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Studies

Egypt’s AUPP & EDA and Militarization of Drug Sector

Before the establishment of the Egyptian Authority for Unified Procurement, Medical Supply and Technology Management (AUPP) and the Egyptian Drug Authority (EDA) by Law No. 151 of 2019 which was issued on 25 August 2019 and entered into force six months after issuance, that is, on February 24, 2020, the entity concerned with the organizational, executive and technical management in all the institutions and bodies that took over the drug and pharmaceutical sector in Egypt had been the Ministry of Health and its affiliated bodies; being undisputed in domination of everything related to drugs, owning all its tools according to the founding and regulatory laws throughout its history.

However, since the issuance of Law 151 of 2019, the two new bodies have acquired most – if not all – of the powers, specializations, and tasks of the Ministry of Health, with regard to drugs and pharmaceutical oversight.

According to Law 151 of 2019, EDA replaced the National Organization for Drug Control and Research (NODCAR), established by Presidential Decree No. 382 of 1976; the National Organization for Research and Control of Biopharmaceuticals (NORCB), established by Presidential Decree No. 398 of 1995; and the Ministry of Health’s Central Administration of Pharmaceutical Affairs (CAPA) in relation to the registration and licensing or pharmaceutical products. EDA also replaced the Ministry of Health, and its chairman replaced the Minister of Health and Population with regard to all terms of reference stipulated in Law No. 127 of 1955 regarding practicing the pharmaceutical profession, and what concerns the registration, circulation and control of preparations and supplies subject to the provisions of this law.

This paper reviews Law 151 of 2019, according to which the Egyptian Authority for Unified Procurement, Medical Supply and Technology Management (AUPP) and the Egyptian Drug Authority (EDA) were established, the prominent terms of reference and powers, their legal status, and privileges. The paper also highlights how all the terms of reference to drug and pharmaceutical affairs were withdrawn from the Ministry of Health in favor of the two new bodies.

The paper attempts to assess the roles of the two bodies and show how they contradict the original role assigned to the Ministry of Health; as with the issuance of Law 151 of 2019 and the powers it granted to the two bodies, their large scale terms of reference and the broad scope of their functions, the matter seems closer to establishment of what the researcher suggests to call the ‘Ministry of Drugs and Pharmaceutical Institutions’ rather than establishment of just two bodies, given the fact that Law 151 of 2019 and the practices of the two bodies have actually withdrawn all terms of reference related to drugs and pharmaceuticals from the Ministry of Health in terms of regulation, oversight, and management.

The paper concludes that such measures come within the framework of General Abdel Fattah al-Sisi’s endeavor to tighten the grip of his regime, especially the armed forces, on the Egyptian drug market within the general control of formal and private economy and looting the capabilities of Egypt and its people.

It is noteworthy that the head of the Unified Procurement Authority is Major General Bahaa El Din Zeidan, the director of the Armed Forces’ Al-Galaa Medical Complex, and his deputy is Major General Tariq Abdel-Rahman, the assistant director of the Armed Forces’ Medical Services for Hospital Development. In addition, the armed forces are exempted from applying the mechanisms of the AUPP in contracting, as it has become a drug producer and investor, after the Prime Minister’s Decree No. 148 of 2017 authorized the National Authority for Military Production, affiliated to the Armed Forces, to establish a joint stock company for pharmaceutical products under the name of the ‘Egyptian National Company for Pharmaceutical Products’.

First: AUPP and EDA

The Egyptian Authority for Unified Procurement, Medical Supply and Technology Management (AUPP) and the Egyptian Drug Authority (EDA) were established in accordance with Law No. 151 of 2019 and its executive regulations were issued by Decree No. 777 of 2020, where the two bodies acquired most -if not all- of the powers, terms of reference and tasks of the Egyptian Ministry of Health, in terms of drug and pharmaceutical oversight.

