Decision Makers and Decision-Making Processes Diagram
Model description and Symbols:
The ultimate decision maker is listed at the top of the model
Bold Boxes: Decision making bodies
Boxes: Decision influencer bodies
Bold Arrows: Required step in decision-making process
Arrows: May or may not impact decision
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The Arab Republic of Egypt has a population of 82,999 million citizens (1), residing in 28 governorates. Egypt has a total of 1969 private and governmental hospitals and 5034 primary health care units (2). Egypt has a fragmented health system with multiple sources of financing and providers. The financing sources include government spending, that comes from direct tax revenues; out-of-pocket spending, by households as premium payments for insurance; as well as direct spending on health, employers’ paying the premium for their employees and donor assistance from charity organizations without any role in the decision making process. These resources including the direct spending flow through public sector entities.
Health care services are provided through public sectors entities, mainly the Ministry of Health & Population (MOHP) and the Health Insurance Organization (HIO); as well as other Ministries and other public sector entities such as the Curative Care Organization, Teaching Hospitals and Institutes, and non-governmental organizations (NGOs) involved in health, which are nonprofit organizations in addition to private insurance plans (Egycare). The MOHP owns and operates a large network of hospitals and outpatient facilities. Each public entity runs its own facilities following the MOHP regulation while the private sectors have their own set of regulations and standards.
The percentage of the population insured by the HIO increased to 55% in 2008 (employers i.e. unemployed are covered by government fund) (3). The government has a special discretionary fund for special conditions, the Program for Treatment at the Expense of the State (PTES), to pay for treatment abroad and for certain services within the country. The government initiated PTES as a safety net for those who did not have insurance coverage. However, as the analysis has shown, expenditures under this scheme have grown exponentially. For 2008/09, over 1.92 million people benefited from the scheme. Total expenditures amounted to over three billion Egyptian pounds (LE). Of this, 11 percent was spent at private providers and covered 9.6 percent of the beneficiaries (3). The top five services, for which these payments were made, are chronic diseases, renal failure, orthopedic surgeries, oncology and ophthalmology.
Health Spending as Percentage of Total Government Budget is 4.30%. In 2008/09, spending at private facilities accounted for 64 percent of total health spending. Of this, spending on pharmaceuticals and private clinics accounted for half of all health spending in Egypt (31 percent and 20 percent, respectively). This is comparable to the findings from the 2007/08 National Health Accounts. In 2008/09, MOHP facilities accounted for 19 percent of total spending in Egypt. This is slightly lower than the 21 percent in 2007/08 and significantly lower than the 25 percent in 2001/02. It is clear that spending on private providers is increasing even as spending at public facilities is declining. In 2008/09, Egypt spent 61.4 billion Egyptian pounds (LE) on health, representing 5.9 percent of the country’s gross domestic product (GDP). Spending on pharmaceuticals is 34 percent of total health spending in the country (3).
Regarding the total health spending in 2008/09, 25 percent came from the Ministry Of Finance (MOF), 2 percent from public and private firms, 72 percent from households, and 1 percent from domestic sources. Donor dependence is low in Egypt with almost all of health spending coming from domestic sources. Over the past 16 years, the share of out-of-pocket spending to total health spending has increased from 51 percent to 72 percent. In Egypt, the steady increase in out-of-pocket spending is occurring even as the percentage of the population covered by insurance is going up (4).
Private clinics and pharmacies are the main private providers accounting for over half of all outpatient visits. More visits occur at MOHP hospitals as compared with MOHP outpatient facilities. Egyptians spend an average of LE 646 per year on health; LE 567 spent on outpatient care and LE 79 spent on inpatient care. There are a number of differentials in per capita spending; urban areas spend more than rural areas, major cities spend the most and rural Upper Egypt, the least; and those in the highest income quintile spend nearly 4.5 times as compared with those in the lowest income quintiles. However, the lower income population spends a higher proportion of household income on health as compared with the higher income population; with 66% of the visits for the lowest income population occurring at either pharmacies or private clinics (4).
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DECISION-MAKERS AND INFLUENCERS
Egyptian Cabinet of Ministers
The Egyptian government (the executive authority) is made up of 22 Ministers who are elected by the Prime Minister. Egyptian Parliament (legislative authority) elects the Prime Minister and evaluates and approves any health care legislation.
