Egyptian Drug Authority studies new flexible pricing system as pharmaceutical companies push for increases

A new formula that would allow more frequent medicine price fluctuations is under review by the Egyptian Drug Authority (EDA), according to four informed sources who spoke to Mada Masr.

An EDA official and the head of a pharmaceutical company who spoke to Mada Masr on condition of anonymity said the EDA, which is responsible for setting prices nationwide, is looking into the system against the backdrop of repeated disputes with pharmaceutical companies requesting price increases.

Drug prices have spiraled in recent years as the pound has weakened against the dollar and raw materials costs have increased accordingly.

Yassin Ragai, the assistant to the EDA’s head, told Mada Masr that the drug authority held meetings this month with various stakeholders in the pharmaceutical industry to discuss the new mechanism in light of various pressures on the drug market in recent years.

Ragai said the meetings came amid a desire to encourage further investments in the pharmaceutical sector “through a clear and transparent formula and a publicly announced, up-to-date mechanism.”

The last amendment to the pricing system took place in 2012, said Ragai. That mechanism, established by Health Ministerial Decree 499/2012, mandated that drug price reviews should take place based on fluctuations of 15 percent or more in the exchange rate. Companies were to be allowed to submit price increase changes when that threshold was met.

Prices on Egypt’s markets are now subject to much more frequent fluctuation than they were in 2012, however. The government has intervened since then to devalue the pound by 15 percent or more on several occasions and, in 2024, introduced a more flexible exchange rate, meaning the pound now fluctuates daily against the dollar, leaving Egyptians more exposed to inflation.

As a result, some medication prices have jumped by as much as 20-30 percent in recent years.

The head of the Pharmacists Syndicate’s pharmaceutical manufacturing committee, Mahfouz Ramzy, said to Mada Masr that the EDA is now studying ways to make drug pricing more flexible.

The new mechanism under review would tie prices to the pound’s exchange rate, as well as to inflation and interest rates, he said. This means prices would move more flexibly in line with these variables to reduce the back-and-forth between the drug authority and pharmaceutical companies.

The new mechanism would determine the share of the dollar-denominated component in each product, serving as a basis for price adjustment, according to Ramzy.

Price increases would therefore be proportional to fluctuations in the dollar exchange rate and to changing interest rates, as well as to any change in the price of raw materials.

The step would protect companies’ profit margins, allowing them to continue production, said Ramzy.

Ragai explained that the goal of the new mechanism is to ensure that pricing is fair and, at the same time, affordable for manufacturers.

He said the authority is still in dialogue with all stakeholders in the pharmaceutical industry — from manufacturers to pharmacists and distributors — to listen to their proposals before issuing a final decision in August. Ragai stressed that the mechanism will not affect any of the medications currently available on the market.

Ramzy confirmed that discussions are ongoing with the aim of landing upon the best formula, given that the decision will affect the entire drug market. He added that the proposal leans toward allowing prices to be adjusted but not by the same scale as the sharp increases seen in recent years.

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