According to the new law, EDA replaced the National Organization for Drug Control and Research (NODCAR), established by Presidential Decree No. 382 of 1976; the National Organization for Research and Control of Biopharmaceuticals (NORCB), established by Presidential Decree No. 398 of 1995; and the Ministry of Health’s Central Administration of Pharmaceutical Affairs (CAPA) in relation to the registration and licensing or pharmaceutical products.

EDA also replaced the Ministry of Health, and its chairman replaced the Minister of Health and Population with regard to all terms of reference stipulated in Law No. 127 of 1955 regarding practicing the pharmaceutical profession, and what concerns the registration, circulation and control of preparations and supplies subject to the provisions of this law.

A. Terms of reference

The most prominent terms of reference of the two bodies are as follows:

– The exclusive purchase competence: where AUPP controls all the procurement processes that were entered into by the state for the purchase of human medical preparations and supplies, and medical devices, so that the authority would be the exclusive body that provides everything related to this to all government agencies, bodies and companies, according to the provisions of Article 3 of Law No. 151 of 2019 which stipulates that: ‘The AUPP shall undertake, exclusively, all procurement processes for human medical preparations and supplies for all government agencies and bodies…’; and Article 10 stipulates that” ‘… It is not permissible for any of the administrative authorities to purchase medical preparations or supplies other than via the AUPP except in cases of necessity and after consulting the AUPP board of directors and the approval of the cabinet…’.

Article 1 of the Law clearly defines the key terms stated in the law, as for example, the “unified purchase” means: ‘all purchases and procurement of the needs of the state and government agencies or any other body approved by the AUPP board of directors of medical preparations and supplies subject to the provisions of this Law’, and that “government agencies” means: ‘The Ministry of Health and Population and its bodies and hospitals; the government-owned universities and their affiliated hospitals; all hospitals affiliated to ministries or various other bodies; government-owned educational institutions and research institutes’.

Reviewing the detailed terms of reference granted by Law 151 of 2019 and its executive regulations to the AUPP and EDA, we find that they have exceeded the terms of reference that had been granted to the Ministry of Health! This is not only within the limits of the terms of reference, but also with respect to their depth and breadth. On the other hand, the matter seems further than just a role assigned to an economic body (AUPP) or to a service body (EDA); as they can serve as a role assigned to a ministry.

With respect to planning, AUPP can prepare programs and set rules of the unified procurement both at home and abroad; prepare an annual budget for the unified procurement in collaboration with the Ministry of Finance and follow up on its execution; set specifications and standards for guiding the requesting entities as well as reviewing, evaluating and approving the purchase requests submitted by them; and set up inventory and collection systems for the needs of these entities, through coordination with the pharmaceutical and medical equipment companies, whether Egyptian or foreign, to enhance the strategic storage of products to face any unforeseen circumstances.

With respect to assessment, AUPP shall set the assessment systems of medical technology in accordance with international standards; and collect integrated data in medical centers, hospitals, and stores of all public health facilities to follow up on needs and maintenance.

The AUPP manages the transportation, distribution and storage system of the products and equipment and inspects the warehouses of the requesting entities affiliated with this law.

Also, AUPP conducts periodical inspection of the stock of the products and equipment at the requesting entities to ensure the consistency of those efforts with the state’s plans in this area!

The AUPP may also provide advisory and training services in accordance with the rules set by its board of directors.

– The pharmaceutical terms of reference: where EDA has acquired all technical and pharmaceutical affairs, as Article 15 of the law stipulated that: ‘The Egyptian Drug Authority shall solely assume the powers established for the Ministry of Health and Population and government bodies and authorities with regard to the regulation, registration, circulation and control of all pharmaceutical and cosmetic products and raw materials that enter into their manufacture wherever they are mentioned in relevant laws, regulations, and regulatory decisions in addition to the powers stipulated in this law’.

Article 13 of the executive regulations of the law stipulates that: ‘The Egyptian Drug Authority replaces the Ministry of Health and Population, and its board chairman replaces the Minister of Health and Population, in all the terms of reference stipulated in Law No. 127 of 1955 regarding the practice of the profession of pharmacy…’. Thus, EDA has dominated the entire mechanism of regulation, execution and control.

