How pharma companies skirted regulations to make ‘Limitless’ profit

Since he was young, Ibrahim Mohamed, 37, has worked as a plumber. He lives in an old house close to the Marg metro station with his wife and two children. His daily wage ranges between LE150 and LE200, half of which goes to his wife to manage the house and the other half  for his personal expenses and his children’s school and private lessons, which come in at about LE1200 a month. Despite the difficulty, they were managing to make ends meet. But everything changed in March 2021, when, while on the job, Ibrahim fell from the third floor onto concrete and broke his spine.

Ibrahim had to have spinal stabilization surgery. While the surgery was a success, months later, he felt an intense pain in his foot. His friends and neighbors advised him to visit a prominent neurologist in Madinet Nasr. 

“I followed their advice and I went, especially because I’d been to several doctors in popular neighborhoods close to us, and, while the appointment was cheap, I didn’t get better. They told me this doctor is one of the best neurologists. They said he was a little expensive – LE400 – but that he would diagnose me right away,” Ibrahim says.

He went to the doctor and waited for his turn in the clinic. The waiting time stretched on to nearly an hour, as pharmaceutical company sales people went in and out. Finally, he heard his name called. Ibrahim entered a medium sized room with a desk in the middle, where a doctor in his fifties was sitting.

Ibrahim explained his case, and at the end of the appointment, the doctor wrote him a prescription for three medications. The first two were to be taken for two months, while the third– Milga Limitless — was to be taken for longer. The doctor informed him that “nerves take a long time to heal” and that “the last one would be taken for a long time, until you feel better. It helps to revitalize the nerves.”

Ibrahim left with the prescription and went to the nearest pharmacy. The first medicine on the doctor’s list cost LE100. Simple. The last one, Milga Limitless, which was to be used for a long time, cost about LE180 at the time. Ibrahim paid without comment, but he left shocked at the price of the medication. “The first thing I thought of was how I would continue to pay for them. Maybe this month, I would be able to, but, in the coming months, what would I do?” he says..

Ibrahim had to sell several of his work tools for him and his family to get by. “I wasn’t able to work as I used to. The last prescription cost LE180, and I needed around two boxes of it every month,” he says. What he didn’t know is that the same medication existed with the same active ingredient and is made by the same company –almost under the same name, too — Milga — but for a cost of no more than LE70.

What happened to Ibrahim has happened to millions of other patients in a practice that has become pervasive in the Egyptian pharmaceutical market. Milga and Milga Limitless are two nearly identical drugs sold in the Egyptian market at different prices. The first is licensed by the Egyptian Drug Authority (EDA), and is regulated by a specific pricing mechanism. The second is licensed by the National Food Safety Authority (NFSA) and can be sold as a food supplement. Both versions have the same active ingredient, but the second is not regulated by a pricing mechanism (and can therefore be sold at much higher prices than the first version) or licensing protocols.

A host of drug manufacturing companies have rushed to take advantage of the discrepancy between the EDA and the NFSA’s regulatory jurisdictions in order to escape the EDA’s authority and pricing mechanism. Hundreds of medications have been registered as food supplements, skirting pricing and safety regulations. The result is that billions of pounds have been made by pharmaceutical companies in just the past few years.

Mada Masr compiled a database and spoke to state officials and industry insiders – some of whom chose to remain anonymous – during the past few months to explain the dimensions of the crisis created by these ongoing practices.

A few years ago, regulatory responsibility over medicines in the Egyptian market was shared by three bodies. The first was the Egyptian Drug Regulation Authority, which was in charge of overseeing raw pharmaceutical materials, cosmetics, disinfectants, medicinal food items, pharmacy inspections and the registration of medications. The second was the National Organization for Research and Control of Biologicals, which was responsible for the quality control of biological substances (medications made from biological sources), as well as creating references and scientific pamphlets for the safe use of these substances and training staff in their oversight. The third was the Central Administration For Pharmaceutical Affairs, whose job was to inspect medicine storage facilitates.

