The main goal of this paper is to analyze the implementation of pharmaceuticals cost-containment measures in Egypt.
This paper adopts descriptive and analytical techniques to assess the extent of implementing pharmaceutical cost-containment measures in Egypt. A comparative approach was used to analyze and draw lessons from the French and Turkish experiences in implementing these measures.
The study reveals that applying pharmaceutical cost-containment policies is considered one of the top priorities of the Egyptian health authorities over the next few years. The analysis of international experiences revealed that implementing traditional cost-containment policies should not be considered as the only way to curb increasing drug spending and facing the increase in pharmaceutical prices. Instead, adopting more advanced cost-containment policies, such as improving the use of economic evaluation, using cost-effectiveness analysis and implementing HTA is highly recommended.
Due to data limitations regarding the current system of coverage and reimbursement in Egypt, the assessment of the impact of pharmaceutical cost-containment policies on reimbursement and procurement systems was not addressed in this study. More studies are required to analyze these issues in light of the implementation of the new Universal Health Insurance system and its implications for the pharmaceutical market.
Although there are many studies that have analyzed pharmaceutical pricing policies in Egypt during the last few decades, to the best of the authors' knowledge, there are almost no studies that specifically try to review the implementation of pharmaceutical cost-containment policies in Egypt in detail. In this regard, the aim of this study is to analyze the implementing of pharmaceutical cost-containment policies in Egypt.
Abbreviations
1. Introduction
The rapid growth of pharmaceutical expenditures is one of the main challenges faced by governments worldwide. Global pharmaceutical spending increased from USD 887 billion in 2010 to USD 1.48 trillion in 2022, and it is expected to increase to more than USD1.9 trillion by 2027 (Statista, 2023a, b).
Further, spread of COVID-19 put pressure on the pharmaceutical industry. In fact, during the period 2020–2026 global spending on COVID-19 vaccines is estimated at USD 251 billion.
Consequently, increasing pharmaceutical expenditures urged most governments to adopt cost-containment measures to control pharmaceutical spending (Dukes et al., 2003).
In fact, Egypt is considered one of the largest producers of pharmaceuticals in the Middle East and North Africa (MENA) region, and is also planning to act as a regional hub for pharmaceutical trade. Moreover, since the implementation of the new universal health insurance system (UHI) which is currently considered one of the top priorities of the government, requires saving resources to finance the new system, it is expected that the Egyptian health authorities will give increasing importance to implementing pharmaceutical cost-containment measures.
The aim of this study is to analyze the implementation of pharmaceutical cost-containment policies in Egypt, and to draw lessons for Egypt from international experiences.
The paper is organized as follows: It first reviews the literature on the key cost-containment policies that are widely used worldwide. Then it sheds light on the experiences of France and Turkey in implementing these policies. Finally, the paper analyzes the extent of applying pharmaceutical cost-containment policies in Egypt, and draws some lessons for Egypt from international experiences that are introduced in the paper.
2. Methodology
The study adopted descriptive and analytical techniques to assess the extent of implementing pharmaceutical cost-containment measures in Egypt. A comparative approach was used to analyze and draw lessons from the French and Turkish experiences in implementing cost-containment measures. The experiences of France and Turkey were chosen for several reasons: on the one side, among all EU countries, France has a successful experience in cost containing drug prices. The most important feature of this experience is that France has already succeeded in stopping drug spending growth without slowing access to innovative medicines (Rodwin, 2021). In addition, numerous studies analyze France’s experience in applying cost-containment in the pharmaceutical sector to draw lessons from it. On the other side, Turkey was chosen due to several reasons: First, both Egypt and Turkey belong to the middle income countries. More specifically, Turkey is classified as upper-middle income country, whilst, Egypt belongs to lower-middle income countries (World Bank, 2024). Also, Turkey has made significant progress in implementing the cost-containment policy since 2003. In this regard, the paper utilized a literature review, and semi-structured interviews. Also, the official data from the Egyptian Ministry of Finance and the World Health Organization (WHO) statistics on pharmaceutical expenditures were employed. In addition, our analysis of Egyptian pharmaceutical indicators over the period 2019–2027 is based on the data stemming from “Egypt Pharmaceuticals Report” published by Fitch solutions (Fitch Solutions, 2022-2023). In general, obtaining data about the Egyptian pharmaceutical market is challenging as data are often outdated or not available for the researchers. For instance the official website of the Egyptian Drug Authority (EDA) does not present any information about the market or the industry.
3. Literature review
Literature suggests that classifying cost-containment policies is not an easy task, since nearly all of them are still in use – albeit to varying degrees – in many countries around the world either in pricing and/or in reimbursement decisions. Espin and Rovira (2008) mentioned that some cost-containment policies are considered ‘obsolete’ despite still being applied in many countries. They also explained that traditional policies include the use of the cost-plus method in setting drug prices [1], as well as cost control policies, which encompass price control policies (including external (international) reference pricing and internal reference pricing) and profit control policies. Meanwhile, these newer cost-containment policies are generally based on the economic evaluation or cost-effectiveness analysis (pharmacoeconomics), which relies on value-based pricing and health technology assessment. Additionally, the newer cost-containment policies include various measures, such as rebate negotiations and different types of risk-sharing schemes. García-Goñi (2022) mentioned that health technology assessment and cost-effectiveness analysis are the main tools used in setting prices for innovative drugs to reflect their value. Tele and Groot (2009) explained that cost-containment policies can be analyzed from two different perspectives: First, supply-side cost-containment policies, which include pricing and reimbursement policies aimed at controlling both prices and combinations of pharmaceuticals; and second, demand-side cost-containment policies, which refer to incentives for physicians, pharmacists and patients.
3.1 Supply-side cost-containment policies
Supply-side cost-containment policies aim to regulate pharmaceutical prices, either directly or indirectly. However, since there are many supply-side policies, this section of the paper will focus on the most commonly used ones, as illustrated in various studies on this issue.
3.1.1 Cost control policies
Cost-control policies include price-control policies and profit-control policies.
A. Price-control policies:
Price control policies refer to setting a maximum price at which a medicine can be sold. These policies primarily include traditional policies such as external reference pricing and internal reference pricing. Both external and internal references are considered direct price control policies (García-Goñi, 2022; World Health Organization, 2015). In this regard, various studies proved that price control policies might help in reducing drug prices, and in slowing price increases, but at the same time empirical experiences revealed that a strict direct price regulation scheme seems to be less effective in controlling overall expenditure, since the savings are generally counteracted because of large increase in volume (Tele and Groot, 2009).
