Iran’s regime recently announced that the country’s pharmaceutical industry will no longer receive the preferential currency, foreign currencies such as the dollar and euro subsidized by the government.
Currently, the U.S. dollar hovers above 500,000 rials. The preferential rate is around 42,000 rials per dollar. Given that the pharmaceutical industry relies heavily on imports, the difference can have a huge impact.
On Saturday, March 26, the regime’s Minister of Health stated in the audience of Shahid Beheshti University of Medical Sciences that in the new year, the preferential currency for medicine has been removed.
As they claim, this decision was made to tackle currency market distortions and prevent the smuggling of subsidized drugs out of the country.
The preferred currency, which had been allocated to domestic drug production and accounted for 97% of the country’s needs, has now been redirected toward the import of drugs.
Health officials say that they have only received between one-third and one-tenth of what they have asked for to fulfill the country’s medical needs.
Experts warn that this move could have serious consequences for Iranian citizens, who are already struggling with high inflation and economic hardship.
In 2020, many consumers reported a five-fold increase in the price of medicines such as acetaminophen. With the removal of the preferred currency rate, there is a possibility that the prices of even readily available medicines may increase further.
In response to the removal of the preferred currency from Iran’s pharmaceutical sector, Mehdi Pirsalehi, the former head of the Food and Drug Organization and a member of the board of directors of the Syndicate of the Owners of Human Pharmaceutical Industries of Iran, stated to the regime’s state-run news agency Mehr:
“If the government does not find a solution to continue supporting the pharmaceutical industry without the preferred currency, it will undoubtedly result in higher medicine prices and harm consumers.”
He added: “We have consistently emphasized that the removal of the preferred currency for medicine cannot be accomplished without exploring alternative solutions. However, we also hold the belief that with determination, we can put in place compensatory measures.”
Iran’s pharmaceutical industry has long relied on government subsidies and preferential currency rates to import raw materials and manufacture drugs.
The regime’s decision to remove these subsidies means that pharmaceutical companies will now have to purchase foreign currency at market rates much higher than the preferential rates previously offered by the regime.
This will result in higher production costs for pharmaceutical companies, which may be passed on to consumers in the form of higher drug prices.
Moreover, the removal of preferential currency rates may also make it more difficult for Iranian pharmaceutical companies to import the raw materials and equipment necessary to manufacture drugs.
This could lead to shortages of essential medicines and medical supplies, further exacerbating Iran’s already dire public health situation.
The issue has become even more sensitive due to the weakness of insurance coverage and the fact that around 6 to 9 million people lack any form of insurance. This could further damage Iran’s already struggling economy and exacerbate poverty in the country.
While the move is intended to address currency market distortions and prevent the smuggling of subsidized drugs out of the country, it could lead to higher drug prices, shortages of essential medicines, and increased poverty.
According to Hossein Ali Shahriari, the head of the health and treatment commission of the regime’s parliament, the government has been granted the authority to decide on the currency of medicine through a legal resolution.
The preferred dollar exchange rate of 4,200 tomans or the Nimai currency, or any other rate, may be used for medicine and medical equipment.
The only condition set by the parliament is that the prices of medicine and medical equipment for people and patients should remain unchanged in comparison to September 2020.
Shahriari expressed his concerns about the high cost of medicines, stating, “Unfortunately, many medicines have become expensive. Medicines and health goods have become really expensive. The prices of medicines have varied in recent months, with some becoming 100% more expensive. The prices of some drugs have increased by several hundred percent, including domestically produced drugs.”
Overall, the regime’s decision to remove preferential currency rates for the pharmaceutical industry is risky and could have serious consequences for the people of Iran.