However, in 2019, the EDA was founded to replace all of these entities. According to its founding law, the EDA took on the tasks of regulating and overseeing the production and distribution of all medical materials and supplies as well as compulsory medicine pricing.

Pharmaceutical drugs sold in Egypt are subject to a fixed pricing mechanism, which came into effect amid a drug pricing crisis following the 2016 liberalization of the exchange rate. Once the EDA came into existence, it was tasked with managing the mechanism. The pricing mechanism makes a distinction between two kinds of medications: the original drug and the generic alternatives. The original drug is the one containing a new active ingredient or method. The generic alternative is the one that is identical to the original in terms of effectiveness but is cheaper.

The price is set according to the lowest price available to the public based on a list of 36 countries where the medicine is available. The generic price is set at 60 to 65 percent of the original’s price.

Each party in the manufacturing and sale of a drug is entitled to a portion of the proceeds, per the pricing mechanism: pharmacies get 25 percent, distribution companies get 8.8 percent, and the rest goes to the pharmaceutical company. 

The EDA depends on several factors for its pricing. For example, the EDA looks into the raw material being used and whether there are cheaper medicines that use the same active ingredient. It can pose queries to companies and demand information regarding the price or location of import of the  i raw materials. This applies whether the company imports the medicine readymade or just the raw materials. Companies provide receipts for their purchases and for operational and marketing costs. The EDA takes into consideration whether the company was the first to import the raw material or synthesize the active ingredient, or if other companies preceded it. The company may also petition the EDA for a price increase.

The mechanism to petition for a price increase is the cause of constant disagreement between the EDA and pharmaceutical companies, with one owner of a pharmaceutical company and a pharmacy describing it as the “big fight” across the industry. In the last few years, after multiple devaluations of the pound and rising inflation, this “big fight” has become more complicated as companies have flooded the EDA with price increase requests. 

Despite the EDA conceding to these demands several times in the past few years, the increases have not been enough for  companies.

Thus, companies began resorting to another way to raise prices without having to deal with the EDA and its regulations. This route was through the NFSA.

The loophole was simple. In order to skirt the EDA, companies began registering a number of their drugs as “food supplements,” which must be written on their packaging, according to NFSA guidelines. The NFSA, which was founded in 2017, is responsible for putting forth regulations for food safety and issuing licenses and overseeing food products. Some of these products include what’s known as “specialty foods, which include foods that are prepared or put together to fulfill special dietary or medical needs, according to the language used in the NFSA’s founding law.

One of the biggest companies to take this route was EVA Pharma. The company released a new line of pharmaceutical products under the brand name Limitless. Many of the products in line are copies of other medications the company already produces. The only difference is that these medications are licensed from the EDA and sold as medications whereas the Limitless products are licensed by the NFSA and are sold as food supplements that are priced at multiple magnitudes higher than the original medication’s price.

One of these medications, Milga, contains three types of vitamins: B1, B6, and B12. Milga is usually used to treat nerves and is sold on the market for LE68. The same Milga exists in the Limitless line with the same three vitamins (in higher concentrations) with added magnesium and an ingredient called Coenzyme Q. This substance is often used as a food supplement but is not licensed by the American Food and Drug Association (FDA) and therefore cannot be used in medicinal formulas. Milga Limitless is now being sold on the market as a food supplement for LE195, which is nearly three times the price of the original.

According to a database prepared by Mada Masr, EVA Pharma has at least 20 products registered at the NFSA, all of which have much cheaper alternatives registered at the EDA, eight of which EVA itself produces. For example, Limitless Prenatal is sold for LE145, while its alternative at the EDA costs only LE5.  EVA produces both Carnivita Forte, which is licensed by the EDA, and Carnivita Advance, which is licensed by the NFSA. The same goes for Genuphil and Genuphil Advance, Ossofortin and Ossofortin Limitless, and so on.

