gov.tr/wps/wcm/connect/8fa7cb90-6d4b-41ab-abe8-
05a5a7c6db3e/duyuru_08022017_00.pdf?MOD=AJPERES&CONVERT_TO=url&CACHEID=8fa7cb90-6d4b-41ab-
abe8-05a5a7c6db3e, last accessed on 7 March 2019.
25
http://www.sgk.gov.tr/wps/portal/sgk/tr/kurumsal/merkez-
teskilati/ana_hizmet_birimleri/gss_genel_mudurlugu/anasayfa_duyurular/duyuru_16022017,
http://www.sgk.gov.tr/wps/wcm/connect/731a3892-8950-4d78-a75d-
7cef4d3c6811/duyuru__16022017.pdf?MOD=AJPERES&CONVERT_TO=url&CACHEID=731a3892-8950-4d78-
a75d-7cef4d3c6811 and http://www.sgk.gov.tr/wps/wcm/connect/e4fdaff9-e53c-4a6f-babf-
457c16249f49/ek_25042017.xlsx?MOD=AJPERES&CONVERT_TO=url&CACHEID=e4fdaff9-e53c-4a6f-babf-
457c16249f49, last accessed on 7 March 2019.
26
http://www.sgk.gov.tr/wps/portal/sgk/tr/kurumsal/merkez-
teskilati/ana_hizmet_birimleri/gss_genel_mudurlugu/anasayfa_duyurular/duyuru_25042017 and
http://www.sgk.gov.tr/wps/wcm/connect/22277d4b-1601-46a6-938e-
a8fb97c092c6/duyuru_25042017.pdf?MOD=AJPERES&CONVERT_TO=url&CACHEID=22277d4b-1601-46a6-
938e-a8fb97c092c6, last accessed on 7 March 2019.
27
http://www.sgk.gov.tr/wps/portal/sgk/tr/kurumsal/merkez-
teskilati/ana_hizmet_birimleri/gss_genel_mudurlugu/anasayfa_duyurular/duyuru_19012018_04,
http://www.sgk.gov.tr/wps/wcm/connect/8c5a62b6-2029-4e04-b6fa-
244b5a4edf2c/duyuru_19012018_04.pdf?MOD=AJPERES&CONVERT_TO=url&CACHEID=8c5a62b6-2029-4e04-
b6fa-244b5a4edf2c and http://www.sgk.gov.tr/wps/wcm/connect/3f6b1970-6b26-4fdf-b31e-
6efa89fb4dd8/ek_19012018_04.xlsx?MOD=AJPERES&CONVERT_TO=url&CACHEID=3f6b1970-6b26-4fdf-b31e-
6efa89fb4dd8, last accessed on 7 March 2019.
28
http://www.sgk.gov.tr/wps/portal/sgk/tr/kurumsal/merkez-
teskilati/ana_hizmet_birimleri/gss_genel_mudurlugu/anasayfa_duyurular/duyuru_16052018_02, last accessed
on 7 March 2019.
 WT/DS583/3

-5-

1. The localisation requirement

1.1. Identification of the specific measure at issue

The Turkish authorities have adopted plans to achieve progressively the localisation in Turkey of the
production of a substantial part of the pharmaceutical products consumed in Turkey. In order to
achieve that objective, Turkey requires foreign producers to commit to localise in Turkey their
production of certain pharmaceutical products. If such commitments are not given, are not accepted
by Turkish authorities, or are not fulfilled, the pharmaceutical products concerned are excluded from
the scheme for the reimbursement of the pharmaceutical products sold by pharmacies to patients
operated by Turkey's social security system (the "reimbursement scheme"). That scheme covers the
vast majority of sales of pharmaceutical products by pharmacies to patients. Consequently, if an
imported pharmaceutical product is excluded from the reimbursement scheme, its competitive
opportunities in the Turkish market are significantly impaired, as compared with domestically
produced like products.

