Opposition Rises as Egypt Seeks to Boost Drug Access Through International Reference Pricing

Egypt Introduces International Reference Pricing for Drugs

The Egyptian Ministry of Health (MoH) has announced a new system of pricing which is set to see the country adopt international reference pricing of drugs. This was announced as the Ministerial decree No. 373 for 2009, reports the Alittihad newspaper. The new system will see a new committee, consisting of various stakeholders—including pharmacists, doctors, and government officials—set prices of innovative drugs by reviewing the price of the drug in as many as 36 countries. The system will identify a minimum of 22 countries that already market the drug and choose the cheapest price and further discount it by 10% to arrive at the Egyptian price. Countries that will be used for reference pricing include an array of developed and developing economies, such as Germany, Canada, India, and Sudan. Generics will be priced at 60–70% of the price of the originator.

Strong Reaction from Stakeholders Provoked

The announcement has seen several domestic stakeholders, including pharmacies, doctors, and public health organisations, severely criticise the move. The Egyptian Initiative for Personal Rights (EIPR) has even initiated a lawsuit to stop the implementation of the indicated directive. The EIPR alleged the announcement as "undemocratic" as it did not involve any prior consultation or participation from citizen and civil society organisations. Pharmacists' associations, meanwhile, claim that the move could see the price of generics increase by as much as 700% of the current price.

EIPR's press release on launching the legal suit can be found here.

Outlook and Implications

Given the strong opposition to, and the legal case being brought against, the roll-out of Decree No 373, it is not known when the international reference pricing system will actually be implemented. However, the move, will see Egypt doing away with its decade-old pricing system (since 1991). To date, drugs have been priced based on their real economic cost, in terms of price of raw materials, cost of research, and industrial and administrative expenses. As the MoH has indicated, and quite rightly so, this sort of pricing mechanics is low on the transparency scale, given that 80% of Egypt's raw materials are imported. The MoH's plan to introduce reference pricing has been motivated by the fact that the new system will not only ensure greater transparency, but also a larger number of innovative pharma companies choosing to enter the country; thereby guaranteeing its citizens greater access to innovative drugs.

The government's plan comes at the right time, when recession has meant that several Big Pharma firms are looking towards emerging markets such as Egypt to mitigate falls in revenues in developed countries, and will therefore cheer the proposals (see United Kingdom - India: 16 July 2009: Big Pharma's Generics Push Continues as GSK Signs Emerging Markets Alliance with Dr. Reddy's). This is likely to see several alliances between domestic and foreign firms, leading to technology transfers and eventually better quality generics becoming available in the country. However, comparing drug prices across 36 markets is a complex task, and whether this will lead to delays in drugs entering the market (due to delays in deciding the price) remains to be seen; an easier reference-pricing system could have excluded higher income countries from the list. Furthermore, using countries like Sudan to reference-price drugs is surprising given the relatively low access to innovative drugs in this country.

Meanwhile, civil society organisations are also right to worry about such an abrupt change. However, it should be noted that Egypt's reference-pricing system includes countries like India and the Philippines, where several major innovative drugs are either not granted patents or are compulsorily licensed, stating public health clauses. It is unlikely, therefore, that the price of generics will increase by the feared 700%.