Ministry of Health & Population (MOHP)
The MOHP is the final decision maker for Market authorization, as well as drug reimbursement, in the public sector. The MOHP is headed by the Minister of Health. The MOHP executes the legal and regulatory framework for health care interventions and the Health Insurance Act, and overall health policy. Decrees are issued by the MOHP; it has the responsibility for health system regulation and oversees the health insurance organization (HIO), Central Administration for Pharmaceutical Affairs (CAPA), National Organization for Drug Control and Research (NODCAR) and National Organization For research & Control of Biologicals (NORCB). The three organizations, CAPA, NODCAR, NORCB constitute the “ Egyptian Drug Authority (EDA)”
Central Administration for Pharmaceutical Affairs (CAPA)
CAPA is part of the MOHP and has the responsibility for price regulation. It is the supervisory authority for therapeutic products including market authorization and post market surveillance. CAPA is a public service organization of the government that includes licensing, registration, inspection, importation and exportation of products. CAPA activities are based on the Egyptian law on therapeutic products. CAPA is the final decision making body for setting the mandatory public price of drugs. In addition, CAPA evaluates clinical trials & post marketing studies of the pharmaceutical drugs.
The Procurement Department
The Procurement Department is part of CAPA. The Procurement Technical Committee is made up of physicians, Procurement Department academic pharmacists, and Legal affairs personnel from MOHP and Head of CAPA. The Procurement Committee holds meetings when the Tender drug list is renewed or on a need-basis for add-ons, i.e. the second tender drug list when all MOHP hospitals and primary care units’ needs are not covered by the main or first Tender drug list). Efficacy, safety and cost of drugs are taken into account for coverage, by reviewing each application to ensure that each medication has acceptable pharmacokinetics, pharmacodynamics, safety (no alerts) and efficacy. The Tender drug list is renewed every 2 years, where all drugs will be going through the review committee again, all applicants have to follow this obligatory recommendation.
The Pricing Committee
The Pricing Committee is part of the Registration Department at CAPA and made up of approximately 10 members (medical, commercial and pharmaceutical academy, physicians, pharmacists, Ministry of Commerce & Social Solidarity representatives and the Head of CAPA). It evaluates new drugs for pricing. The Pricing Committee regulates not only the ex-factory price but also the distribution margin to be shared between wholesalers and pharmacies in payment for logistic and capital costs of distribution. The pricing committee is responsible for publication of the only authorized mandatory public price of the drug (mandatory on all pharmacies).
National Organization for Research & Control of Biologicals (NORCB)
NORCB is part of the MOHP, and has the responsibilities for Safety, quality and efficacy of all imported and domestic Biological products in Compliance with WHO requirements & international organization for standardization. They are responsible for clinical trials and post marketing studies for Biological products only. They generate reports on clinical assessment but not on economic evaluations. They evaluate/assess the clinical trials submitted after approval of protocol from the Ethical Committee at the MOHP. (Decree 360/2010).
Health Insurance Organization (HIO)
HIO administers a fragmented set of social health insurance programs, established under different laws, covering different population groups with separate rules for payment of premiums and management of benefits. Benefits packages are broad and generous and include inpatient care, plastic surgery, and treatment abroad while copayment rates are low. The last major expansion of health insurance in Egypt was the introduction of the School Health Insurance Program in the mid-1990s. The HIO continues to have gaps between revenues and expenditures, for several reasons: 1) a fragmented set of social health insurance programs, leading to inefficiencies; 2) broad and generous benefits packages, and 3) employers are able to opt out, and beneficiaries in low-income regions bear a larger cost burden than those in high-income regions. The rate of being uninsured is higher for females, those living in rural areas and those in the lowest income quintile. The lowest income population is less likely to use HIO facilities as they are less likely to be insured.
The Medical Supply Department at HIO is complimentary to Procurement Committee at MOHP. Not all drugs requested by HIO are covered by the Procurement Committee at MOHP, so the Medical Supply Department at HIO covers the rest of drugs in another Tender drug list. By 2013, there will be one Tender drug list for MOHP & HIO. The Medical Supply Department at HIO runs its system following the Procurement Committee regulation at CAPA.
National Organization for Drug Control and Research (NODCAR)
NODCAR is part of the MOHP and the empowered National Quality Control Authority for marketed locally manufactured and imported pharmaceutical products, in addition to medical devices, cosmetics, insecticides, raw materials, medicinal plants and products from natural origin. It analyzes the samples of new products under registration and products that need reevaluation, to ensure safety and efficacy, by testing the quality of active constituents & formulation strength (Quantitative assessment) & Microbiological Assay. No clinical trials or post marketing studies are conducted at NODCAR.