External reference pricing (ERP): External reference pricing is also known as international reference pricing. The World Health Organization (2020a, b) defines ERP as “the practice of using the price of a pharmaceutical product in one or several countries, regions or other organized purchasing authorities to derive a benchmark or reference price”. ERP is used as a cost-containment measure that drives price convergence to the lowest possible levels. Additionally, the selection of countries for ERP should be based on clear criteria, for example, countries should be economically comparable and geographically close to facilitate the determination of a reasonable price. Furthermore, the larger the basket of countries included, the more complex the application of ERP becomes, leading to longer delays in the launch of new drugs (García-Goñi, 2022; Kanavos et al., 2018).
Internal reference price (IRP): Refers to using the prices of a set of pharmaceutical products that are therapeutically similar and can be substituted for one another. IRP is used as a benchmark or reference price in determining the price or reimbursement rate of a product. In addition, the drugs compared within a group can be identified at a therapeutic level or at a molecular level (WHO, 2021; Kamphuis and Kanavos, 2021).
In fact, the main difficulty in applying internal reference prices is that it requires a high level of technical expertise to determine the similarity of products. It also requires transparent criteria for pricing generics and biosimilars. Furthermore, patients and physicians need detailed and up-to-date information about the prices and quantities of different drugs (WHO, 2021; Carone et al., 2012).
B. Profit control policies: Profit control policies are defined as an indirect method to control pharmaceutical prices; they refer to a maximum annual limit on the profits or profit growth rates of pharmaceutical companies (Sood et al., 2008; Gross et al., 1994).
3.1.2 Positive and negative lists
On the supply side, cost-sharing policies are based on positive and negative lists. Positive lists refer to drugs that receive different levels of reimbursement. While negative lists refer to drugs that are completely paid for by the patient. These measures aim to reduce the number of reimbursed drugs (Espin and Rovira, 2008; Tele and Groot, 2009).
However, assessing the cost-effectiveness of positive and negative lists is not an easy task. On the one hand, with negative lists, if the list is not well-designed, patients might shift to more expensive drugs. On the other hand, positive lists depend on reimbursement criteria, especially the use of health technology assessment, which will be discussed later. In addition, both types of lists need to be updated regularly, making the assessment of cost-effectiveness a more complicated task (Carone et al., 2012; Nuijten et al., 2001).
3.1.3 Encouraging the use of generic drugs
Generics are one of the two types of substitutes for innovative drugs that help lower prices, the other being biosimilars [2]. If a drug is a chemical, then generics are used, and if it is biological, then the substitute is biosimilars (García-Goñi, 2022).
Mandated generic substitution is considered a good policy that has succeeded in curbing the growth in pharmaceutical expenditures in many countries, at least in the short run. However, this policy relies on both supply-side measures, which affect pricing and reimbursement, and demand-side measures which focus on incentives for physicians, pharmacists, patients (Tele and Groot, 2009; Serra, 2015).
It is worth mentioning that focusing only on using generic drugs might lead to increased total treatment costs in cases of overconsumption. Additionally, in some cases newer drugs may help reduce mortality and morbidity; meaning that replacing older drugs with newer ones could have a positive effect on public health.
3.1.4 Drug use review
This policy refers to the monitoring of prescription patterns. It can be implemented by publishing the names of the physicians who practice over-prescribing (Tele and Groot, 2009).
3.1.5 Economic evaluation and health technology assessment (HTA)
Health technology assessment (HTA) and economic evaluation, or cost-effectiveness analysis (pharmacoeconomics), are considered the main tools for determining the prices of innovative drugs in a way that reflects their value. This approach to setting prices is known as “Value-Based Pricing” (VBP), and it links the price of the innovative drug to its added therapeutic value through comparisons with existing treatments, as stated earlier (Rodwin, 2021; García-Goñi, 2022).
Ali (2015) explained that the best value for money does not refer to the lowest initial price option; rather, it signifies the best return on the money that was spent to meet the population’s needs for medicines and other medical technologies.
Moreover, health technology assessment (HTA) is used to evaluate the additional value of an innovative drug compared to existing treatment alternatives. This method is applied not only to pharmaceuticals but also to medical devices, clinical procedures and other public health interventions. Typically, this process is conducted by specific review agencies, which may be governmental or non-governmental. These agencies provide recommendations that are used to determine reimbursement and/or pricing (Rodwin, 2021; World Health Organization, 2020a, b). In addition, many requirements are needed to successfully implement HTA. For instance, assessing the impact of HTA on decision making and the interaction between HTA and other applied cost-containment policies like ERP. Furthermore, the implementation of HTA should be separated from the registration process and should not affect it, as registration process is based on efficacy and safety. Also, the implementation of HTA requires investment in human and physical infrastructure and data systems (Kanavos et al., 2018).
3.2 Demand-side cost-containment policies
Demand-side policies refer to incentives aimed at physicians, pharmacists and patients to encourage the use of generic drugs and control overconsumption. Additionally, different policies that can affect demand may be implemented by governments, such as preferential copayment plans for generic medicines and mandatory substitutions (World Health Organization, 2020a, b). However, physicians are considered the main actor among all those players in the demand-side. Thus, most of the demand-side policies are directed to physicians, for instance using guidelines and educational programs to influence physicians' behavior as drug prescribers (Tele and Groot, 2009; Kanavos et al., 2018). In OECD countries, the successful implementation of primary care reforms, such as introducing or strengthening the gatekeeping role of general practitioners (GPs), largely depends on the financial incentives offered through the associated physician payment system (Serra, 2015).
Moreover, the literature focuses on Managed Entry Agreements (MEA) and Cost-sharing policies as the most important demand-side polices.
3.2.1 Managed entry agreements (MEA)
Managed Entry Agreements (MEA) are among the most important demand side policies. They are binding contractual agreements that are established between the marketing authorization holder (MAH) and healthcare payers. These agreements are implemented when clear decisions on pricing and reimbursement cannot be reached due to uncertainties regarding the clinical evidence and/or the drug’s financial impact. In this context, financial-based agreements (e.g. flat discounts, price-volume agreements, capping) are more widespread because of their simplicity, while performance-based agreements (e.g. risk-sharing agreement, coverage with evidence development) are less commonly used in European countries, except in Italy. In addition, many EU countries implement MEA, However, the common feature in implementing is that MEA facilitate the market access of drugs by distributing the costs associated with uncertainty between the payer and the MAH. The significance of MEA is expected to increase in the future, especially concerning oncology drugs (Pauwels et al., 2017; WHO, 2020).
3.2.2 Cost-sharing policies
On the demand-side, cost-sharing policies are also applied. Various cost-sharing mechanisms are used to influence patient behavior. For instance, co-payment, refers to fixed amount that is paid by the insurance beneficiary per prescription or service, co-insurance involves sharing costs between the provider and the beneficiary per prescription or service and/or deductibles where patient reimbursement is provided only after costs exceed a specified minimum threshold per prescription or service (Serra, 2015). Among all demand-side policies, copayment is considered the most commonly used measure in EU countries [3]. However, copayments must be carefully designed, especially as they can affect low-income groups. In addition, pharmacists are being targeted with cost-sharing practices, for instance, pharmacists are obliged to inform patients of the availability of an alternative product with lower copayments (Espin and Rovira, 2008; Tele and Groot, 2009).