But this practice is not exclusive to EVA Pharma. Dozens of companies have registered  approximately 5,600 food supplements at the NFSA, according to data from the Chamber of Food Industries at the Federation of Egyptian Industries. Hundreds of those supplements are used for medicinal purposes and are not subject to any oversight from the EDA, all of the sources Mada Masr spoke to for this story agree.

Mohsen Hedaya, who was previously the head of the faculty of clinical pharmacy at Tanta University and an assistant lecturer at the pharmacy school of Washington State University, explains the costs and profits of these products. For example, the price of producing Milga’s active ingredient could not, in real terms, exceed 20 percent of the medicine’s price, according to Hedaya. “The lowest profit the company can make from Milga is 25 percent per box,” he says.

This means that the company already makes huge profits from the original medication that is sold for no more than LE70. The cost of producing Milga and Milga Limitless is the same. But the Limitless version — selling for LE195 — makes for enormous profits. “The idea that there is an increase in some ingredients or their concentrations is just price manipulation,” Hedaya says. 

But this “manipulation” of the pricing mechanism is not the only reason that has pushed companies toward the NFSA registration route. Another reason is the ease and low cost of registration procedures for products when compared to the EDA. Usually, it could take several years in order to register a product with the EDA and receive a license, whereas, at the NFSA, it might only take a couple of months.

This disparity is logical. The job of the EDA, theoretically at least, is to make sure medicine is safe and to understand its side effects, look into alternatives, agree on its price point and supervise their production lines, among other things. But the work of the NFSA does not require all of this complication, making the registration period six months to a year on average, as opposed to several years, according to a source in the General Chapter of Medicines, Cosmetic Preparations, and Food Supplements department at the Federation of Egyptian Chambers of Commerce.

Even this period can be down considerably if the company has strong ties inside the NFSA and can influence officials. According to all sources Mada Masr spoke to for this story, some companies, especially the larger ones, depend on these “relationships” to get their registration through. “Here there is corruption, and there is the money and manipulation between employees and the person responsible for registering medicine in the NFSA,” says the chambers of commerce source.

Companies have resorted to poaching employees from the NFSA. These employees take an indefinite leave and then they take up consultancy jobs at pharmaceutical companies with salaries  as high as millions of Egyptian pounds per year for facilitating the registration of food supplements. The manager of a major pharmaceutical company who was a manager for pharmacy warehouses at the Health Ministry says, “the job of consultants or employees, who are on leave from the EDA or the NFSA, at big pharmaceutical companies is to coordinate with their inspector colleagues at these bodies to facilitate registration without scrutiny.”

Mohsen Hedaya gives clarity to the power and influence of officials in charge of registering and licensing medications and their work as consultants for pharmaceutical companies. As far as their work at the EDA or the NFSA goes, “they are the ones who report [...] that the market is in need of a specific medication, and that the sick will benefit,” says Hedaya. And as for the companies, the job of their consultants is to finish the procedures needed by different regulatory bodies. For him, this is a conflict of interest. “Laws abroad forbid that any official in charge of licensing or registering a medication receive any fee from the companies,” he says, implying that the absence of such laws in Egypt has created this loophole allowing for this type of malpractice.

In addition to this, consultants have another important responsibility, which is to limit big companies’ market competitors. If another company had a high-selling product that would compete with one of the bigger companies’ products, the consultants would begin to influence their colleagues at the EDA to stop the other product and have it pulled from the market. “If a company is selling a medication for LE4 bn annually, they won’t allow a small company to take LE1 billion out of that,” says the head of a private pharmacy chain.

All sources Mada Masr spoke to indicate this practice is common in the medicine market, including in the food supplement market that is regulated by the NFSA.

The relationship of these big companies to the NFSA does not stop at a few employees. The booming food supplement market covers the operational budget of the entire NFSA, according to employees in different sectors of the medication market.

