Wednesday,19 September, 2018
Current issue | Issue 1173, (21 - 27 November 2013)
Wednesday,19 September, 2018
Issue 1173, (21 - 27 November 2013)

Ahram Weekly

Egypt’s elusive medicines

Medical shortages have reportedly been putting patients’ lives at risk, with health workers and healthcare activists expressing concerns at what may be a growing problem, writes Hayat Yehia

Al-Ahram Weekly

Egypt is no stranger to shortages of medicines, but with shortages now being reported of nearly 600 pharmaceutical drugs possibly putting patients’ lives at risk, medical workers have been sounding the alarm. This has also led to the Ministry of Health, the pharmaceutical industry, and the medical profession speaking with one voice to fend off accusations of greed or neglect and fighting what may be a rearguard battle to preserve their reputations and the many lives that depend on them.

“We are now often not able to get hold of the right drugs to give to patients after surgery, and this means that we have to prescribe more expensive alternatives,” said Mohamed, a surgeon at the 6 October Public Hospital. The problem has been getting worse over the past six months, he added.

Shaymaa, an internist at the Zagazig Educational Hospital, is also incensed by the risk this situation could be causing to patients. “It is becoming hard to find certain types of medicine, some of which are essential to saving lives. Take intravenous sodium bicarbonate, for example, which disappeared for nearly three months at the beginning of the year and then reappeared in March. This has started to disappear again, but we need this drug to treat the acidity that can result from blood poisoning, kidney and liver diseases, and diabetes. Without it, the patient can die,” she said.

At the Al-Qusiya Central Hospital in Assiut, kidney failure patients, most of them from poorer sections of the population, can face terrible problems because they cannot get their hands on EPO 4000 erythropoietin, a drug used to treat the anaemia associated with kidney failure and dialysis treatment. Patients at this hospital used to receive the drug free of charge at the rate of one injection a week over a two-month period, but now the hospital’s management, no longer able to pay for it, has appealed to private donors to buy it.

In late October, the Egyptian Centre for the Right to Medicine (ECRM), an NGO, appealed to the cabinet and the Ministry of Health to do more to provide essential medicines to haemophiliac patients, some of whom had died because of shortages of essential drugs. The ECRM has also threatened to file a court case against the ministry unless a solution is found.

Tarek Imam Allam, leader of the Freedom Party, has been even more pro-active and has already filed a lawsuit against Health Minister Maha Al-Rabat and pharmaceutical officials at the ministry accusing them of criminal negligence.

Meanwhile, the Pharmaceuticals Industry Chamber of Commerce has been playing down the problems. According to officials, any drug shortages that have occurred have only affected three per cent of the country’s overall supply, though such statements have done little to soothe frayed nerves in the medical profession.


CREDIT DOWNGRADES: Part of problem has been due to the successive downgrading of Egyptian credit by the major credit-rating agencies, explained Mohamed Ghoneim, chairman of the General Syndicate of Pharmaceutical Manufacturers.

Speaking to Al-Ahram Weekly, Ghoneim said that credit downgrades reduced the ability of the local pharmaceutical companies to import medicines and medical ingredients from abroad. Exporters wanted to see their money in full first, he said, rather than take a small down payment in advance as was the practice in the past. “Foreign companies used to accept a down payment of 25 per cent for the ingredients, with the balance to be settled after a product was made and sold. Now they want payment in full upfront,” he commented.

Such practices have put the companies in an awkward position, which has been further complicated by shortages of foreign currency. Often, companies have had to settle their import bills with dollars bought on the black market as a result.

Because of the post-revolutionary drop in tourism and foreign direct investment, Egypt’s foreign currency reserves dipped to $14 billion in June 2013, compared to $35 billion in early 2011. As a result, the Egyptian pound has also dropped against the dollar, falling from LE5.8 to the dollar before the 25 January Revolution to LE7 at the moment.