In the regulatory competence, EDA represents the state in the area of its competence at the international level; sets policies and plans guaranteeing the availability of pharmaceutical and cosmetic products and supplies; reviews regulatory systems and regulations; proposes amendments; sets safety controls and systems for examining medical supplies and supplies and their raw materials; sets import and export controls, registration, pricing, circulation, control and inspection of medical preparations and supplies; and it also has the right to prepare development and training programs for employees in the EDA’s area of competence.

As for the supervisory competence, the law grants it the right to inspect all types of pharmaceutical establishments and their employees, take all legal measures against violators, monitor compliance with specifications, and implement the regulations and systems related to the activity of manufacturing medical preparations.

The most dangerous jurisdiction of EDA is manifested in replacing the Ministry of Health in issuance of licenses for various types of pharmaceutical institutions; licenses to operate factories for medical preparations, supplies, and raw materials; and licenses to laboratories related to its work, as well as laying down the technical and health foundations and requirements for pharmaceutical institutions and their workers.

In addition, EDA technically examines all medical preparations and supplies, allow their circulation, conduct research and scientific studies, evaluate the results of clinical trials, monitor their likely adverse effects, and clear all imports after examinations and analyses.

After listing all these terms of competence granted to the two bodies (AUPP and EDA), it is evident that Law 151 of 2019 has prevented the Ministry of Health from exercising any administrative, executive, supervisory, technical or even monitory role within the limits of the task entrusted to the two bodies as a drug and pharmaceutical specialization, where the Ministry of Health has become merely a consumer or, at best, a promoter of the efforts and products of the two bodies.

B. Legal status

Article 2 of Law No. 151 of 2019 stipulates that the Egyptian Authority for Unified Procurement, Medical Supply and Technology Management (AUPP) is a public economic body that has a legal personality affiliated with the Prime Minister. Article 4 stipulates that: ‘The AUPP shall have a Board of Directors headed by a chairman appointed at the rank of Minister…’.

Article 5 stipulates that: ‘The Board of Directors is the dominant authority over the AUPP affairs, where he may take whatever it deems necessary to achieve its objectives…’.

As for the Egyptian Drug Authority (EDA), Article 14 stipulated that: A public service body under the name of the Egyptian Drug Authority shall be established and shall have a legal personality affiliated with the Prime Minister. Article 18 stipulated that: The Egyptian Drug Authority shall have a Board of Directors headed by a chairman appointed at the rank of Minister.

Article 19 stipulates: ‘The Board of Directors is the dominant authority over the AUPP affairs, where he may take whatever it deems necessary to achieve its objectives…’.

Again, the articles defining the legal status of the two bodies were devoid of any role for the ministry or the minister of health, but rather stated appointment of heads of the two bodies with the rank of minister, affiliated with the prime minister.

C. Privileges

Privileges of the Unified Procurement Authority

1. Fees and financial concessions

– Despite the fact that the Unified Procurement Authority is a government-established body and its monopoly status according to the law, it receives 7% of the net value of the purchases it undertakes, as service performance fee, from government agencies in return for carrying out its original mission, without adding customs duties, value added tax and other costs that are added to the value of the deal. However, the AUPP may reduce fees by half for compulsory vaccinations, where the authority receives 3.5%. In times of disasters and epidemics, the authority do not offer exemptions on fees of the purchases it performs unless a decree is issued by the Prime Minister in this regard, which actually happened during the COVID-19 pandemic (Prime Minister’s Decree No. 1093 of 2020, considering coronavirus as one of the epidemics referred to in the exemption clause decided in accordance with Article 2 of the executive regulations of the law).

– One of the privileges granted to the AUPP is that it collects purchase contracting fees in advance at a time when it is exempted from payment of primary and final insurances during purchase operations.