Regarding the effectiveness of these policies, Stadhoudersa et al. (2019) investigated healthcare cost-containment measures across OECD countries from 1970 onward, reviewing 43 original studies and 18 systematic reviews comprising 341 studies. They found that evidence on the effectiveness of these policies is limited, and many of the studies could be biased or lack sufficient accuracy. They described these findings as “disappointing” and attributed the limitations to several factors, such as cost-containment policies often being part of broader reform strategies which complicate the analysis. The study recommended using a combination of cost-containment policies for better results.
Additionally, Serra (2015) examined empirical evidence on cost-containment policies in OECD countries and noted that while price and profit control policies might reduce pharmaceutical prices, the success of these reforms largely depends on the context in which they are implemented.
Furthermore, the World Health Organization (WHO) issued guidelines for different pharmaceutical pricing policies, detailing the requirements for implementing each policy, the guidelines emphasize the importance of the assessment and regular review of the implementation of these policies, and the need for involving relevant stakeholders in the decision-making process of adopting any of these policies (World Health Organization, 2020a, b).
To conclude, continued growth of pharmaceutical expenditures gives rise to the need for providing affordable access to medicines and this urged different governments worldwide to adopt various supply-side and demand-side cost-containment policies. In this context, the following section of the paper sheds light on the French and Turkish experiences in implementing these policies with the aim of drawing lessons for Egypt.
4. Cost-containment measures in France
In the year 2000 per capita pharmaceutical spending in France was the highest compared with OECD countries (except USA which was the only country that exceeded France). However, during the period 2013–2021 per capita pharmaceutical spending in France was below the four highest countries; USA, Canada, Japan and Germany. This section sheds light on the most important features of cost-containment measures in France.
The French cost-containment system relies on three main approaches: First: Determining maximum drug prices that are based on added therapeutic value and using external reference pricing. Second: Using negotiation in setting prices and in limiting price increases. Third: Capping total spending to a global budget (Rodwin, 2019) [4].
4.1 Supply-side polices
4.1.1 Cost control policies (price control policies and profit control polices)
Price-control policy: In applying price-control policies, France adopts two principles; the first principle depends on determining national health insurance coverage and also the share of copayment, and the second principle depends on establishing price parameters. The Transparency Commission (TC) issues the recommendations about the assessment of each drug therapeutic value. In addition, there is a framework agreement with the pharmaceutical industry to observe the drug price negotiations (Rodwin, 2020).
Using external reference prices: France uses reference pricing to cap new drug prices. Since 2003, The Health Care Products Pricing Committee (CEPS) sets prices of these drugs by referring to four reference price countries: United Kingdom, Germany, Italy and Spain. Moreover, pharmaceutical firms usually offer secret discounts in different European countries and as a result, implementing external reference prices in an effective way is considered difficult to some extent. To overcome this difficulty (CEPS) negotiated two prices: a list price, and a confidential rebate to the Central Agency for Social Security Organizations. Industry experts report that secret discounts typically range from 10% to 30% of the list price. Manufacturers often provide a fixed discount. In other cases, the discounts are graduated and take effect after a certain threshold is reached (Vogler, 2020; Rodwin, 2020).
Profit control policy: As a profit control policy, the French Parliament sets a target for health insurance spending growth rates. And, there is a cap on annual growth of pharmaceutical companies’ turnover from National Health Insurance (NHI). In this respect, there is a payback clause if the growth of the manufacturer turnover exceeds the budget cap (Rodwin, 2020).
4.1.2 Positive and negative lists
A reimbursement list for the outpatient sector utilizes a positive list, while no negative list is utilized. And, the decision regarding the inclusion of items in the reimbursement is based on a Health Technology Assessment (HTA) report provided by the Transparency Commission (TC) of HAS (Vogler, 2020). However, the vast majority of the literature does not provide specific reasons for not using a negative list in France, it can be said that using HTA to evaluate the efficacy and cost-effectiveness of new drugs and to make reimbursement decisions ensures that only valuable medicines are funded, making the use of negative lists unnecessary.
4.1.3 Generic substitution
France has a physician-driven pharmaceutical model, in which the decision-making power concerning the choice of drugs is controlled by the physician in most cases, and using the International Non-proprietary Name (INN) by doctors in prescribing is obligatory. In addition, generic substitution by pharmacists is permitted but not mandatory. It is worth mention that substitution with biosimilars is not allowed. In addition, since 2020, patients who reject generic substitution are reimbursed on the basis of the generic medicine price, rather than the price of the originator drug (Stabile et al., 2013; Vogler, 2020).
4.1.4 Implementing health technology assessment (HTA)
France adopts HTA in evaluating and setting maximum prices of all new medicines, HTA is also used in capping reimbursement. In this respect, France is applying a kind of comparative effectiveness analysis, where the reimbursement of any new drug is no more than its appropriate comparator, except in the case when the new drug were approved to be more effective than the comparator (Rodwin, 2020).
4.2 Demand side policies
We shed light on the most commonly used demand-side policies further in the text.
4.2.1 Managed Entry Agreements (MEA)
MEA are used for some outpatient and inpatient drugs, mainly through financial-based agreements, In this respect, the Ministry of Social Affairs and Health stated that all information regarding MEA is kept strictly confidential, and no comprehensive information on the characteristics of diseases included in MEA is available (Pauwels et al., 2017; Vogler, 2020).
4.2.2 Cost-sharing policies
As stated earlier, copayment is considered the most commonly used measure in EU countries. In France, aside from patients with severe and chronic illnesses, co-payments of 35%, 70% and 85% must be paid by patients depending on the reimbursement rate. Additionally, co-payments are applied only for outpatient medicines (Rodwin, 2020; Vogler, 2020).
In addition, financial incentives are used to encourage office-based physicians to prescribe generics (Vogler, 2020).
5. Cost-containment measures in Turkey
This section of the paper sheds light on analyzing the Turkish experience in implementing cost-containment measures.
Turkey has launched the Health Transformation Program (HTP) in 2003, and the implementation of compulsory social health insurance (SHI) with a single payer was included in the program. According to last available data, in 2019 approximately 98.8% of the population was covered by health insurance (Atikeler et al., 2020; Cinaroglu, 2022; World Health Organization, 2022).
