Medication shortages: Manufactures, pharmacists, companies seek a way out

Hadeer El-Mahdawy , Thursday 8 Dec 2016

FIle Photo: Medicals. (Photo: Reuters)

More than 20 doctors, medical experts, pharmaceutical manufacturers and representatives of the medicine chamber of the Federation of Egyptian Industries, gathered earlier this week at the Egyptian Medical Syndicate to discuss a crisis in the rising cost of medicine and a shortage in essential drugs.

The industry professionals discussed the reasons behind the crisis and possible short and long-term solutions.

Deputy head of the doctors' syndicate Mona Mina outlined the problem, saying that most of Egypt's medical supplies, medical production inputs, and medications themselves are imported. The Central Bank of Egypt's decision to float the Egyptian pound against the US dollar in early November has drastically raised costs and decreased the availability of medications in Egypt—a situation mounting to a crisis.

"Medical commodities are indispensible; the absence of insulin and kidney dialysis equipment is lethal, and the shortage of medical supplies has led some hospitals to limit the number of patients they admit," added Mina.

The doctors' syndicate intends to hold further discussions on the issue and present recommendations to policy makers.

Failed strategies

Mohie Hafez, a member of the chamber of medicine at the Federation of Egyptian Industries (FEI) highlighted some reasons behind the crisis, including the "failed medical policies", explaining that Egypt has 154 pharmaceutical factories, in an industry worth EGP 50 billion. Four percent of the market is controlled by public sector companies, while multinational companies occupy 96 percent.

El-Nasr, One of the oldest pharmaceutical companies in Egypt, is an example of a domestic company that has struggled to maintain a market share after becoming part of the public business sector. The company's director Omar Abdel-Ati said that "many of El-Nasr's factories have closed since the company moved from the public sector, and although the company produces some medication components, many companies prefer to import these from India and China."

"Egypt has 14 thousand medications registered with the ministry of health, and another 14 thousand in the process of being registered. However, the medications available in over 60-70 thousand pharmacies nationwide do not exceed 7 thousand varieties," added Hafez, as companies which have registered with the ministry to produce certain medications have failed to actually produce them.

Price setting and the medication registration system

Ramez George Amin, managing director of Luna pharmaceutical group, pointed to problems with price setting, as well as the process for acquiring the right to produce medications from the ministry.

For example, Amin said, to buy a medication used to treat kidney failure from Germany costs 95 Euros, but said "the price of this drug set by the government is equivalent to 11 Euros, which doesn't even account for the fees of the pharmacist, transfer and banking fees."

Mohamed Ghoneim, a member of the medicine branch in the Chamber of Commerce, said that companies operating with small profit margins have had to stop production, because the price setting system is defective.

Price setting is regulated by health ministry decree no 499 for the year 2012, and covers both foreign and domestic pharmaceutical companies.

"The committees setting the prices following the ministry of health have multiple standards; they force some companies to commit to selling at artificially low prices, and if the companies refuse, their files will be shelved for months," Ghoneim added.

He pointed to the drug omeprazole, a generic heartburn medication, which is sold by foreign companies for EGP 146, and by two local companies at EGP 80, while the rest of the companies are forced to sell it at EGP 9-10.

Once the production patent on a drug expires— 20 years in most cases— Egyptian law provides 12 licences to produce generic versions of the drug to domestic and foreign companies. With each subsequent registration, the set price for the drug declines, (i.e. the first company to register to produce the generic will be allowed to sell at a higher price than the second company).

The 12 licenses are designated for the original brand, one imported brand and 10 locally manufactured drugs are of the same pharmaceutical form.

Ghoneim adds that this system limits competition and means that companies that fail to register their generics early will not be able to produce it at all.

Due to this system only big companies who sell the drug for reasonable prices can survive the competition and the increase in the price of dollars. 

Monopoly and manipulation

A major reason behind the current crisis is monopolistic practices on the part of the 30-35 domestic and foreign companies that dominate Egypt's pharmaceutical sector. These companies control 85 percent of the production and distribution of medications in the country.

Large companies are able to lobby for preferential access to the 11 coveted domestic production licenses, a problem experts consider a serious flaw in the system.