– The AUPP also receives all the financial appropriations allocated by the state in the general budget for the purchase and maintenance of medical preparations and supplies.

– It is also entitled to receive gifts, grants and donations in addition to owning the full proceeds of its investment.

– The Unified Procurement Authority replaces government agencies funded from the state’s general budget in execution of purchase and maintenance contracts of medical preparations and supplies concluded by those entities before the provisions of the law came into force.

2. Establishing companies

According to a decision made by its Board of Directors, the AUPP may establish joint-stock companies alone or with others, or share existing companies, which has already been done in the establishment of the Egyptian Company for Medical Investments, in addition to its seizure of the El-Gomhouria Company for Trading Pharmaceuticals, Chemicals and Medical Appliances and the Egyptian Company for Trade and Distribution of Drugs.

Privileges of the Egyptian Drug Authority

a. Assets and funds

– The possession of the special funds of the Drug Control and Research and the Drug Planning and Policy authorities were transferred to the AUPP.

– The AUPP received all the headquarters and assets of the authorities that it replaced, including the headquarters and assets of the Central Administration of Pharmaceutical Affairs (CAPA).

– The AUPP gets all the financial appropriations allocated by the state in this regard.

b. Services fees

– The Egyptian Authority for Unified Procurement, Medical Supply and Technology Management (AUPP) collects fees for the services it performs, where these fees are determined and updated by the authority’s board of directors.

– The AUPP collects all the prescribed fees for its activities according to a table attached to the law and its executive regulations, where fees range from one thousand to 250 thousand Egyptian pounds

– The funds of the two bodies (AUPP and EDA) are considered public funds, where they may take administrative seizure measures in order to restore. Also, the two bodies have independent budgets whose surpluses are distributed annually in agreement with the Minister of Finance.

D. Powers

Law 151 of 2019 grants the Unified Purchase Authority unlimited powers in controlling the Egyptian drug market; and besides the exclusivity of purchasing, it controls warehouse management, moving the stock and providing all distribution and maintenance services. It also has the privilege of electronically linking the stock of medical preparations and supplies all over the country to its own system through coordination with the Egyptian Drug Authority. Moreover, the AUPP has the right to facilitate the redistribution of products between various parties in cases of necessity, including those parties that paid the required prices and received the goods!

The AUPP also has supervisory competence to inform the Egyptian Competition Protection Authority (ECA) if it encounters a case of agreement among the purchasing authorities to raise or lower prices of commodities, share the market, or coordinate entry to tenders or auctions.

The law also granted the Egyptian Drug Authority the power to grant the judicial seizure status to its workers and to appoint necessary employees at customs ports to carry out drug clearance.

It also has the right to form various technical committees, as well as grievance committees against its decisions and deciding on them.

Second: Evaluating the role of the two bodies and the contradictions

With the issuance of Law 151 of 2019, the powers granted to the two bodies, their large scale terms of reference and the broad scope of their functions are closer to establishment of what the researcher suggests to call the ‘Ministry of Drugs and Pharmaceutical Institutions’ rather than formation of normal bodies, as the law and the practices of the two bodies have withdrawn all drug and pharmacological competence from the Ministry of Health in terms of regulation, oversight and management.

A. Limits and scope of the law

In the absence of any oversight or follow-up from the Ministry of Health over the work of the two bodies, Law 151 of 2019 according to which the two bodies were established severed any link with the ministry by stating appointment of a board chairman with the rank of a minister in order to escape application of Articles 5 and Article 11 of the Public Authorities Law No. 61 of 1963 (Article 5 of the Public Bodies Law No. 61 of 1963 states that the competent minister has the authority to direct, supervise, and control the public bodies affiliated to him) and Article 11 states that the decisions made by the public body’s board of directors shall be sent to the competent minister for approval…). Accordingly, the Minister of Health is no longer competent in the affairs of the two bodies, as it is the case with all similar bodies that used to have health and pharmaceutical jurisdiction before 2013.

