CAIRO — Mohammed Lufti was desperate to obtain the prescription drugs his mother needed to live. He couldn't afford them, but he was trying to raise funds for her treatment after a stroke sent her to a Cairo hospital's intensive care unit.
“My mother is dying and we cannot afford the treatment,” he tweeted Nov. 19. But even if he could raise enough money, he hadn't been able to find the drugs. Egypt has been suffering from an acute shortage of many medicines, especially imported ones, since its Central Bank decided Nov. 3 to float the Egyptian pound.
“These drugs are imported and … doctors told me that the companies had stopped distributing them following the floating of the Egyptian pound," Lufti, who works in a clothing factory, told Al-Monitor. He said his mother needed a combination of three antibiotics to live: polymyxins B and E and tigecycline. "But I could not find them, and the doctors told me that her condition was deteriorating day after day." His mother died waiting for the drugs, he said.
The Egyptian government strictly regulates drug prices, so pharmaceutical companies haven't been able to raise prices. Yet they must pay about twice as much now to import the medicines or their ingredients. Their only alternative, some say, is to curtail imports and set restrictions on distribution, which they have done.
Ahmed El-Ezabi, the chairman of the Pharmaceutical Industry Chamber, told Al-Monitor that the pharmaceutical sector became unstable following the Central Bank’s decision. Agreeing to float the pound, however, helped Egypt secure a $12 billion loan from the International Monetary Fund. The IMF did specify that the government must raise subsidies for food and medicine, which hasn't been done yet.
Health Minister Ahmed Emad al-Din Rady initially denied claims of a crisis in the pharmaceutical sector, saying drug companies were making such claims as a ruse to justify a call for price hikes. But he retracted that statement Nov. 17 and acknowledged the lack of imported drugs. He said there are 146 medicines with no available alternatives in the local market.
The Egyptian government has agreed to spend $186 million to import the unavailable drugs. On Nov. 16, the health minister assigned state-run holding company Vacsera Co. and government-owned Egyptian Pharmaceutical Trading Co. (EPTC) to import the drugs, to avoid price controls among private companies.
Although the drug shortage reached a crisis stage after the government floated the pound, the problem emerged in the first quarter of 2016, when the foreign exchange market suffered from a severe dollar shortage and a major drop in the country’s foreign exchange reserves at the Central Bank. The bank devalued the pound by 14% in March, and it reached 8.78 against the dollar. However, the pound continued to plummet and now stands at 18 pounds to $1.
In mid-May, the Ministry of Health allowed companies to raise the price of the cheapest drugs — those selling for up to 30 pounds ($3.40) per pack — by 20% effective July 1, and warned drug manufacturers against closing down production. That decision applied to drugs manufactured locally, which rely on imported raw materials affected by the foreign exchange crisis.
Mohammad al-Abed, the chairman of the Pharmacies Committee at the Pharmacists General Union, said that according to the union’s Aug. 16 report, the pharmaceutical market suffered a shortage of 919 types of drugs — local and imported. This is in addition to the 146 imported drugs for which a shortage became apparent after the decision to float the pound, he said.
He added, “The record mentioned only the missing drugs in the private pharmacies, [which make up] two-thirds of the medicines needed by the market. … The drugs that have no alternatives on the Egyptian market are mostly medicines for blood and tumors.”
Sherif al-Sabki, a manager at EPTC, blamed the current situation with locally made drugs on hoarding by consumers who anticipated higher prices and scarce products after the pound was floated. But the true shortage of locally made drugs — which account for about 60% of the market's needs — will emerge when the raw materials inventory in factories run out, he said, noting that those materials were purchased at the old price of the dollar before the pound was floated.
Sabki acknowledged the current lack of imported drugs, estimating that 15% of those medicines have no alternatives on the local market.
“The importing companies will suffer huge losses … as the cost of such drugs has increased by 200%,” he said. He believes the situation is the result of those companies’ accumulated debt in dollars.
He added, “These companies — such as the Egyptian Pharmaceutical Trading Co. — have imported the existing quantities of drugs using deferred checks with the old price of the dollar, which was 8.78 pounds, while this price has doubled in banks following the decision to float the dollar.”
During a Nov. 20 meeting with pharmaceutical companies, the minister of health refused to raise drug prices at that time, deferring the discussion until April. A number of delegates from the Pharmaceutical Industry Chamber protested, but the meeting was adjourned without reaching any solution.
Sabki called upon the state to find a swift solution to the rising cost of medicine, to shield consumers against the crisis that is likely to worsen once the reserves of raw materials run out, and in light of the reluctance of some companies to import.
For this part, Ezabi said delegates of 154 factories in the chamber pledged during several meetings with government representatives that they will continue manufacturing as long as they can endure the losses. He called on the government to make up the difference in the price of the pound until it reaches a decision on raising the prices of drugs and the importing companies settle their debts for drugs they bought on credit. He said he expects a breakthrough in the next two months.
Commenting on locally manufactured drugs, Sabki said the only solution is for the government to gradually raise the prices of medicines after studying the actual cost of every medicine type.
As for the importing companies, Sabki believes the government has to take into account the size of the losses they may incur. He expects an inevitable price increase.