Hussein Mansour, the first and former head of the NFSA does not deny this. He says he took over the NFSA with no employees or headquarters but handed it back with 1,750 employees and 92 branches. According to Mansour, “the state paid nothing” for all of this. “All the expenses, the rent, the buying, the labs, all of that” came from the registration of food supplements. But he emphasizes there was no bribery or manipulation on the part of registering companies and that it was never done illegally.

Despite Mansour’s insistence, all sources who spoke to Mada Masr confirmed several instances of “bribery” and “manipulation” by some of these companies. A member of Merva Pharm’s board, for example, says that the NFSA set a limit of five products that can be registered by each company, with further registration of another five products being possible  only once the first batch is processed. However, EVA did not face this restriction. “They received a license for 300 products as fast as possible,” says the source. “EVA was releasing a new medication almost every week [under the umbrella of] Limitless, with the specifications it wanted in terms of packaging, ingredients and price.”

Mansour denies the registration of 300 products by EVA. But he goes on to say “if we assume the authority registered 300 products, that the company registered 300 products, is one of these registrations a mistake or not? That’s the question.”

In any case, regardless of the registration process, licenses are only the first step. After that, companies start to prepare their new products: new packages with the same medications, but under the banner of “food supplement” and with a license from the NFSA. These products are put on the market, but that doesn’t mean they are ready to make a profit yet. Because of the exceptional nature of the pharmaceutical market in Egypt, it still needs a push that relies on one person only: the doctor.

In December 2021, the Egyptian Orthopedic Association (EOA) held a conference that promoted the launch of Limitless Allzyme Max, the newest EVA product at the time. On a stage flanked by some of the biggest names in orthopedic surgery in Egypt, Adel al-Adwy, the former health minister and an orthopedic surgeon and professor, spoke about the importance of the new product, describing it as a “pharmaceutical medication” and stressed the quality of EVA’s products.

Behind him, there was a big poster with the new product’s name and the Limitless logo. On the far right was the logo of the EOOA. The whole scene gave the impression of significant support from the association and its biggest doctors for EVA’s new product. What Adwy and other doctors failed to mention is that the company is one of the main sponsors of the conference and that it covered some of its main expenses.

There are several notes on this new “medication.” The first remark is that it is not a medication, but a food supplement which has received its license from the NFSA and not the EDA. Therefore, it cannot be described as a medication.

The second remark is that the active ingredients in this product, Trypsin and Chymotrypsin, are the same found in different kinds of anti-inflammatory medications such as Alphintern. The difference is that EVA’s new product contains a substance called Bromelain. This substance is not FDA approved and therefore cannot be used to make medication. Despite being marketed as a food supplement, it has not been scientifically proven to have any benefit. There is also another key difference: This new product is sold at LE89 while Alphintern is sold for only LE50.

More importantly, EVA did not have to go through the EDA to register their product. Amina al-Hindawi, a pharmacy inspector at the Health Ministry and pharmacovigilance trainer who specializes in analyzing data regarding potential side effects of medications, gives an example where this has an impact. The active ingredient Trypsin, which is used in anti inflammatory medications, is a naturally occuring animal enzyme and has several functions, the most important being the digestion of protein. This ingredient is extracted from cows to be used in pharmaceutical applications, and therefore “there must be a certificate to prove it is not connected to mad cow disease.” This test is overseen by the EDA, but the NFSA does not require it to issue the same certification. Hindawi adds that the biggest companies applied “heavy pressure” to have the product registered at the NFSA, arguing that it would only be recommended for protein digestion. However, “most orthopedic doctors used it as an anti-inflammatory,” she says. “I don’t know who these people are kidding.”

Neither Adwy nor the other big names at the conference revealed any of this information when they praised EVA’s new product. This seems to be a clear conflict of interest, but in reality it is a microcosm of one of the most salient features of the medical profession in Egypt: doctors, especially prominent ones, do whatever they want, and pharmaceutical companies rely on this to make billions of pounds in profits.