The law also granted the two bodies a wide range of terms of references, powers, and privileges that do not meet in one entity.

The law allowed the Unified Purchase Authority to monopolize the provision of regulatory service to government agencies, as it is competent to purchase all government agencies’ needs of medical preparations, supplies, and devices; controls inventory systems, setting standard specifications, customs clearance, evaluation, transportation and storage; and at the same time, it is the one that contracts and sign on behalf of those agencies (except for the armed forces). Things do not stop there, as it manages maintenance operations and after-sales service. It also has the right to move the stock instead of the party in possession of it, and furthermore, it gets 7% for each purchase operation.

While the Unified Procurement Authority enjoys this unlimited powers and tasks, it has the right to establish joint-stock companies alone or with others, which allows it to enter the market and compete, with that monopoly position, according to the normal competition mechanisms.

For example, the AUPP, which represents government agencies in purchasing drugs or supplies, can purchase from the company that it owns and then collects 7% as fees added to the supply price, while it is exempted from taxes and fees. The Unified Procurement Authority enjoys all these benefits in addition to the advantages of the laws regulating both joint stock companies and public bodies, and at the same time, AUPP can get rid of competitors by reporting them to the Egyptian Competition Protection Authority (ECA)!

As for the Egyptian Drug Authority, it has a set of broad terms of reference in licensing pharmaceutical and manufacturing facilities, examination, control, inspection, clearance, provision of permission for circulation, and the establishment of laboratories.

On the other hand, EDA has two powers that contradict the idea of ​​monopolizing the service and mechanisms: the first is its independence in determining and updating fees for each service it performs while it enjoys complete exemption from taxes. The second is its independence in forming grievance committees against its decisions and deciding on them.

B. Absence of control

The law and its executive regulations did not include any indication of existence of any kind of oversight of the work of the two bodies, where the law articles did not assign any task to the Central Auditing Organization, nor did they refer to a governmental monitoring mechanism of any kind.

As for what was stated in the general provisions of the law’s executive regulations regarding the formation of a higher committee for drugs and the presence of a representative from the Administrative Control Authority (ACA), the role of the ACA representative is limited to following up the work of the two bodies with the aim of coordination and non-operational conflict, not monitoring and oversight in its legal sense.

C. Overlapping tasks and duplication of dependency

The two bodies enjoy all the privileges that law has ever granted to public bodies, including independence of decision and freedom to dispose of their funds and affairs. But at the same time, the functions of the two bodies overlap with those of the Ministry of Health. Although the Pharmaceutical Affairs Department is affiliated with the Ministry of Health, the newly-established Egyptian Drug Authority infringes on its functions.

Also, the Medical Supply Department is affiliated with the Ministry of Health, while the Unified Procurement Authority carries out all logistics and supply work.

On the other hand, jobs are also overlapping, where the head of the Egyptian Drug Authority is a member of the Board of Directors of the Unified Procurement Authority and the chairman of the Unified Procurement Authority is a member of the Egyptian Drug Authority.

The chairman of the Egyptian Drug Authority, is deputy Minister of Health for drug affairs, while the Minister of Health is a member of the Board of Directors of the AUPP and the EDA as well as the Drug Supreme Committee.

D. The AUPP budget and drug market size

The IMS Health, the leading provider of global market information to the pharmaceuticals and healthcare industries, has published its report on the size of the Egyptian drug market for 2019, where it amounted to EGP 77.5 billion.

Egyptian Official Gazette also published Law No. 126 of 2020 on the budget of the Unified Procurement Authority, which was estimated at twenty-four billion three hundred and forty million Egyptian pounds.

The IMS report shows the huge size of the Egyptian drug market, which indicates the size of the financial ceiling within which the AUPP and the EDA. Also, the emerging authority’s budget is approximately EGP 25 billion, that is certainly likely to increase according to the drug market indicator.