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The MOHP is the final decision maker for pharmaceutical and health technology reimbursement in the public sector through its approved drug tender lists. CAPA, part of the MOHP, is the final decision maker for market authorization, and pricing; and is responsible for post market surveillance and price regulation. The marketing authorization is granted by CAPA within 12 months from the day of application submission. Pricing decisions are based on international pricing considerations in compliance with the pharmaceutical Egyptian price regulations.
The MOHP makes the final decision on reimbursement, based on the Procurement Technical Committee recommendation for the public sector. Other ministries are parallel final reimbursement decision makers for the health care services they provide. The Procurement Committees in the MOHP, or other ministries, are the initial reimbursement decision makers. Not all the new products, which undergo authorization by CAPA, are reimbursed by MOHP or listed in the Tender drug list. The Procurement Technical Committee reviews all MOHP hospitals and primary care units’ needs of medications and applications submitted by drug manufacturers, then decides whether this medication is to be listed or not, according to pharmacokinetics, pharmacodynamics, safety and efficacy.
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REIMBURSEMENT AND PRICING APPROVAL PROCESS
Pricing approval process
CAPA is the final pricing decision maker of first price. Currently, there are 2 prices for each drug. The first price is the mandated public government price and the second price is the tender price for every market authorized drug included in the Tender Drug List (mentioned later). Drug manufacturers just recommend prices for new medicines then the pricing committee evaluates this price to be approved or not, according to the Cost-Plus Model; which deals with cost of raw materials, industrial expenses, distribution expenses, company and pharmacy profits, then the pricing committee sets the approved price. CAPA reevaluates pricing of drugs (first price i.e. public price) every three years. It also re-evaluates pricing of drugs upon request of the drug manufacturers in the case of changed costs. In addition, reevaluation also takes place in case of new indications or changed exchange rate by 15%. Pharmacoeconomic study for high technology products may be provided upon request. Upon pricing of the referenced product (Brand or innovator), there should be a 10% deductible from the lowest price referenced country. There is an annual price reduction by 2 % once the first generic is approved.
In case of pricing of Generic products, it should be lower than the referenced product by the following percentages:
- 30% for products manufactured locally and certified by FDA, EMA, MHLW and TGA or manufactured from Egyptian manufactory accredited by World Health Organization (WHO) or being member in International Conference Harmonization (ICH).
- 40% for products manufactured only by a manufactory licensed by CAPA.
- 60% for products manufactured in another manufactory (Toll) i.e. don’t have their own manufactory.
This price includes a profit margin of importers, wholesalers and pharmacists. The price of the product can be changed upon appearance of other lower prices of the same product in any country.
This reimbursement process is specified for the main public entity, which is the MOHP (and HIO) while the other Ministries and other public sector entities follow the MOHP regulation, but independently. Each public entity owns and operates a large network of hospitals and outpatient facilities. Also, the private sectors have their own set of regulations and negotiations.
The Procurement Department publishes the Tender drug list approved for reimbursement on all MOHP facilities where each hospital or primary care unit has a plausible budget to purchase their needs from drug manufacturers or wholesalers according to price specified in the Tender drug list (no negotiation on price). All Procurement Committees in other ministries work by the same system as the MOHP.
The Tender drug list is a list of approved medications for reimbursement based on the request by all MOHP hospitals and primary care units; it includes all essential drugs & biologicals needed to be covered for patients. (Not all market authorized drugs are reimbursed by MOHP; only drugs in the Tender drug list are reimbursed). There are 3 Tender drug lists, the first is the main list and the second is the “add-ons” (when all MOHP hospitals and primary care units’ needs are not covered by the main or first Tender drug list). One of the main reasons is that many companies fail to submit their applications in the first list due to commercial situation or to get a higher price.
The Procurement Department calls for the average number of medications needs of each active ingredient consumed by all MOHP hospitals and primary care units per year, then collects average amounts of medications needed to be covered to form a new tender list. Then the Procurement Department informs drug manufacturers or wholesalers about the total amounts of medications needed to be covered in a Tender drug list, to which the drug manufacturers or wholesalers submit bids. Once drug manufacturers or wholesalers submit applications (bids), the Procurement Technical Committee meets and decides whether this medication is to be listed, or not, according to technical issues. Then the applications go to the committee for financial offers at the MOHP to review the financial issues and decide which drug manufacturer or wholesaler, that presented the lowest price for each active ingredient (medication), is to get reimbursement. Drug manufacturers or wholesalers who submitted identical price levels for the same active ingredient are given reimbursement by an equal process.
