Piled-up debts, missing medicines: Sisi cuts back powers of Unified Procurement Authority

On September 10, President Abdel Fattah al-Sisi ordered an overhaul of the state’s system for procuring medicines and medical supplies.

Contracts will now be structured as three-party agreements between the Unified Procurement Authority (UPA), hospitals and private suppliers, replacing the previous model in which the UPA bought from companies and then distributed supplies to hospitals, according to two sources, one at the Health Ministry and the other in the UPA.

Under the new system, the UPA’s role will be limited to oversight and monitoring implementation. It will no longer act as a direct financial party in procurement or payment.

The directive comes amid a severe shortage of critical medicines that has affected hospitals affiliated with the General Authority for Health Insurance since August, according to Mada Masr’s monitoring.

Three pharmaceutical company owners agreed that the UPA was primarily to blame for the crisis, after several firms suspended deliveries due to the authority’s mounting unpaid dues.

Growing patient waiting lists for drugs and supplies in hospitals prompted Sisi to meet with Health Minister Khaled Abdel Ghaffar on September 10, head of the Right to Medicine Center Mahmoud Fouad told Mada Masr. The presidential directive to amend the UPA’s contracting mechanisms came soon after.

According to Fouad, the change effectively ends the UPA’s executive role, while hospitals will again take responsibility for placing orders and paying bills.

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Under its establishment law, issued in 2019, the Unified Procurement Authority was granted exclusive control over purchasing all medicines and medical supplies for government facilities, charging a fee of up to seven percent of the net purchase value. Hospitals were barred from signing direct contracts, except in urgent cases and with approval from the UPA’s board and the Cabinet.

The authority was originally created to lower prices by pooling demand across facilities, instead of each hospital negotiating separately, the Health Ministry source told Mada Masr. A second goal, they said, was to standardize medical specifications to ensure that patients everywhere received supplies of the same quality, rather than depending on the integrity or competence of whoever drafts each tender.

“But what ended up happening,” the source explained, “is that some UPA leaders became focused only on saving money. That was not the point of establishing the authority. The point was that a patient in a hospital in Manfalout, for instance, should be able to receive gauze of the same quality as someone being treated in the new administrative capital.”

Although the UPA was set up to cut costs and curb corruption in hospital tenders — given how difficult it is to monitor each procurement process individually — the absence of an independent oversight body and the lack of such provisions in the law raised concerns that commissions, once spread across hospitals, were instead being centralized, a researcher in the healthcare sector told Mada Masr on condition of anonymity.

Since its establishment, the UPA has monopolized the market in a "terrifying" way, an owner of a medical supplies company told Mada Masr. In the past, they said, the Health Ministry set essential drug lists, oversaw some central tenders for items, like vaccines and chronic disease treatments, and monitored procurement. Government hospitals — whether under the ministry, universities or the General Authority for Health Insurance — also issued tenders and allocated part of their budgets to cover their needs. But once the UPA became a compulsory intermediary in every transaction, the equation shifted: it emerged as the dominant party, reaping profits while falling behind on payments to pharmaceutical companies, which in turn struggled to sustain production or imports at previous levels.

“We were surprised to find after it was set up that the UPA was a profit-driven economic entity: it buys medical supplies and takes seven percent above the base price, profiting from both the Health Ministry and state hospitals,” Right to Medicine Center head Mahmoud Fouad said.

A pharmaceutical company owner asked, “What’s the point of creating an authority that draws on the Health Ministry’s budget and profits from it?”

Two other company owners noted that although the UPA is supposed to facilitate procurement using allocations it receives from the Finance Ministry, it does not transfer these funds directly to suppliers. Instead, they said, the allocations are “placed in bank deposits, to be released a year later for settlements with companies.”

All three owners agreed that some companies manage to get their dues only through inside connections and by paying commissions to officials within the UPA — and even then, payments often fall short. This complex payment process adds to another complication: hospital requests are not approved until they pass through a screening process against a list of certified suppliers, even if a physician requires a drug not included on that list.

Fouad said that major distributors such as United Pharma face mounting pressure from debts, while manufacturers increasingly struggle to market their products without relying on financially stronger intermediaries. He warned that these crises are putting Egypt’s drug distribution market at serious risk.

While pharmaceutical companies’ receivables from the UPA reached LE24 billion, according to Fouad, the Health Ministry source said that the authority’s total debts to pharmaceutical and medical supplies firms had recently exceeded LE40 billion.

