E-DRUG: Comments on Egyptian Drug Authority pricing system
----------------------------------------------------------
[Abdel Wahad has provided a copy of his blog posting on the new Egyptian Drug Authority pricing system. While quite a long posting, this will be of interest to a number of E-Druggers. Some cosmetic editing of the original by the moderator. DB]
Dear E-Druggers,
For a link to the following article, please visit:
http://publichealthpharmacist.wordpress.com/2012/08/25/comments-on-new-amendments-of-pricing-of-pharmaceuticals-in-egypt/
[Please fix link in browser if broken]
Comments on new amendments of pricing of pharmaceuticals in Egypt.
New pricing rules have been put into practice for pharmaceuticals being registered by the Egyptian Drug Authority (EDA), effective from July 2012. For the full minister decree in Arabic with regard to pricing of pharmaceuticals, please visit the following link (Arabic language):
http://www.eda.mohp.gov.eg/Download/Docs/499.pdf
[Please fix link in browser if broken]
Before I get into commenting on the new rules, I will have to translate the important notes in the decree for non- Arabic speaking readers.
Basically the decree briefs how both original and generic products are being priced when applied for registration in EDA.
For the *original product*, the public price (Retail price) is being set with regard to its lowest retail price in the countries where it is being marketed. If it is marketed in less than 5 countries, the retail price in Egypt is calculated after reviewing the lowest retail price of the product in countries where it is being marketed as well as the result of comparative study between the product and other therapeutic alternatives in the Egyptian market.
For a *generic product* (both manufactured locally and imported), the public price is calculated as a percentage of the public price of the original product as follows:
1- the first 5 generic products submitted for registration, is granted a same retail price, which is 35% less than the retail price of the original product.
2- the next generic products is granted same retail price which is 40% less than the retail price.
For a generic product of high technology which is imported, the public price shall be calculated as percent of the public price of the original product public price as below:
a- for generics imported from *reference* countries, the public price granted will be 30% less than the public price of original as long as it will not be more than its retail price in any country where it is marketed.
b- for generics imported from non reference countries, the public price granted will be 35% less than the public price of original as long as it will not be more than its retail price in any country where it is marketed.
And finally the EDA allows only 12 products to have same molecule of same strength to be registered.
The decree also stated the profit of the both wholesaler and the retail pharmacist depending on the type of the product as below:
a- for product mentioned in the country national essential medicines list:
Profit of the wholesaler: 7.86% of ex factory price
Profit of retail pharmacist: 25% of wholesaler price
b- subsidized products:
Profit of the wholesaler: 4% of ex factory price
Profit of retail pharmacist: 10% of wholesaler price
c- Imported products (of public price less than EGP500.00/pack)
Profit of the wholesaler: 8.8% of importer price/6.4% of retail price
Profit of retail pharmacist: 22.9% of wholesaler price/18% of retail price
These are the most important articles of the minister decree. I have few comments on these articles:
1- The public price granted to imported generics (of high manufacturing technology) from reference countries is more than those imported from non reference countries. Reference countries as per EDA are basically some European countries, US, Canada, Japan and Australia. Full list can be found in this link:
http://www.eda.mohp.gov.eg/Download/Docs/Current%20reference%20list.pdf
And since the decree didn't have any explanation for these articles, I have to ask, does this mean that EDA admits that products from reference countries are superior to those of non reference origin, that's why it has different pricing? Is there a difference in quality? if so, does the low quality can be compensated by decreasing price? I don't want my imagination to be carried away more than that, it is scary.
2- The "boxes" system which aims for protecting the local industry with less regard to the patient access to the drugs. The box of alternatives system sets a quota for products of same active ingredient of same dosage for and strength, not to exceed 12 products including the original product. Out of these 12, only one product can be imported, the rest must be produced locally, unless the product is manufactured using high technology which is not available in the local factories. Having only one imported product in the quota seems to aim only to protect local industry not the patient access to medicines.
Not to forget that Egypt GDP per capita is above the world GDP per capita and according to the regulations mentioned above, the following scenario is possible to happen for a group of generics and original.
A product X (original) is to be placed in market with public price USD10.00 /20's
Product X-1 (Generic) public price will be: USD6.50
Product X-2 (Generic) public price will be: USD6.50
Product X-3 (Generic) public price will be: USD6.50
Product X-4 (Generic) public price will be: USD6.50
Product X-5 (Generic) public price will be: USD6.50
Product X-6 (Generic) public price will be: USD6.00
Product X-7 (Generic) public price will be: USD6.00
Product X-8 (Generic) public price will be: USD6.00
Product X-9 (Generic) public price will be: USD6.00
Product X-10 (Generic) public price will be: USD6.00
Product X-11(Generic) public price will be: USD6.00
That will price the price of the products in the market for same active ingredient, dosage form and strength. From this, we can clearly see that patient is going to have only three options out of all 12 products: the original at $10 or a generic at $6.50 or $6. So basically there will be a loaded shelf at the pharmacy, but less price options to the patient.
Original products are usually very expensive, so even 40% decrease will not be enough to make an affordable price in poor population in Egypt, specially for drugs used for neglected diseases.
3- The difference between the profit of wholesaler/retail pharmacists for local manufactured products and imported products is inexplicable. It will make the retail pharmacist try to push for the item which will give him more profit, even if the patient can't afford it. Again it is a way to protect the local industry with less regard to patient affordability
Apart of these comments, I can't see anything wrong with the decree. I hope it can work out well for the benefit of the Egyptian patients at first and then for the local industry protection.
I'd much welcome your comments and opinions. Thanks for reading.
Respectfully,
Ahmed Abdelwahab, B.Sc. Pharm.
Kuala Lumpur, Malaysia.
25th of August, 2012.
http://publichealthpharmacist.wordpress.com/