Court of Administrative Justice Considers EIPR Lawsuit against the New Drug-Pricing Decree. EIPR: al-Gabali’s claims concerning the price reduction of 40 drugs are false, confirming the confusion and ill intentions of the Ministry of Health

The Cairo Court of Administrative Justice is scheduled to continue hearing tomorrow – Tuesday 23 February - a lawsuit filed by the Egyptian Initiative for Personal Rights on 22 October 2009 challenging Minister of Health Decree 373/2009 on the pricing of drugs. The EIPR had filed the lawsuit (no. 2457/64) with the Court of Administrative Justice asking for a suspension of the decree, which went into effect on 25 September 2009 and establishes a new drug-pricing regime in Egypt that will lead to higher prices for many drugs.

The EIPR therefore expressed its astonishment at recent statements by the Minister of Health that the new decree had led to lower prices for 40 different drugs already on the market. The EIPR said that these statements were false and contradicted previous statements made by the minister and other Ministry of Health officials that the decree would only affect the prices of new drugs entering the market. This means that the reduction of prices of these already registered drugs has nothing to do with the new decree.

“The Ministry of Health dearly wishes to show that, contrary to reality, the new pricing system will lead to lower prices for medicines and so it has resorted to making false statements, which indicate ill-intentions and confusion," said Soha Abdelaty, the deputy director of the EIPR.

The EIPR said that on the contrary, with the implementation of the new pricing regime, the price of drugs would increase, especially the price of generic drugs on which Egyptian citizens rely heavily due to their relatively low cost, compared to the expensive originator-brand drugs. Unlike the previous system, in which the price of generic drugs was determined on the basis of the actual production cost, plus a set of profit mark-ups for the manufacturer, distributor and pharmacist, under the new decree prices of generic drugs will be set at a fixed percentage markdown from the expensive originator-brand drugs — either a 30, 40 or 60 % markdown. According to a Ministry of Health study issued in 2004, originator drugs are on average three times more expensive than their generic equivalents, but some prices of generic drugs in the market cost up to 95% less than their originator-brand drug.

For example, Zovirax, an antiviral drug, is currently sold for LE31.75 while its generic equivalent costs only LE1.75, i.e. 95% lower than its originator-brand equivalent. If the new pricing system were applied in this case, the price of the generic would be LE19.05, i.e. more than ten times the current market price.

The EIPR also cautioned that implementing certain provisions in the decree will be problematic, particularly the provision that sets the price of originator-brand drugs in accordance with the lowest price in foreign markets, with an additional 10% discount. The biggest challenge will be determining the lowest patient price for each new medicine in the 36 countries that the decree names as reference countries since these countries have radically different health and pricing systems and the relevant information is not available in many of them.

“The Ministry of Health will not be able to accurately ascertain the patient price in each of these countries every time a new drug is registered in Egypt,” said Dina Iskander, researcher for the EIPR's Right to Health Program. “It will be unable to review all the information pertaining to the nearly 400 new drugs registered each year in Egypt and so, in the end, it will be forced to rely on the prices that are available, which may be high.”

For more information see:

•  Facts about the New Drug-Pricing Decree - Brief Guide.