Amid mounting accusations that the UPA was to blame for the crisis, Prime Minister Mostafa Madbuly stepped in, holding two meetings in November and December 2024 with major pharmaceutical companies owed money by the UPA, according to Fouad. At one meeting, the government promised to disburse LE10 billion, but the pledge went unfulfilled, deepening shortages and pushing some companies out of the market.

Due to the debt crisis, President Abdel Fattah al-Sisi declined in mid-January to renew the term of Bahaa Eddin Zidan, the first head he appointed to the UPA and whose mandate he had already extended beyond its initial four years. Zidan was replaced by his deputy Hesham Steit.

While the government was attempting to ease tensions with distributors, UPA was working in a different direction. One of the three company owners told Mada Masr that another meeting was held two months ago between the UPA and major distributors, including Ibn Sina Pharma, Pharma Overseas and United Pharma. The aim was to pressure these companies into convincing manufacturers to accept longer payment delays, the owner said. Distributors then contacted their partner factories to request deferrals on overdue receivables, but some refused, warning that further delays would threaten their existence, as they were already unable to cover production costs.

And the crisis persisted — leading to the latest decision to scale back the UPA’s role.

As for the current debt, the Health Ministry source said the Finance Ministry has begun paying off part of the arrears to ease the situation.

But the September 10 directive has raised new questions about who will ultimately shoulder the UPA’s accumulated debts. According to one company owner, discussions are underway on securing bank loans and credit facilities to pay off the outstanding dues. One proposal floated selling land owned by the Egyptian Pharmaceutical Trading Company, which was merged into the UPA in 2020.

The company owner said that, according to information shared with firms by the UPA, while the president’s directive has indeed been issued, implementation is unlikely before July 2026, when the new fiscal year begins and after existing debts are fully settled. Part of the delay, they said, is linked to the transfer of staff who previously handled these files at hospitals, a shift that risks administrative disarray that would require time to resolve.

The broader dysfunction is already clearly visible in the drug market for health insurance patients. Fouad said that, according to the Right to Medicine Center’s monitoring, hospitals affiliated with the General Authority for Health Insurance are facing acute shortages of  heart medications such as Aggrastat and its substitutes, Cardixin and Lanoxin, as well as the intravenous treatment Isoptin. The crisis also hit drugs for miscarriage management and uterine cleaning, such as Misotac and Misoprost, alongside gastrointestinal medicines, antibiotics and basic painkillers, including Septrin, Duphalac, Ultradol and Contramal, as well as eye drops including Cosopt and Artelac.

Ashraf, a driver from Luxor in his fifties who has been living with diabetes for five years, has spent the past three months trying in vain to obtain his insulin treatment, Glifaz 50/100, at a universal health insurance facility. Each visit to the family health unit in the town of Baghdadi ends the same way: he registers, receives an appointment for the end of the month and then is told the drug is unavailable at the insurance-affiliated pharmacy. Even substitutes with the same active ingredient are missing. “I’m sick, and I’m forced to wait months just for the chance to find medicine,” he said.

The UPA’s debt crisis has not only led to severe drug shortages, but it is also likely on its way to driving up out-of-pocket costs for patients.

Patients under the health insurance scheme are entitled to locally manufactured drugs and substitutes free of charge, but for imported medicines, they are expected to pay 35 percent of the market price. But as the UPA’s debts mounted, a decision was issued in July to raise patients’ contribution for insured imported drugs to 70 percent — a move the Health Ministry denied.

Fouad told Mada Masr at the time that the decision, which he said was only delayed, followed a mid-July meeting between the health minister and the heads of the Universal Health Insurance Authority and the General Authority for Health Insurance, where they discussed the UPA’s arrears to pharmaceutical firms.

The idea of establishing the UPA arose after state officials noticed that medical supplies companies were making massive profits from supplying government hospitals, even as health insurance hospitals faced chronic shortages because of budget constraints.

In 2017, the Armed Forces Medical Services Authority stepped in to address the problem by organizing a global tender in Berlin, inviting international companies to supply equipment and medical consumables in bulk. This replaced the process in which hospitals, government agencies and the Health Ministry each handled their own procurement. But once the military body began delivering supplies, it became clear the effort demanded resources and expertise beyond its capacity. In response, Sisi issued Law 151/2019, creating the UPA as a corporate entity under the prime minister’s authority.