In this respect, pharmaceutical spending in Turkey started to increase gradually since 2007. As Figure 1 shows, in 2009 pharmaceutical spending had witnessed a very large increases and accounted for nearly 1.61% of the GDP. This sharp increase urged the government to adopt strict cost-containment policies to curb pharmaceutical spending (Gursoy, 2016). However, these measures succeeded in decreasing pharmaceutical spending as a percentage of GDP over the period 2010–2018. In 2019 the pharmaceutical spending as a share of GDP starts to increase again; this could be attributed to the spread of COVID- 19. In 2023 the share of pharmaceutical spending as a share of GDP accounted for approximately 0.8% in 2023.
The horizontal axis is labeled “Year”, and ranges from 2005 to 2023 in increments of 1 year. The vertical axis is labeled “percentage”, and ranges from 0 to 1.80 in increments of 0.20 units, increasing in regular increments. At the top of the graph, a legend shows a curve labeled “Public Pharmaceutical Spending (percentage)”. The curve starts at (2005, 1.29), and passes through the following points: (2006, 1.28), (2007, 1.27), (2008, 1.30), (2009, 1.61), (2010, 1.32), (2011, 1.14), (2012, 0.92), (2013, 0.87), (2014, 0.86), (2015, 0.82), (2016, 0.83), (2017, 0.83), (2018, 0.84), (2019, 0.92), (2020, 0.96), (2021, 0.84), (2022, 0.68), and ends at (2023, 0.78).Pharmaceutical Spending as a Percent of GDP in Turkey over the period 2005–2023. Source: Prepared by the authors, based on Statista (2024)
The horizontal axis is labeled “Year”, and ranges from 2005 to 2023 in increments of 1 year. The vertical axis is labeled “percentage”, and ranges from 0 to 1.80 in increments of 0.20 units, increasing in regular increments. At the top of the graph, a legend shows a curve labeled “Public Pharmaceutical Spending (percentage)”. The curve starts at (2005, 1.29), and passes through the following points: (2006, 1.28), (2007, 1.27), (2008, 1.30), (2009, 1.61), (2010, 1.32), (2011, 1.14), (2012, 0.92), (2013, 0.87), (2014, 0.86), (2015, 0.82), (2016, 0.83), (2017, 0.83), (2018, 0.84), (2019, 0.92), (2020, 0.96), (2021, 0.84), (2022, 0.68), and ends at (2023, 0.78).Pharmaceutical Spending as a Percent of GDP in Turkey over the period 2005–2023. Source: Prepared by the authors, based on Statista (2024)
Table 1 presents implementation of the key cost-containment policies in Turkey.
The extent of using cost-containment measures in Turkey
| Supply-side policies: Cost-control policies: | A. Price-control policies:
|
| Positive and negative lists: |
|
| Encouraging the use of generic drugs |
|
| Drug use review: |
|
| Economic evaluation and health-technology assessment (HTA): |
|
| Demand side cost-containment policies: |
|
Source(s): Author, based on: Atikeler and Özçelikay (2016), Gursoy (2016), Kanavos et al. (2018), Atikeler et al. (2020), García-Goñi (2022), Venkateswaran and Singh (2022), IQIVA (2023)
In addition to all the above mentioned facts, Global budget negotiations between the pharmaceutical industry and the government paved the way for price reductions and mandatory increases in discounts for all drugs, starting in 2009 (Cinaroglu, 2022).
To conclude, the Turkish experience in implementing cost-containment policies reveals that despite the difficulties that the health system is facing, there is a continuous effort to reform the system, especially in implementing pharmaceutical cost-containment policies. However, there is a need for more studies that analyze the current challenges that are faced by the pharmaceutical market and the ways to reform it.
6. Implementing cost-containment measures in the Egyptian pharmaceutical industry
This section of the paper begins by analyzing the main features of the pharmaceutical market in Egypt. In this respect, since the implementation of a universal health insurance system is still in its early stages, as it started after the issuance of the health insurance law in 2018, and is expected to be completed by 2030—thus analyzing the issues related to future trends in pharmaceutical pricing and reimbursement policies will require future studies.
6.1 Stylized facts
Egyptian pharmaceutical sales are expected to grow from EGP69.2bn (USD3.6bn) in 2022 to EGP106.7bn (USD3.8bn) in 2027 [5]. In addition, by 2032, the market’s value is expected to increase to EGP162.9bn (USD5.3bn) (Fitch Solutions, 2022-2023). Further, pharmaceutical expenditure accounts for approximately third of total health expenditure (THE). More specifically, over the period 2011–2019 the value of pharmaceutical expenditure as a percent of THE ranged from approximately 26% to 37% with an average of 34%. In this respect, pharmaceutical expenditure as a value over the same period – after adjustment to 2019 EGP – ranged between EGP40bn to EGP67bn (Fasseeh et al., 2022a; Kamphuis et al., 2022).
In fact, the government is playing a significant role in pharmaceutical spending, but at the same time, it is trying to minimize public spending on pharmaceuticals, especially after the end of COVID-19 pandemic which began to fade away in 2022. Table 2 illustrates that spending on medicines as a percentage of GDP is tending to decrease, Figure 2 shows the declining share of spending on medicines as percentage of GDP [6] (Ministry of Finance, 2023).
The horizontal axis is labeled “Year”, and includes the categories from left to right as follows: 2019 to 2020, 2020 to 2021, 2021 to 2022, 2022 to 2023, and 2023 to 2024. The vertical axis ranges from 0 to 0.30 in increments of 0.05 units. The graph shows five vertical bars. The data for the bars is as follows: 2019 to 2020: 0.14. 2020 to 2021: 0.17. 2021 to 2022: 0.249. 2022 to 2023: 0.16. 2023 to 2024: 0.12. Note: All numerical data values are approximated.Spending on medicines as a percentage of GDP in the Egyptian budget, FY 2019/20- FY 2023–2024. Source: Drawn by the authors based on the Ministry of Finance (2023)
The horizontal axis is labeled “Year”, and includes the categories from left to right as follows: 2019 to 2020, 2020 to 2021, 2021 to 2022, 2022 to 2023, and 2023 to 2024. The vertical axis ranges from 0 to 0.30 in increments of 0.05 units. The graph shows five vertical bars. The data for the bars is as follows: 2019 to 2020: 0.14. 2020 to 2021: 0.17. 2021 to 2022: 0.249. 2022 to 2023: 0.16. 2023 to 2024: 0.12. Note: All numerical data values are approximated.Spending on medicines as a percentage of GDP in the Egyptian budget, FY 2019/20- FY 2023–2024. Source: Drawn by the authors based on the Ministry of Finance (2023)
Spending on medicines as percentage of GDP as a percentage of GDP in the Egyptian budget, FY 2019/20–FY 2023-24
| Year | Spending on medicines (EGP million) | Gross domestic production (EGP million) | Spending on medicines % of GDP |
|---|---|---|---|
| 2019/2020 | 9,490 | 6,295,000 | 0.14 |
| 2020/2021 | 11,838 | 6,923,000 | 0.17 |
| 2021/2022 | 19,303 | 7,842,500 | 0.25 |
| 2022/2023 | 14,613 | 9,092,080 | 0.16 |
| 2023/2024 | 14,604 | 11,841,100 | 0.12 |
Note(s): 1Adjusted budget: According to the budgeting practices of the Egyptian Ministry of Finance, the adjusted budget includes revisions introduced during the fiscal year to reflect actual developments, such as changes in spending needs or revenue performance
2Allocated budget: According to the budgeting practices of the Egyptian Ministry of Finance, the allocated budget represents the initial estimates approved at the beginning of the fiscal year, based on projected revenues and planned expenditures
Source(s): Ministry of Finance (2023)
Pharmaceutical sales are categorized into two main types: prescription drugs, which include both generic and brand-name drugs, and over-the-counter (OTC) products. Prescription drug spending in Egypt is expected to increase from EGP66.0bn (USD2.7bn) in 2023 to EGP92.7bn (USD3.3bn) in 2027. Also, over the period 2019–2027 prescription drug sales as a percentage of total drug sales is expected to increase from 83.3% in 2019 to 86.9% in 2027 as Figure 3 shows. In this respect, implementation of universal health care system is expected to have an impact on the prescription drug market, since implementing the new system will result in increase in the use of prescribed drugs (Fitch Solutions, 2022-2023; AmCham, 2012).