In order to comply with the above described localisation requirement (the "localisation
requirement"), certain producers of pharmaceutical products commit to localise their production of
certain pharmaceutical products in Turkey. In those cases where foreign producers do not give the
required commitments to localise (or where their offered commitments are rejected, or are
considered not to be fulfilled, by the Turkish authorities), the pharmaceutical products concerned
are no longer reimbursed. The localisation requirement is designed to apply on an ongoing basis, or
at least until the localisation objectives established by the Turkish government are achieved. The
localisation requirement is periodically adapted, modified, updated or extended with respect to, inter
alia, the products it applies to and/or the extent of localisation sought.

The specific commitments to be implemented in order to comply with the localisation requirement
are established for each foreign producer in a non-transparent manner and may differ from producer
to producer.

1.2. Summary of the legal basis of the complaint and reasons for this panel request

The European Union considers that the localisation requirement is inconsistent with Turkey's
obligations under the following provisions of the covered agreements:

− Article III:4 of GATT 1994, because, by excluding imported pharmaceutical products for
which localisation commitments have not been given, have not been accepted or have not
been fulfilled from the reimbursement scheme, through the localisation requirement Turkey
accords to imported pharmaceutical products treatment less favourable than that accorded
to like products of national origin covered by that scheme in respect of laws, regulations and
requirements affecting their internal sale, offering for sale, purchase, transportation,
distribution or use;

− Article X:1 of GATT 1994, because Turkey has failed to publish certain elements, terms and
conditions of general application of this measure promptly in such a manner as to enable
governments and traders to become acquainted with them;

− Article 2.1 of the TRIMs Agreement, because the localisation requirement is an investment
measure related to trade in goods inconsistent with Article III:4 of GATT 1994; and

− Article 3.1(b) of the SCM Agreement, because the reimbursement scheme operated by the
Turkish social security system involves the granting of a subsidy within the meaning of
Article 1.1 of the SCM Agreement. The localisation requirement makes the granting of that
subsidy contingent upon the use of domestic over imported goods, thereby violating
Article 3.1(b) of the SCM Agreement.
 WT/DS583/3

-6-

2. The import ban on localised products

2.1. Identification of the specific measure at issue

Where the production of a pharmaceutical product has been localised in Turkey in accordance with
the localisation requirement, applied in conjunction with the Turkish rules for approving the
importation and marketing of pharmaceutical products, the importation of that pharmaceutical
product is no longer permitted ("the import ban on localised products").

2.2. Summary of the legal basis of the complaint and reasons for this panel request

The European Union considers that the import ban on localised products is inconsistent with Turkey's
obligations under Article XI:1 of GATT 1994, because, once a foreign producer has localised
production of a certain pharmaceutical product pursuant to the localisation requirement, applied in
conjunction with the Turkish rules for approving the importation and marketing of pharmaceutical
products, that product can no longer be imported, and therefore Turkey institutes and maintains a
prohibition or restriction, other than duties, taxes or other charges, on the importation of
pharmaceutical products of the territory of other WTO Members.

3. The prioritization measure

3.1. Identification of the specific measure at issue

Lastly, even in certain cases where imported products are not excluded from the reimbursement
scheme by virtue of the localisation requirement, Turkey gives priority to the review of applications
for inclusion of domestic pharmaceutical products in the list of products covered by the
reimbursement scheme, as well as with respect to any pricing and licensing policies and processes,
over the review of the applications of like imported products (the "prioritization measure").

3.2. Summary of the legal basis of the complaint and reasons for this panel request

The European Union considers that the prioritization measure is inconsistent with Turkey's
obligations under Article III:4 of GATT 1994, because, by according priority to the review of
applications for inclusion in the reimbursement scheme, as well as with respect to any other pricing
and licensing policies and processes, of pharmaceutical products of national origin, through the
prioritization measure Turkey accords to imported pharmaceutical products treatment less
favourable than that accorded to like products of national origin.

The various measures relating to pharmaceutical products identified in this request appear to nullify
or impair the benefits accruing to the European Union directly or indirectly under the covered
agreements.

Accordingly, the European Union respectfully requests that, pursuant to Articles 4 and 6 of the DSU,
Article XXIII of GATT 1994, Article 8 of the TRIMs Agreement, and Article 4.4 of the SCM Agreement,
the Dispute Settlement Body establish a panel to examine this matter, with the standard terms of
reference as set out in Article 7.1 of the DSU.

__________