After the flotation of the Egyptian Pound, many businesses and industries experienced a variety of challenges. But when it comes to the pharmaceutical industry, one main issue that came up and directly affected patients of all classes was the surge in prices of medications, as well as a noticeable shortage in medication availability.
Although price surges have happened in all types of industries, one has to keep in mind that in the pharmaceutical industry, medications have a forced price set by the Ministry of Health. These prices are set through a very clear and standard process; pharmaceutical companies combine a list known as the ‘costing sheet’ that takes into account all expenses that go into the production of a medication, such as raw materials, machinery and active ingredients, and then present it to the Ministry of Health. The Ministry then carefully examines it and evaluates a reasonable profit for the company before setting a public price for the medication.
Since the beginning of 2017, new, higher prices were set for certain medications as a result of the flotation. Because the Egyptian Pound decreased in value, the production expenses for medication increased; the costs of imported raw materials, active ingredients, solvents and many other elements that go into the making of a medication have almost doubled -not to mention the rise in the cost of electricity, water and gas.
“We could not import the same amounts for the same prices anymore, which not only meant losing profit, but also that you might not be able to finance the running cost for operation anymore,” said the General Manager of one of Egypt’s leading multinational pharmaceutical companies, who chose to remain anonymous.
Pharmaceutical companies held months-long discussions with the Ministry of Health in order to agree on new prices that would guarantee a minimum profit for the companies.
Dr. Hassan Ibrahim, Vice President of the General syndicate of Pharmacists, believed that the price surge was a firm and necessary decision that had to be taken due to the flotation. “The price increases set by the government were the minimum that could’ve been set in order to keep the factories running and to be able to continue importing,” he said.
Another part of the agreement between the companies and the Ministry was an additional wave of price increases of about 20% expected to hit by August 2017. “You can maintain your profit by reducing the cost, but this is not very sustainable. You have to increase prices to maintain operations and, more importantly, to enable companies to supply patients with the medications they need,” the General Manager explained.
However, there is another side to price surges.
Dr. Ahmed Faress, a pharmacist and activist, explained that as of April 2017, some prices were raised by almost 50%, creating a burden on both patients and pharmacists. He felt that the government seemed to be putting all the pressure on the patient and not on the companies.
Faress also highlighted another problem that came up with the implementation of the new prices, a problem commonly referred to as “tas3erteen”; when there are two prices for the same medication. The Ministry of Health had declared that any product sold to pharmacies before the issuance of the new pricing decree should be sold according to the old price, and that any medication sold to pharmacies after the new pricing decree should be sold according to the new prices. The result of the latter was that one would find an older pack with the cheaper price and a newer pack with the newer, more expensive price. “Such conflict in prices has never happened anywhere in the world. It’s very degrading for the pharmacist,” Faress said.
Another challenge Faress faces in this pricing conflict is that most of the patients don’t know why or how it happened. He noted that while the regulations are clear for anyone who works in the industry, the patient is unaware and has nobody to blame but the person selling the medication. He added, “Patients are no longer able to purchase the medication they need from the nearby pharmacy; instead, they have to visit around ten different pharmacies and ask if they sell according to the old or new price tariff.”
On the other hand, this pricing conflict is only a transitional phase; since the old stock with the old pricing will eventually be sold out and all medications will soon be available according to the new pricing.
Dr. Samer El-Refaie, President of the Arab Association of Pharmacy Progress, also had something to say about price surges. He agreed that price surges were a necessity, but he criticized the Ministry of Health and pharmaceutical companies for the way the price surges were implemented. “The price increases were implemented randomly by the Ministry of Health and selectively by pharmaceutical companies,” he stated, elaborating and saying that pharmaceutical companies chose the products to be added to the new pricing plan based only on which would grant them the highest profits.
El-Refaie also weighed in on the shortages in some medications and their relation to the price surges, saying that the cost of production of some became higher than their public price, especially if these medications did not receive a price increase. This led companies to stop producing them, leading to their disappearance from the market. “In the pharmaceutical market in Egypt, medication lines are only stopped if they are no longer profitable,” he said.
He added that another factor could also be the entry of an innovative, more effective product that replaced the old product’s place in terms of sales and prescription, leading it to step out of the market.
Nevertheless, Ibrahim assured that most of the medications that were unavailable have become available again step by step, commenting, “There are no medications that have no substitutes in the market, and almost all types of medications have become available again.”
It is worth noting that there is no Food and Drug Administration (FDA) in Egypt that regulates food, dietary and drug supplements.