The vertical bar chart shows the distribution of medicine sales by category as a percentage of total sales. The vertical axis ranges from 0 to 100 in increments of 10 units. The horizontal axis includes the following categories from left to right: 2019, 2020, 2021, 2022 e, 2023 f, 2024 f, 2025 f, 2026 f, and 2027 f. Each year displays four vertical bars. The blue bar represents “Over-the-counter (O T C) medicine sales, percentage of total sales”, the orange bar represents “Prescription drug sales, percentage of total sales”, the grey bar represents “Patented drug sales, percentage of total sales”, and the yellow bar represents “Generic drug sales, percentage of total sales”. The data for the bars is as follows: 2019: Over-the-counter (O T C) medicine sales: 15.7 percent, Prescription drug sales: 82.5 percent, Patented drug sales: 48.3 percent, Generic drug sales: 34.45 percent. 2020: Over-the-counter (O T C) medicine sales: 15.7 percent, Prescription drug sales: 84.17 percent, Patented drug sales: 46.67 percent, Generic drug sales: 36.89 percent. 2021: Over-the-counter (O T C) medicine sales: 15.07 percent, Prescription drug sales: 85.8 percent, Patented drug sales: 46.67 percent, Generic drug sales: 37.71 percent. 2022 e: Over-the-counter (O T C) medicine sales: 15.7 percent, Prescription drug sales: 85 percent, Patented drug sales: 46.67 percent, Generic drug sales: 37.7 percent. 2023 f: Over-the-counter (O T C) medicine sales: 14.88 percent, Prescription drug sales: 84.99 percent, Patented drug sales: 45.86 percent, Generic drug sales: 39.34 percent. 2024 f: Over-the-counter (O T C) medicine sales: 14.07 percent, Prescription drug sales: 85.8 percent, Patented drug sales: 48.3 percent, Generic drug sales: 40 percent. 2025 f: Over-the-counter (O T C) medicine sales: 15.7 percent, Prescription drug sales: 87.43 percent, Patented drug sales: 45.04 percent, Generic drug sales: 41.78 percent. 2026 f: Over-the-counter (O T C) medicine sales: 13.25 percent, Prescription drug sales: 87.43 percent, Patented drug sales: 48.3 percent, Generic drug sales: 14.78 percent. 2027 f: Over-the-counter (O T C) medicine sales: 12.44 percent, Prescription drug sales: 88.25 percent, Patented drug sales: 44.23 percent, Generic drug sales: 43.341 percent. Note: All numerical data values are approximated.Over-the-counter (OTC), prescription drugs, generic drugs and patented drugs % of total sales over the period 2019–2027. e/f = Fitch Solutions estimate/forecast. Source: Drawn by the authors based on Fitch Solutions (2022-2023)
The vertical bar chart shows the distribution of medicine sales by category as a percentage of total sales. The vertical axis ranges from 0 to 100 in increments of 10 units. The horizontal axis includes the following categories from left to right: 2019, 2020, 2021, 2022 e, 2023 f, 2024 f, 2025 f, 2026 f, and 2027 f. Each year displays four vertical bars. The blue bar represents “Over-the-counter (O T C) medicine sales, percentage of total sales”, the orange bar represents “Prescription drug sales, percentage of total sales”, the grey bar represents “Patented drug sales, percentage of total sales”, and the yellow bar represents “Generic drug sales, percentage of total sales”. The data for the bars is as follows: 2019: Over-the-counter (O T C) medicine sales: 15.7 percent, Prescription drug sales: 82.5 percent, Patented drug sales: 48.3 percent, Generic drug sales: 34.45 percent. 2020: Over-the-counter (O T C) medicine sales: 15.7 percent, Prescription drug sales: 84.17 percent, Patented drug sales: 46.67 percent, Generic drug sales: 36.89 percent. 2021: Over-the-counter (O T C) medicine sales: 15.07 percent, Prescription drug sales: 85.8 percent, Patented drug sales: 46.67 percent, Generic drug sales: 37.71 percent. 2022 e: Over-the-counter (O T C) medicine sales: 15.7 percent, Prescription drug sales: 85 percent, Patented drug sales: 46.67 percent, Generic drug sales: 37.7 percent. 2023 f: Over-the-counter (O T C) medicine sales: 14.88 percent, Prescription drug sales: 84.99 percent, Patented drug sales: 45.86 percent, Generic drug sales: 39.34 percent. 2024 f: Over-the-counter (O T C) medicine sales: 14.07 percent, Prescription drug sales: 85.8 percent, Patented drug sales: 48.3 percent, Generic drug sales: 40 percent. 2025 f: Over-the-counter (O T C) medicine sales: 15.7 percent, Prescription drug sales: 87.43 percent, Patented drug sales: 45.04 percent, Generic drug sales: 41.78 percent. 2026 f: Over-the-counter (O T C) medicine sales: 13.25 percent, Prescription drug sales: 87.43 percent, Patented drug sales: 48.3 percent, Generic drug sales: 14.78 percent. 2027 f: Over-the-counter (O T C) medicine sales: 12.44 percent, Prescription drug sales: 88.25 percent, Patented drug sales: 44.23 percent, Generic drug sales: 43.341 percent. Note: All numerical data values are approximated.Over-the-counter (OTC), prescription drugs, generic drugs and patented drugs % of total sales over the period 2019–2027. e/f = Fitch Solutions estimate/forecast. Source: Drawn by the authors based on Fitch Solutions (2022-2023)
Additionally, Figure 3 shows that generic drugs' share of total pharmaceutical sales is expected to increase from 37% in 2020 to 42% by 2026. In 2027 generic drugs will represent approximately 43.3% of total pharmaceutical sales and 49.8% of prescriptions in value terms. Moreover, the Egyptian generic drug market will increase in value from EGP30.2bn (USD1.2bn) in 2023 to EGP46.2bn (USD1.7bn) in 2027. Also, by 2032 spending on generic medicines is expected to increase to EGP78.8bn (USD2.6bn). Increasing the generic medicines share in the market is highly expected in next few years. Also, the value of patented drug market is expected to increase from EGP35.8bn (USD1.5bn) in 2023 to EGP46.5bn (USD1.7bn) in 2027. By 2032, the patented drug market is expected to increase in value, reaching to EPG65.2bn (USD2.2bn). In this respect, patented drug spending will continue its absolute growth, but its share as a proportion of total pharmaceutical spending is expected to fall from 48% in 2020 to 44% in 2032 (Fitch Solutions, 2022-2023).