Recent cash injections from the UAE, Saudi Arabia and Kuwait have helped Egypt defend its currency, but the situation nevertheless remains perilous, and Central Bank of Egypt governor Hesham Ramez recently admitted that the government was unable to end currency trading on the black market.

Following the removal of former president Mohamed Morsi from office on 3 July, Fitch Ratings, an international credit-ratings agency, downgraded Egypt’s credit rating from B to B- citing political instability and economic uncertainty. Other credit-rating agencies like Moody’s and Standard and Poor’s have also reduced Egypt’s ratings six times since January 2011.

Ghoneim mentioned another factor that has led to the current troubles in the pharmaceutical industry. Due to the poor policing after the revolution many companies, his own included, had their stores robbed. “A large truck laden with pharmaceuticals was stolen from my company,” he said, indicating that such events may also have affected other companies.


CHEAPER MEDICINES: In one major pharmacy in downtown Cairo, a young man in his 30s speaking with a Gulf accent asks to buy large quantities of medicines of different types, the nature of his purchases suggesting that the drugs are not intended for a single patient.

Such purchases raise suspicions of smuggling, Ghoneim said, with many drugs being spirited out of Egypt because they are cheaper to buy here than abroad. The government in Egypt, eager to supply drugs at affordable prices to the nation, has slammed price controls on pharmaceuticals that the industry itself claims are unfair.

Egypt’s medicine prices have remained unchanged for 10 years, during which time the costs of production have gone up, according to industry specialists. Magdi Elba, chairman of the Chamber of Commerce for the Medicine Industry, said that the current situation posed a threat to the pharmaceuticals industry in Egypt because prices haven’t increased for 10 years, whereas production costs, including wages and imported supplies, have increased considerably.

According to Elba, the size of the Egyptian pharmaceuticals market is about LE30 billion ($4 billion), half of which is represented by foreign companies and the rest by private and government firms. Egypt exports nearly $200 million of medicines per year.

In May 2011, the pharmaceutical companies won a court order supporting their right to increase prices, but healthcare activists challenged this in court, and the Ministry of Health, caught in the middle between the activists and the producers, has been trying to find a way to please both.

In July 2012, the health minister tried to placate the pharmaceutical companies by allowing them to liberalise prices, on condition that prices in Egypt would be kept to the lowest rate reported on the international market. According to current practice, the ministry sets price in accordance with cost estimates plus a profit margin, the latter being set at eight per cent for distributors and 25 per cent for pharmacists.

SELECTIVE ENFORCEMENT: Ministry of Health procedures can be difficult to implement, however, Ghoneim said. Setting prices at the lowest level worldwide does not make sense, he said, as some countries with small populations may be able to enforce unrealistic prices.

But what many in the industry find most galling is that the ministry has a tendency to implement its own regulations in a selective manner. “The Ministry of Health has been acting as a bully towards the pharmaceuticals industry,” commented one company owner, who asked for his name to be withheld.

The reason for such criticisms is that the ministry seems to have developed a multi-tier system for tenders, in which latecomers are dealt with at a different price rate. Under the system, the ministry sets a certain price for a pharmaceutical product, and if no companies submit tenders at that price it then forces companies that took part in the previous tender to produce the same product at the previous price.

The ministry also demands a letter of guarantee costing LE500,000 from companies applying for tenders, and it is slow in making refunds after the tendering process is over. The tenders are unfair, critics say, since companies that register first get higher prices for the products they will supply, whereas those that register later are paid much lower prices.

“These odd methods cause many companies to stay away from the tenders, or to take part and then reduce the active ingredients in their products,” claimed one industry insider. Shaymaa said that industry experts were also aware that some drugs were not as effective as they should be.

“We know that the active ingredients in some of the medicines we receive are low, but we cannot prescribe other medicines because our customers cannot afford them,” she said.

Ghoneim said that the sometimes low efficacy of Egyptian products compared to foreign ones was due to the price-fixing imposed by the state, which forces companies to shop for inexpensive suppliers of the active ingredients, sometimes ending up with lower quality ingredients. “Instead of importing from Europe or America, they import from India and China instead,” he said.