This situation boosts the AUPP and the EDP financial independence from the Ministry of Health, and confirms the idea of ​​the ‘Ministry of Drugs’, which the researcher has proven in this study, where the two bodies possess the financial solvency and administrative dominance based on their role as a ministry, not just economic and service authorities.

E. Unified Procurement Authority, an economic body, and Drug Authority, a service body

The experience of the Unified Procurement Authority is similar to that of the Egyptian General Corporation for Drugs, Chemicals and Medical Supplies, which was established in 1962. The law according to which the Egyptian Corporation for Drugs was established had drawn up a reasonable path for an economic body that provides a service that is monitored by the ministry closest to its service competence, namely the Ministry of Health. However, the Unified Procurement Authority is an economic authority headed by a minister. While it is not a ministry nor does it belong to any ministry, according to the law according to which it was established, which makes us in front of an ambiguous entity whose reality is an economic company in the form of a public body with the status of a ministry!

As for the Egyptian Drug Authority, it is a service body that has replaced the Ministry of Health in execution of the Pharmaceutical Law, but it provides all its services for a high fee that makes it far from being a public service organization, and closer to commercial institutions or investment companies.

Conclusion

The Egyptian Authority for Unified Procurement, Medical Supply and Technology Management and the Egyptian Drug Authority have withdrawn the drug and pharmaceutical terms of reference from the Ministry of Health and Population according to the provisions Law 151 of 2019. In fact, this encouraged issuance of a series of procedures, decisions, and reports that followed the establishment of the two bodies. For example, the Ministry of Health and Population issued Decree No. 174 of 2020 that directing the health directorates in governorates and their affiliated bodies to coordinate with the AUPP and providing it with their needs, and warning its affiliates against violating the law. The Ministry of Trade and Industry issued Decree No. 196 of 2020 for obliging companies and factories of the products that fall within the powers of the AUPP to supply their products and stock to the authority within three months and to stop any direct supply process to hospitals. Also, the Ministry of Health signed a cooperation protocol with the Unified Procurement Authority to regulate the procurement of the Ministry’s needs of devices and supplies.

For its part, the Unified Procurement Authority established a joint stock company in the name of the Egyptian Company for Medical Investments.

The AUPP also included in its affiliation the two companies of El-Gomhouria Company for Trading Pharmaceuticals, Chemicals and Medical Appliances and the Egyptian Company for Trade and Distribution of Drugs. Then, the Prime Minister assigned the Planning Minister and AUPP Chairman to establish a company for strategic stores of drugs and supplies in partnership between the Unified Procurement Authority and the Sovereign Fund.

In his meeting with the head of the Unified Procurement Authority, the Prime Minister directed to take the necessary measures to resettle the industry of medical preparations and supplies.

Then, Major General Bahaa Zeidan, head of the AUPP, stated that warehouses would be prepared to place Egypt in fifth position over the world in storing drugs.

These measures and others enhance control over the drug market and separate it from the original mandate of the Ministry of Health.

Finally,

Such measures come within the framework of General Abdel Fattah al-Sisi’s endeavor to tighten the grip of the pillars of his regime, especially the armed forces, on the Egyptian drug market within the general control of the official and private economy and looting the capabilities of Egypt and its people.

It is noteworthy that the head of the Unified Procurement Authority is Major General Bahaa El Din Zeidan, the director of the Armed Forces’ Al-Galaa Medical Complex, and his deputy is Major General Tariq Abdel-Rahman, the assistant director of the Armed Forces’ Medical Services for Hospital Development. In addition, the armed forces are exempted from applying the mechanisms of the AUPP in contracting, as it has become a drug producer and investor, after the Prime Minister’s Decree No. 148 of 2017 authorized the National Authority for Military Production, affiliated to the Armed Forces, to establish a joint stock company for pharmaceutical products under the name of the ‘Egyptian National Company for Pharmaceutical Products’.

The researcher believes that such measures are part of the consequence of the coup earthquake that took place in 2013 and is now occurring within each ministry and administrative body on a separate basis.

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