Taking these points into consideration, it can be said that pharmaceutical sales primarily rely on out-of-pocket spending, as consumers often resort to self-medication, because it is considered the cheapest treatment option. Therefore, despite the decrease of out-of-pocket expenditures (OOPS) as a percentage of health expenditure from 62.6% in years 2018 and 2019 to 59% in 2020, it still reflects a high burden on citizens who also suffer from low income levels, especially that implementation of the comprehensive health insurance system which aims at covering the whole population is not yet completed, as above mentioned (N GAGE consulting, 2017). Further, Figure 4 illustrates the fact that out-of-pocket expenditure as a percentage of current health expenditure in Egypt is considered very high when compared with other Middle East and North Africa (MENA) region countries (World bank, 2023; Kanavos et al., 2018).
The horizontal axis is labeled “Country” and from left to right includes the following categories: “Algeria”, “Bahrain”, “Egypt”, “Jordan”, “Lebanon”, “Morocco”, “Kuwait”, “Oman”, “Qatar”, “Saudi Arabia”, and “U A E”. The vertical axis ranges from 0 to 120 in increments of 20 units. The graph shows eleven vertical bars. The data for the bars is as follows: Algeria: 37.4. Bahrain: 28.36. Egypt: 98.68. Jordan: 31.37. Lebanon: 45.44. Morocco: 43.43. Kuwait: 12.29. Oman: 7.26. Qatar: 12.29. Saudi Arabia: 18.31. U A E: 14.3. Note: All numerical data values are approximated.Out-of-pocket expenditure % current health expenditure in some MENA region countries in 2020. Source: Drawn by the authors based on World Bank (2023)
The horizontal axis is labeled “Country” and from left to right includes the following categories: “Algeria”, “Bahrain”, “Egypt”, “Jordan”, “Lebanon”, “Morocco”, “Kuwait”, “Oman”, “Qatar”, “Saudi Arabia”, and “U A E”. The vertical axis ranges from 0 to 120 in increments of 20 units. The graph shows eleven vertical bars. The data for the bars is as follows: Algeria: 37.4. Bahrain: 28.36. Egypt: 98.68. Jordan: 31.37. Lebanon: 45.44. Morocco: 43.43. Kuwait: 12.29. Oman: 7.26. Qatar: 12.29. Saudi Arabia: 18.31. U A E: 14.3. Note: All numerical data values are approximated.Out-of-pocket expenditure % current health expenditure in some MENA region countries in 2020. Source: Drawn by the authors based on World Bank (2023)
Figure 5 illustrates that trade balance of pharmaceuticals suffers from deficit over the period 2021–2027, and this deficit is expected to continue in the next few years, running to USD1.77mn by 2027.
The vertical axis ranges from negative 3000 to 3000 in increments of 1000 units. The horizontal axis includes the following categories from left to right: “2021”, “2022 e”, “2023 f”, “2024 f”, “2025 f”, “2026 f”, and “2027 f”. Each year displays three vertical bars. The blue bar labeled “Pharmaceutical exports, United States dollars million”, the orange bar labeled “Pharmaceutical imports, United States dollars million”, and the grey bar labeled “Pharmaceutical trade balance, United States dollars million”. The data for the bars is as follows: 2021: Pharmaceutical exports: 286.79, Pharmaceutical imports: 2470, Pharmaceutical trade balance: negative 2048.87. 2022 e: Pharmaceutical exports: 286.79, Pharmaceutical imports: 2140.09, Pharmaceutical trade balance: negative 1820.38. 2023 f: Pharmaceutical exports: 261.41, Pharmaceutical imports: 1886.21, Pharmaceutical trade balance: negative 1541.11. 2024 f: Pharmaceutical exports: 210.63, Pharmaceutical imports: 1784.66, Pharmaceutical trade balance: negative 1515.73. 2025 f: Pharmaceutical exports: 236.02, Pharmaceutical imports: 1835.44, Pharmaceutical trade balance: negative 1541.11. 2026 f: Pharmaceutical exports: 261.41, Pharmaceutical imports: 1911.6, Pharmaceutical trade balance: negative 1591.89. 2027 f: Pharmaceutical exports: 261.41, Pharmaceutical imports: 2000, Pharmaceutical trade balance: negative 1668.05. Note: All numerical data values are approximated.Egypt pharmaceutical trade balance (in million USD) over the period 2021–2027. e/f = Fitch Solutions estimate/forecast. Source: Drawn by the authors based on Fitch Solutions (2022-2023)
The vertical axis ranges from negative 3000 to 3000 in increments of 1000 units. The horizontal axis includes the following categories from left to right: “2021”, “2022 e”, “2023 f”, “2024 f”, “2025 f”, “2026 f”, and “2027 f”. Each year displays three vertical bars. The blue bar labeled “Pharmaceutical exports, United States dollars million”, the orange bar labeled “Pharmaceutical imports, United States dollars million”, and the grey bar labeled “Pharmaceutical trade balance, United States dollars million”. The data for the bars is as follows: 2021: Pharmaceutical exports: 286.79, Pharmaceutical imports: 2470, Pharmaceutical trade balance: negative 2048.87. 2022 e: Pharmaceutical exports: 286.79, Pharmaceutical imports: 2140.09, Pharmaceutical trade balance: negative 1820.38. 2023 f: Pharmaceutical exports: 261.41, Pharmaceutical imports: 1886.21, Pharmaceutical trade balance: negative 1541.11. 2024 f: Pharmaceutical exports: 210.63, Pharmaceutical imports: 1784.66, Pharmaceutical trade balance: negative 1515.73. 2025 f: Pharmaceutical exports: 236.02, Pharmaceutical imports: 1835.44, Pharmaceutical trade balance: negative 1541.11. 2026 f: Pharmaceutical exports: 261.41, Pharmaceutical imports: 1911.6, Pharmaceutical trade balance: negative 1591.89. 2027 f: Pharmaceutical exports: 261.41, Pharmaceutical imports: 2000, Pharmaceutical trade balance: negative 1668.05. Note: All numerical data values are approximated.Egypt pharmaceutical trade balance (in million USD) over the period 2021–2027. e/f = Fitch Solutions estimate/forecast. Source: Drawn by the authors based on Fitch Solutions (2022-2023)
6.2 Pharmaceutical pricing regime
Drug prices in Egypt are considered among the lowest prices in the MENA region, and health authorities are always trying to keep prices as low as possible (Fitch Solutions, 2022-2023).