Changing pricing policies is now a top priority for the industry, and a few weeks ago the Pharmaceuticals Industry Chamber of Commerce issued a statement calling on the ministry to take quick action on pricing. According to Elba, the current pricing system is harmful to the country on more than one level. “Medicine is important for national sovereignty,” he said, adding that “we cannot allow ourselves to come under pressure from foreign countries in matters that affect the lives and health of Egyptian citizens.”

However, deregulation could send medicine prices sky high, given that Egypt is a signatory to the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, which protects property rights on innovations for 20 years. Egypt started implementing the TRIPS agreement in January 2005, but nearly 90 per cent of the drugs on the market are not affected as these do not use recent innovations.

Sooner or later, however, such regulations will take their toll, and most recent drugs used to treat serious diseases such as certain forms of cancer or AIDS come under the TRIPS regulations and would therefore be priced out of the range of most Egyptians.

Yet, Adel Al-Tahlawi, a member of the Pharmaceuticals Industry Chamber of Commerce, argued that deregulation was the only way for the country to go. Nearly two out of every five pharmaceuticals factories in the country could have to close, he said, if they were not allowed to sell their products at higher prices.

Total investment in the pharmaceuticals industry in Egypt is now close to LE200 billion ($30 billion), he added.


HEALTH INSURANCE: Egyptian healthcare activists are more worried about the affordability of medicines than about the profitability of the industry, however. “Why are the companies only looking at rising costs rather than at all the other things that keep them profitable,” asked ECRM chief Mahmoud Fouad.

Speaking to the Weekly, Fouad said that the private companies that provide the market with 90 per cent of its needs were the ones stiff-arming the Ministry of Health and not the other way around.

Recently, the Pharco Corporation in Alexandria closed its eight factories for one month, for example, suspending 8,000 workers who had requested better working conditions. However, the owner of the company, Fouad said, had made generous donations to outsiders, including a LE250,000 payment he made in 2011 to Zewail University.

“Where are these donations coming from, if the company is not profitable?” Fouad asked, pointing out that a box of Lipitor, a cholesterol-reduction medicine, now costs about LE11 to make but is sold for LE90. A better regulatory body was needed, Fouad said, echoing the views of other experts.

One way to address the question of cheap medicine, experts say, would be to introduce a national health insurance system. Egypt, where one out of four of the population lives under the poverty line, could benefit enormously from such a system, but the question remains of whether it could afford it. 

Some people think that providing cheap medicine is just as much of a government obligation as providing cheap food. “Why should the state subsidise food and not medicine?” Elba asked. The government’s health insurance system currently covers some 50 per cent of the nation, but it is of such poor quality that even poorer members of the community sometimes try to avoid it.

One recent study by Ahmed Shokri, a professor at the American University in Cairo, pointed out that nearly seven per cent of Egyptian families facing a medical emergency, such as a life-threatening illness, dug into their savings until they were pushed below the poverty level. But government officials speaking on condition of anonymity said that the high cost of a nation-wide insurance scheme had meant that one had not been introduced. Many schemes had been discussed in the past, they said, but none had come to fruition.

To add to such problems, workers in the medical professions are also demanding higher rates of pay, some of them chanting slogans like “low wages affect efficiency” during recent demonstrations. In response, the ministries of finance and health drafted a new law to increase the pay of medical workers some weeks ago, and this new law, to go into effect in January, should improve the pay of nearly half a million medical workers at a cost of LE6 billion annually, according to Finance Minister Ahmed Galal.

The pleas of the pharmaceuticals manufacturers are also being heeded. The Ministry of Health is currently drafting a scheme that would allow the prices of medicines to go up to match the economic situation. The ministry has also promised to keep the interests of the patients in mind, though like all such promises this is one that healthcare activists are for the moment taking with a pinch of salt.

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