The committee for financial offers at the MOHP reviews the financial issues, to ensure the offered price by companies is lower than the mandatory public price and doesn't exceed an estimated value (estimated value not regulated by any law) calculated by the Procurement Department for each medication. Then the committee for financial offers selects the lowest price for each active ingredient (medication) to be reimbursed (i.e. MOHP reimburse this price of drug). Reimbursement decisions are based on acceptable technical offers and the lowest price provided by the drug manufacturers or wholesalers. Once it is approved it goes to the reimbursed list (Tender drug list) for 2 years. This reimbursement process includes all the locally manufactured and imported drugs only for the MOHP & HIO facilities.
In case of a projected negative reimbursement decision, the Procurement Technical Committee informs the applicant about the designated negative decision. The applicant may then apply for reevaluation before the official reimbursement decision has been issued by the Procurement Technical Committee. Arguments for reevaluation could be e.g. price adjustments at the final stage or additional data.
To be listed in the Tender drug list, the drug must be effective, safe and cost-effective. The time frame to get reimbursement depends on the meeting schedule of the Procurement Technical Committee. Normally it takes 8 months from the reimbursement dossier application to the official reimbursement status. After final decision on reimbursement, every batch from each product must be tested at NODCAR or NORCB to ensure its quality.
Not all of the drugs of HIO are covered by the Procurement Committee at MOHP, so the Medical Supply Department at HIO covers the rest of drugs through an additional Tender drug list (third tender list). The Procurement Committee, related to the Medical Supply Department at HIO, is complimentary to the Procurement Committee at MOHP. These drugs are differed each year according to HIO local needs. The first and second lists Drug Tender List are used by MOHP facilities, while the third list is used by HIO facilities. By 2013, there will be one Tender drug list for MOHP & HIO.
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Data requirements for Pricing to all Egyptian facilities
(Mandatory public price):
- Preliminary market authorization by CAPA.
- Cost study for the product (list of all costs).
- Statement of product composition ingredients.
- Importing price (in case of imported drug only).
- Original product pack & pamphlet (in case of imported drug only).
- List of imported product prices in countries where it is being traded in, or origin country; (public price) including distribution margin to be shared between wholesaler & pharmacy, and VAT.
- Certificate of pharmaceutical product traded in origin country (in case of imported drug only).
- Copy of manufacturing contract (in case of domestic product only).
Data requirements for reimbursement of MOHP & HIO three Tender drug lists
- Final market authorization by CAPA.
- Final pricing certificate by pricing committee.
- Quality and appropriateness certificate by NODCAR or NORCB before and after final decision.
- Certificate of pharmaceutical product traded in the Egyptian market.
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Egyptian Cabinet of Ministers مجلس الوزراء
MOHP: Ministry of Health & Populationوزارة الصحة والسكان
HIO: Health Insurance Organizationالهيئة العامة للتأمين الصحى
PTES: Program for Treatment at the Expense of the State العلاج على نفقة الدولة
CAPA: Central Administration For Pharmaceutical Affairsالادارة المركزية للشئون الصيدلية
NODCAR: National Organization for Drug Control and Research الهيئة القومية للرقابة و البحوث الدوائية
NORCB: National Organization For research & Control of Biological الهيئة القومية للبحوث و الرقابة على المستحضرات الحيوية
EDA: Egyptian Drug Authority
FDA: Food & Drug Administration.
EMA: European Medicines Agency
MHLW: Ministry of Health, Labor and Welfare
TGA: Therapeutic Goods Administration
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World Health Organization (WHO) Pharmaceutical Sector Egypt Profile SURVEY 2011. World Health Organization Regional Office. (not published yet)
Egypt’s Central Agency for Public Mobilization and Statistics (CAPMAS) in collaboration with Egypt’s Ministry of Health and Population. Household Health Care Utilization and Expenditure Survey, 2010. USAID. 2010.
AUTHORS & CONTRIBUTORS
Author: Gihan Elsisi, BSPharm, MSc, Team leader of Hospital Pharmacy Administration, Central Administration for Pharmaceutical Affairs
Mahmoud Diaa, PharmD, Manager of Hospital Pharmacy Administration, Central Administration for Pharmaceutical Affairs
Randa Eldessouki MBBCH, MSc, MD, Director, ISPOR Scientific & Health Policy Initiatives, ISPOR
Maria Swift, Assistant Manager, ISPOR Scientific & Health Policy Initiatives, ISPOR
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