Unlike most countries around the world, doctors in Egypt prescribe the brand name of medication to their patients instead of a generic one that uses the same active ingredient, which could be sold by multiple brands. This means that the doctor chooses a pharmaceutical company specifically and not just any medication with the same active ingredient.

This gives doctors enormous market power. All companies seek to convince doctors to prescribe their brand of medication and not another. This depends on a network of salespeople that is active across the country and massive promotional budgets which are all aimed at convincing the largest number of doctors to prescribe certain brands of medications.

This “convincing” is not limited to scientific arguments regarding the merits of this medication versus another. Instead, it depends on a number of incentives companies offer to doctors. These can start with facilitating a doctor’s participation in scientific conferences domestically and internationally, and can sometimes go so far as to see the company offer direct payments in exchange for writing prescriptions for their drugs.

These incentives differ depending on the doctor’s standing. Incentives for the bigger doctors, often university professors, who see the most patients and have the ability to influence other doctors, are very different from incentives for a young doctor at a rural clinic, for example.

Ahmed Sayid, a former salesperson at EVA Pharma, explains the details of these incentives. The big companies categorize doctors into four categories: A+, A, B, and C.

The A+ category includes university professors and section heads at big universities. They see a large number of patients and have many younger doctors who are their apprentices that often follow the same prescribing methodology. Companies make financial deals with this group, valued according to the importance of the doctor, explains Usama Heneidy, a former executive consultant at EVA.

The A category are the second biggest doctors. These doctors “see about 50 patients a day and write 30 prescriptions a day, which include company products.” The incentives given to this group include attending international scientific conferences, sometimes with their families included, all paid for by the companies.

Category B doctors write fewer prescriptions and the companies facilitate their attendance at local conferences. Category C includes the smallest doctors. The company will facilitate their attendance at conferences held by the more prominent doctors in Cairo and perhaps some restaurant meals.

Salespeople follow up on doctors’ prescriptions through pharmacies to make sure they are prescribing their products. If the doctor reneges on prescribing the product (if they start prescribing a competitor’s product for example), one of the managers from a more senior level will intervene to try to convince the doctor to keep prescribing the product and offer more incentives. Uncooperative doctors are excluded completely from all of this. And, thus, their mere attendance at scientific conferences becomes an expensive endeavor.

This is a common practice in the medication market in Egypt. After the Limitless products were put on the market, EVA relied on a new network of salespeople across Egypt with a sizable budget, independent of its existing network, according to a former salesperson at the company who spoke to Mada Masr on condition of anonymity. “After the first group of Limitless products hit the market, we gave it priority in marketing,” he says. “If the company had two products and one was registered at EDA and the other at the NFSA, we were told to prioritize the one registered at the NFSA.”

The company’s plan succeeded, as Limitless products were a huge success. In one year, between May 2022 and April 2023, these products alone made the company LE866.7 billion, according to sources used by the Souq al-Dawaa platform. In the first four months of this year alone, the products achieved a growth of almost 145 percent compared to last year. Limitless became one of the fastest growing products on the market during the first five months of this year.

Mada Masr reached out to Andrew Raafat, the head of public relations at EVA Pharma, for comment but he said that the company refused to comment.

These practices have led to chaos. Food supplement products have filled the market and original versions have disappeared. Even doctors who refused to participate initially out of principle have begun doing so due to the absence of other versions from shelves.

This mess has caused a battle between the EDA and the NFSA. The EDA believes that food supplements are a form of medication that should be subject to more rigorous oversight and a clearer pricing mechanism,while the NFSA insists that these supplements are food items which are under its jurisdiction.

The dispute necessitated the involvement of state institutions last year. In May 2022, the Senate Health Committee held a session to discuss the issue. The session was attended by Tamer Essam, the head of the EDA, Hussein Mansour, then head of the NFSA, Sahar Farag, the head of the pharmacy department at the Health Ministry, and members of the committee itself.