Ahmed Farouk, the general secretary of the pharmacist's syndicate, said they've worked to purge corrupt manufacturers from the syndicate, including those operating on the black market.

"We removed medicine monopolists and smugglers from the syndicate, however the Ministry of Health allows them to continue working and making a profit," he said.

Amin raised the problem of drug hoarding as another reason behind the crisis. Knowing that prices are increasing, some pharmacies and distribution companies store large stocks of medications, to sell at higher prices later.

High prices and no health insurance

Mohamed Seoudi, a former member of the pharmacists syndicate, said pharmacist's profits have lowered from 20 to 18 percent. While companies raise their prices, pharmacists are forced to sell at the fixed price, even though they're subject to taxes and business regulations like any private company.

Amin said he supports the liberalisation of medicine prices, but thinks that the full health insurance system must be applied effectively to protect poor patients.

Speakers at the meeting who supported liberalizing prices saw effective health insurance policies as a powerful solution.

Defenders of greater state control over the market, however, argued that the current health insurance system does not provide enough coverage and that's why prices control is still needed.

The spokesperson of the Egyptian Center for the Right to Medicine (ECRM), Mohamed Tawfik said that "there is no health insurance that guarantees the right of every citizen in need to buy medication. We do not care about the numbers or the profits of the companies; citizens died because they could not find Factor 8 injections (a medicine used to treat blood clotting)."

"There are 1,680 other drugs facing shortages in the market. Shortages will increase because many companies cannot afford to import the substance needed to produce the medications," Tawfik said.

He added that Egyptian citizens spent EGP120 billion on health in 2016; 33 percent of this was spent on medication.

The right to medicine

The medical consultant of the Egyptian Center for the Right to Medicine Mohamed Ezz El-Arab said that the right to medicine applies to every person. The center warned in May the government that 7 thousand drugs could see price increases in the event of a EGP flotation.

"What if the dollar reaches 28 EGP? The law says that the generic drug should be sold at 35% of the brand price, this law should be changed," Ezz El-Arab said.

According to Ezz El-Arab the price of a Hepatitis C brand drug is now EGP 20 thousand. According to regulations the drug should be sold to consumers at EGP 8 thousand (35% of the original price) which is prohibitively high for most patients. "We fought to have the price set at EGP 900, then 400." Egyptian citizens have the right to a secure, available, and effective medicine," Ezz El-Arab concluded.

Mina argued that citizens should have a say in medicine regulation, the budget for scientific research should be enforced, national production should be supported, and a fair pricing system recognizing that almost 50% of the population is under poverty line should be established.

The state's role

Mohamed Raouf Hamed, a prominent pharmacology expert, said " the problem has always been with the leading officials in the health sector."

"Auditions should be random and effective, to shut down any violating company or factory. The private sector is necessary, but a plan by the state to improve it is essential. Finally a pricing system for local and imported products should be planned by finance, economy and pharmaceutical experts," Hamed said.

Hafez recommended establishing new factories, fixing the production registration system, and creating  what he called a "medicinal dollar"—by which companies could import drugs and components at the old exchange rate of EGP 8.88 to the dollar, while the government would subsidise the difference.

Hafez stressed that the state should invest in the local companies to help them meet the global standards and thus be able to export.

Finally, a national independent body for medicine should be established. Hafez said the chamber has in fact submitted a proposal to parliament to establish such a chamber.

Seoudi recommended increasing the number of generic drug licences allowed, saying that 12 is too few to meet the need.


Farouk said that the state should punish companies who have threatened to halt production if they are not allowed to increase prices.

"Why has the investigative committee that was formed in parliament to study the crisis ceased its work?" he said.

"Companies have been required by the government to supply all medications facing a shortage, at the prices they choose; however, no medications were supplied," Farouk added.

He argued that the state should define their alignment, whether in the favor of the private and multinational companies, or the citizens. The Central Administration of Medicine Affairs should be disbanded, for not being able to solve these issues, as "they refuse to register some less expensive generic drugs, showing favor to certain companies."

"The public sector and local industry should be supported by getting rid of manipulation in the health ministry that favors the private sector, and curb the tendency to privatise what is left of the public sector," Farouk concluded. 

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