Tuesday,21 November, 2017
Current issue | Issue 1326, (5-11 January 2017)
Tuesday,21 November, 2017
Issue 1326, (5-11 January 2017)

Ahram Weekly

Towards liberalisation?

Are the recent price hikes of pharmaceuticals the start of the liberalisation of the industry, asks Safeya Mounir

Currency drop hits Egypt’s medicine supplies
Currency drop hits Egypt’s medicine supplies

Amira Al-Guindy, an elderly woman in her seventies, has been looking for the medicines she takes every month for a host of chronic ailments. She has been looking in pharmacies large and small, but finding the medicines she takes has been difficult for at least two months.

The response at most of the pharmacies she has visited is that there is a shortage of medicines, and the pharmaceutical companies are waiting for the prices to increase before making more.

Since the exchange rate of the Egyptian pound was liberalised in November, pharmaceutical companies have wanted to raise the prices of their products as the value of foreign currencies has increased and they import most of the active ingredients used in their production.

In response, the minister of health announced on Sunday that he had agreed to raise the prices of various medicines to varying degrees. Small companies that produce fewer than 30 products will be able to raise the prices of seven medicines, while larger companies producing more than 30 drugs will be able to raise the prices of 15 per cent of their products.

For multi-nationals, the ministry has drawn up a list of products that are produced locally and those that are imported, using this as the basis for price rises. 

The minister said the market was suffering from shortages of a number of medicines, including those used for treating cancer, giving immunity after transplants, for kidney patients and to treat some respiratory conditions.

He added that the companies had wanted all prices to increase by 50 per cent, but an agreement had been reached at the announced rates.

Mahmoud Fouad, director of the Egyptian Centre for the Right to Medicine, an NGO, said the pharmaceutical companies were putting pressure on the government and the market was suffering shortages as a way of forcing the government’s hand.

He said the decision by the ministry to increase the prices of some medicines effectively abandoned the system of compulsory pricing that has been used in Egypt and was the start of a process of liberalising the prices of medicines.

In May, the Ministry of Health decided to raise by 20 per cent the price of cheaper medicines priced at less than LE30 a packet to a maximum of LE6.

During the weeks following the flotation of the pound in November there was pressure on the ministry to raise prices on the grounds that imported ingredients, which can comprise 40 per cent of products, were now far more expensive.

At the moment, the state has a policy of compulsory pricing of medicines, and pharmaceutical companies are not at liberty to decide prices unless the government approves them.

According to the Chamber of Pharmaceutical Industries, there are 154 pharmaceutical companies operating in Egypt. Some LE45 billion is invested in the sector.

Fouad said the recent measures meant the companies had succeeded in their goal of raising prices because the state had failed to adopt a strategy by which state-owned companies would produce most medicines.

The decision does not include medicines used to treat chronic illnesses, but Fouad believes the companies will stop producing these to put pressure on the government to raise their prices.

The Ministry of Health does not control pharmaceuticals production in Egypt. The state-owned companies are part of the public sector, and their share of the market has dropped in recent decades.

“In 1980, the Holding Company for Pharmaceuticals had a market share of 40 to 60 per cent, but this has dropped to just three per cent today,” the minister told a news conference in Cairo.

Fouad said there were currently shortages of 2,000 types of medicine. The decision to raise prices could only postpone the problem, he said, and it was not a solution to the price hikes or the shortages.

The drugs that will increase in price represent some 3,800 types out of the 13,000 medicines on the market. As a result, the companies will likely stop producing the medicines that did not increase in price, causing further shortages, he said.

The minister has said that there are currently 146 types of medicine that have no substitutes, including blood derivatives, hormones, cancer treatments and some drugs for respiratory conditions. He said the state was working on finding substitutes for them.

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