In May 2016, the Ministry of Health of Egypt announced it was raising price ceilings on certain tiers of medication in response to an ongoing range of drug shortages.
According to reports, the shortage stemmed from the steep decline of the Egypt pound against the U.S. dollar. That decline has sharply raised production costs for the Egyptian pharmaceutical industry, which imports an estimated 90 percent of its component materials. Initially unable to raise prices because of government price ceilings on various categories of medicine, the industry reportedly cut back production of a number of key drugs. Early in 2016 a Health Ministry inventory showed 232 drugs in short supply. Forty-three of these drugs had no available substitutes, including migraine treatment drugs, cold and flu medication, drugs treating psychiatric disorders and several antibiotics.
Before the price increase, many drug prices had not increased for more than a decade. Some hadn’t been changed since the 1990s, a time when the U.S. dollar was worth about a third of its current value in Egypt pounds. The recent price hike, set at 20 percent, will affect drugs costing under US$3.38 (30 Egyptian pounds), while exempting certain higher-priced drugs, including those treating rare forms of cancer.
Until now, Egypt’s government has long rejected requests by manufacturers for price hikes. In 2012, the Chamber of Pharmaceutical Industries petitioned the Egyptian government to lift prices, but the action was rejected by the Health Ministry. In response, several pharmaceutical companies decreased drug production, claiming it was the only way to avoid operating at a loss.
The price increase isn’t seen as a long-term fix for the problem. Ahmed El-Ezaby, head of the of the Chamber of Pharmaceutical, Cosmetics and Appliances at the Federation of Egyptian Industries, a trade association based in Cairo, has called on the government to set aside a reserve of cash of nearly US$4 billion to enable the domestic pharmaceutical industry to import raw materials. In addition, the Egyptian Pharmacists Syndicate, another trade group, has recommended building a factory in Egypt to process raw materials domestically. As of September 2016, construction had not yet begun on the Syndicate’s US$56 million (500 million pounds) proposal.
— Ali Greatsinger
Ali Greatsinger is the senior editor at GHCi.