In addition to general laws applicable to all businesses in Egypt, pharmaceutical prices in Egypt are subject to compulsory pricing. Numerous decrees have been issued by the Ministry of Health to regulate the industry: In July 2012, the government issued “The Ministerial Decree 499/2012 on Pricing of Human Pharmaceutical Preparations,” which primarily adopts the external reference pricing system (ERP) that relies on comparing the price of a drug with its price in other countries and sets the price in Egypt at the lowest of these prices. It is worth mentioning that one of the main features of this method is that the price of branded medicines is determined according to the least selling price available worldwide. A list of 36 countries is provided for guidance. Also, if a new pharmaceutical product is available in fewer than five countries in the basket, the pricing committee in the Ministry of Health should ask the pharmacoeconomic unit to perform a quick pharmacoeconomic review (AmCham, 2012; Wanis, 2015; Mohamed and Kreling, 2016).
Furthermore, there is a continuous effort by health authorities in Egypt to adopt a more transparent and fair pricing system. For instance, Law No. 151 of 2019 was issued to establish the Egyptian Drug Authority (EDA) and the Unified Procurement Authority (UPA). On the one hand, the EDA is a public service authority affiliated with the Prime Minister, and it replaces the Ministry of Health and Population. It also replaces public authorities and other government agencies that had authority over the pharmaceutical industry and other related industries; including the cosmetics, medical devices and biological products industries. On the other hand, UPA is a public economic authority that is responsible for purchasing all medical products for governmental entities (Teaima et al., 2021; Fitch Solutions, 2022-2023).
6.3 Pharmaceutical cost-containment measures in Egypt
In the light of the previous analysis, this section analyzes the implementation of cost-containment measures in the Egyptian pharmaceutical industry.
6.3.1 Supply-side cost-containment policies
6.3.1.1 Cost-control policies: (price control policies and profit control policies)
A. Price control policies: As mentioned earlier in the text, pharmaceuticals are subject to compulsory pricing in Egypt, meaning that local pharmaceutical industry is always subject to price control policies that are implemented by the local authorities. Consequently, manufacturers often find their profit margins at risk especially with the continuous economic pressures on the market and local currency as stated earlier. Thus negotiations between pricing authorities and manufacturers can be considered as one of the main features of the market. However, a review of price control policies in Egyptian pharmaceutical industry reveals the following:
Cost-plus policy: The cost-plus policy was applied from 1991 to 2009.
External reference price (ERP): ERP was adopted for the first time in 2009. Then Decree 499/2012 confirmed the continued use of ERP in pharmaceutical pricing as stated earlier, and this method is still in use until the present time. Moreover, using external reference pricing (ERP) is considered one of the main generic pricing policies in MENA region. Meanwhile, the reimbursement and procurement of generics rely only on tendering [7].
Internal reference price (IRP): This tool is not used in Egypt. It is worth mentioning that there are some trails from Egyptian health authorities in the last few years to converge pharmaceutical prices (Kamphuis et al., 2022; Al-Hoseny, 2023; Medhat, 2023).
B. Profit control policies: There is no evidence of any profit control policies being applied to the pharmaceutical industry. Nevertheless, it has to be mentioned that profits of the local pharmaceutical industry were negatively affected by the pressures resulted from the challenging economic situation that the local economy is facing as illustrated earlier.
6.3.1.2 Positive and negative lists
The Ministry of Health assembles “essential” and “non-essential” drug lists. But there is no use of positive and negative lists in Egypt (Kanavos et al., 2018; Fitch Solutions, 2022-2023). However, it is expected that a positive reimbursement list will be announced to outline the medicines that will be covered by the country’s new universal healthcare system (Al-Hoseny, 2023).
6.3.1.3 Encouraging the use of generic drugs
The Egyptian government encourages using generic substitution, despite it being not mandatory for any of the main actors in the market. However, approximately 84% of prescriptions are generically substituted (Kamphuis and Kanavos, 2021; Fitch Solutions, 2022-2023). Moreover, pharmacists encourage generic substitution and recommend using generic drugs. Also, biosimilars contribute to approximately 14% of the biologics market (Kanavos et al., 2018).
In addition, the Egyptian government facilitates the registration of new local generics not only for domestic supply but also to increase exports. Additionally, promoting localization of pharmaceuticals is a part of development of pharmaceutical industry in Egypt according to Vision 2030. The COVID-19 crises further highlighted the importance of localization of the industry and achieving self-sufficiency of medicines (IQVIA me consulting, 2022). Moreover, using generics is also encouraged as a good tool to reduce costs of public spending on pharmaceuticals and to save resources to finance the implementation of new health insurance system.
6.3.1.4 Drug use review
There is no evidence of a drug use review or monitoring of prescription patterns. However, the Egyptian Drug Authority (EDA) has issued the second version of the Egyptian regulations for good pharmacovigilance practices in 2022. According to the regulation, it is stated that “if the marketing authorization holder (MAH) becomes aware of a pattern of use of the medicinal product, then the MAH should provide a brief description of it” (EDA, 2022; Al-Hoseny, 2023).
6.3.1.5 Economic evaluation and health-technology assessment (HTA)
Despite Egypt starting to use economic analysis in pharmaceuticals, the application of economic analysis methods is still on small scale. For instance, cost-effectiveness analysis is used in reimbursement processes or in specific cases. Moreover, in 2011, a ministerial decree was issued to establish the Pharmacoeconomics Unit (PEU), which is currently under the supervision of the Egyptian Drug Authority [8]. In addition, if an expensive drug receives a low price, the manufacturers can appeal to the Pricing Committee and request a pharmacoeconomic study (Fasseeh et al., 2022b; Kanavos et al., 2018).
However, HTA and value-based pricing systems are used in making reimbursement decisions, as they directly consider the value of the drug. In this respect, directing the establishment of a department for HTA is one of the main responsibilities of the Unified Procurement Authority (Fasseeh et al., 2022b).
6.3.2 Demand-side cost-containment policies
6.3.2.1 Managed entry agreements (MEA)
Managed Entry Agreements are expected to be utilized for the reimbursement of new pharmaceuticals and for revising previous reimbursement decisions over the next five years (Fitch Solutions, 2022-2023).