Mohamed al-Sheikh, a Senator and the head of the Pharmacists Syndicate, was also present at the session. He says they discussed the large number of medications registered by companies with the NFSA, and which we had “considerable concern over.” They discussed, for example, Limitless Allzyme, which is sold at a much higher price than Alphintern, an EDA-registered medication, as well as Prostanorm, which has become Limitless Prostanorm, and Milga and Milga Limitless, among others. According to Sheikh, 3,000 medications were registered at the NFSA which should be investigated by the EDA.

Sheikh says they sent a memo with the talking points of the session to the Cabinet but no productive outcomes have come of it.

The problem escalated as the  dollar crisis continued and import restrictions were imposed by the government throughout the last year. This, coupled with unprecedented inflation rates, caused companies to demand amendments to the medication pricing mechanisms. According to Sheikh, companies no longer accept the current mechanism and are demanding to set their own prices without EDA oversight.

The power dispute raged on. Last September, it led to the EDA issuing a decision regarding "supplemental medicinal formulas" and how they must be exclusively registered with the EDA. The decision set a six month limit for companies who had previously registered their products "at any other government entity" to ensure they received a license from the EDA.

 

The other government entity  being referred to here is the NFSA, which in turn stressed that it was responsible for licensing and registering food supplements according to its founding law and executive regulations.

According to a source from the NFSA, this ongoing battle led to the removal of Mansour from his position as head of the NFSA in October. 

But this did not help solve the crisis, which continued due to the uncertainty surrounding the legislation regulating the registration process of medications and food supplements. Given that the law allows the NFSA to license “specialty foods,” all food supplements were moved to the NFSA without regulating allowed dosages of herbal substances and without specific rules in the law regarding the registration process. According to a number of employees in in the pharmaceutical industry who are members of the Veterinarians Syndicate and who work closely with the NFSA, this lack of clarity allowed the NFSA to ignore its primary job, which is the oversight of food items, and to take over the functions of other regulatory bodies such as the Veterinary Quarantine Authority and the General Organization For Export & Import Control.

The owner of a pharmacy chain and a medication company points out that this ambiguity is what led to this battle between the two entities, in addition to the role of the companies. “We are talking about a business which can take in billions,” says the source.

Therefore, none of the different steps or decisions were able to provide a solution to this protracted battle. At the end of last year, a five-year, neutral, scientific committee was formed by the prime minister made up of Egyptian university professors in an effort to end the dispute. The Administrative Control Authority would choose the committee head, and both the NFSA and the EDA would pick a member each to represent them.

According to the decision, the committee is tasked with making a list of food supplements and determining whether it falls under the jurisdiction of the NFSA or EDA. The committee would meet once a week.

An informed source at the EDA, who chose to remain anonymous, explains that the decision means tasking this committee with looking into license applications to determine which of the two the NFSA is responsible for, according to the active ingredients and percentages. But, according to the source, the NFSA did not commit to attending the meetings and continued to issue food supplement licenses.

Negotiations between both entities continued over the course of sessions and meetings with no solution in sight. Mohamed al-Bahy, a consultant to the Federation of Egyptian Industries’ pharmaceutical division, says they were able to reach an agreement in one of these sessions, which were held during a communal iftar during Ramadan.

However, according to the former official at the Pharmacists Syndicate, all talks hit a wall. He says that the crisis will not be resolved as long as the reasons that led to it are still operative. These reasons, the official says, can be summed up as the lack of clarity surrounding the jurisdiction of each government agency. The official believes the crisis will not be solved unless both of these entities are merged into one, as is the case in several other countries.

As the crisis continues, pharmaceutical companies make billions from the dispute, and Ibrahim struggles to reduce his and his family’s expenses to afford the expensive medication he needs.