6.3.2.2 Cost-sharing agreements
Risk sharing agreements are not widely used by local healthcare stakeholders. Similar to Managed Entry Agreements, approximately 60% of stakeholders expect that these policies will be widely adopted for reimbursing new pharmaceuticals and revising previous reimbursement decisions over the next five years. In addition, co-payments are considered one of the tools for financing the new Universal Health Insurance system. It is worth mentioning that no studies have been conducted on the implementation of co-payments for purchasing medicines under the new system (Fitch Solutions, 2022-2023).
6.4 Lessons for Egypt
In light of the previous analysis, one key fact stands out: the implementation of the new Social Health Insurance system is crucial in transforming the current pharmaceutical pricing and reimbursement regime.
Moreover, in addition to the previous analysis of the current situation regarding the implementation of pharmaceutical cost-containment policies in Egypt, future research conducted by health authorities is needed to identify the challenges and expected gains of implementing these policies, especially since the lack of data represents a major obstacle in this respect. Furthermore, health authorities must design a suitable methodology for pharmaceutical reimbursement decisions. This part of the study provides some guidelines for reforming cost-containment policies in Egypt, based on lessons learned from the French and Turkish experiences in implementing these policies.
First: Guidelines for reforming supply-side cost-containment policies:
External reference price policy: On the one hand, Egypt uses a list of 36 countries for guiding purposes. On the other hand, France uses prices in four countries and Turkey uses prices in five countries, which could be increased to ten countries to determine reference price. In this respect, the literature states that many criticisms have been directed at using large baskets, as mentioned earlier. Thus, external reference price (ERP) reference basket in Egypt is considered very large, and should be reconsidered.
Internal reference price policy: While internal reference price policy (IRP) is applied in France and also in Turkey, this policy is not applied explicitly in Egypt, In this respect, implementing IRP might be useful, but it should be applied carefully due to the potential difficulties in implementation.
Price negotiations between government and manufacturers should be developed: One of the main lessons that can be drawn from the French experience in pharmaceutical cost-containment system is the importance of using price negotiations. In this respect, since as negotiations between pricing authorities and manufacturers is considered as one of the main features of the pharmaceutical market in Egypt. Thus, developing the use of negotiations in Egyptian pharmaceutical market is highly recommended.
Encouraging the use of generics should not be at the expense of patented drugs:
The issue of encouraging the use of generics in Egypt should be treated with caution from policy makers. On the one hand, generic substitution is highly encouraged by health authorities to reduce the costs of the implementation of the new health insurance system, and to reduce public spending on pharmaceuticals. On the other hand, as mentioned earlier in the text, the share of patented drug spending as a proportion of total pharmaceutical spending in Egypt is expected to fall. In this respect, literature and analyzing the French and Turkish experiences reveal that encouraging the use of generics should not be on the expense of encouraging patented drugs. In addition, strengthening generic markets requires giving more importance to demand side policies, for instance, encouraging the use of generics could be improved through using guidelines and educational programs which are mainly directed to physicians to influence their behavior as drug prescribers. Also, using biosimilars should be encouraged by Egyptian health authorities in the future (Al-Hoseny, 2023; Medhat, 2023).
Encouraging the use of health-technology assessment (HTA):
Despite the fact that Egypt has already started implementing HTA, more efforts are needed to improve the use of HTA as explained in the literature. Additionally, as France has a leading experience in implementing HTA, health authorities may consider exploring the ways of cooperation with the French health authorities in this regard.
Using global budget: Capping total spending to a global budget is one of the main approaches in applying cost-containment in France. Also, it was applied in Turkey since 2009. No evidence about applying this widely cost-containment tool in Egypt. More studies are required about the possibility for implementing this tool in Egypt.
Second: Guidelines for reforming demand-side cost-containment policies:
Upon reviewing demand side policies which are applied in France and Turkey, many lessons could be drawn for Egypt. The most important of these lessons is that Managed Entry Agreements (MEA) and cost-sharing agreement should be considered. More specifically, co-payments is considered one of the most common used cost control policy among demand side policies as mentioned above. Needless to say that using copayments should be considered in implementing universal health insurance as it could be used for the reimbursement of new pharmaceuticals (Al-Hoseny, 2023). In addition, other policies like using financial incentives which are targeted at prescribing doctors and pharmacists to encourage the use of generics should also be considered.
7. Conclusion
Increasing pharmaceutical expenditures over the last few decades have urged health authorities in most countries worldwide to adopt different pharmaceutical cost-containment policies. In general, the pharmaceutical industry in Egypt is currently facing many challenges, and the situation could be more complicated due to repercussions of many political and economic circumstances which have negatively affected the whole world.
The main policy implication drawn from the findings of the paper is that health authorities in Egypt need to adopt more advanced cost-containment policies, instead of the traditional cost-containment policies. For instance, they should consider using cost-effectiveness analysis and implementing health technology assessment (HTA), among other strategies. In addition, designing a suitable methodology for reimbursement decisions to help in implementing the Universal Health Insurance (UHI) system in Egypt is another critical issue.
8. Limitations
Due to data limitations regarding the current system of coverage and reimbursement in Egypt, the assessment of the impact of pharmaceutical cost-containment policies on reimbursement and procurement systems was not addressed in this study. More studies are required to analyze these issues in light of the implementation of the new Universal Health Insurance system and its implications for the pharmaceutical market.
Notes
Cost-Plus Pricing: is a pricing method used to set the prices of pharmaceutical products by taking into account the manufacturing costs, research and development expenses, costs related to regulatory processes and compliance, overheads, other operational expenses, along with a profit margin to establish the final price (World Health Organization, 2020a, b).
Biosimilar: a medication that closely resembles a biological reference product and is produced by a company other than the original manufacturer (Fitch solution, 2022-2023).
All EU countries except Malta apply the copayment policy (García-Goñi, 2022).
Global budgets: refer to expenditure caps that aim to constrain the growth in hospital and/or physician expenditures (Wolfe and Moran, 1993).
The main reason for such decrease in pharmaceutical sales when estimated in US dollar terms is the weakening of the local currency, which is a result of many difficult political and economic circumstances that have negatively affected the Egyptian economy. For instance, the repercussions of the Corona virus and the Russia–Ukraine war.
Medicines: refer to drugs, or substances which are used to diagnose, treat, prevent or cure diseases.
Health authorities implement Tender Drug List (TDL), which includes all the essential drugs that are required by the Ministry of Health institutions. Tender Drug List also includes drugs that will be reimbursed. In general, the lowest-priced medication in each active ingredient group is added to the list for reimbursement (Fitch Solutions, 2022-2023; Kamphuis and Kanavos, 2021).
According to interviews with EDA officials.
