The price of imported medicine has increased by a factor of six, Bahram Darai, the president of Iran’s Food and Drug Administration, acknowledged in an interview with the state-run Hamshahri newspaper on April 3. Darai also admitted that the price of domestically produced medicine has increased 30 to 100 percent.
In his interview with Hamshahri, Darai claimed that the price hike was caused by “irrational consumption of medicine,” “increased use of medicine during the covid-19 pandemic,” and “reverse smuggling” of medicine from Iran to other countries.
What he did not dare say, however, is that the main cause behind the rising price of medicine is the endemic corruption that the regime has inflicted in Iran’s healthcare and medicine industries.
Confusing remarks by regime officials
In the past weeks, regime officials have made controversial remarks, arousing public concern and panic and exacerbating the fluctuation in the prices of vital medicines.
Health minister Bahram Einollahi declared on March 26 that medicines would no longer be allocated “preferential currency” and “companies no longer have to wait for long times to receive raw materials with preferential currency.”
Preferential currency is the government-fixed exchange that pegs the U.S. dollar to 42,000 rials as opposed to the market rate, which is standing at around 250,000 rials. The preferential currency was supposed to protect vital goods such as food and medicine against the fluctuating value of the national currency. While the price of medicine had been continuously growing even with the preferential currency policy in place, its official removal will make the situation even worse, especially since the government has no concrete plans to deal with the shock this change will have on the price of medicine.
On April 3, the Majlis (parliament) gave the government permission to completely dissolve the preferential currency policy in the new year’s budget bill.
But shortly after Einollahi’s remarks, the head of the Health Ministry’s public relations declared, “So far, the removal of preferential currency for medicine and medical equipment has not been communicated to the Health Ministry in the budget for the [Persian calendar] year 1401 [March 2022-March 2023], and we will continue to use the preferential currency.”
In his interview with Hamshahri, Darai also said, “For the moment, there will be no change in the currency allocation to medicine, but the financial structure will be reformed to prevent a surge in prices and a shortage of drugs.” Darai did not provide any details on how the government plans to control the price and supply of medicine.
At the same time, different reports indicate that the regime has silently stopped allocating preferential currency to medical supplies since 2021, which is one of the main reasons behind the accelerating rise in the price of medicine.
One of the government’s so-called initiatives has been to replace imported medicines with domestically produced drugs. But due to the low quality and inefficiency of these drugs, consumers have been forced to purchase foreign medicine at very high costs in the free market.
The medicine mafia
One of the problems that is causing the surge and fluctuation of the prices of medicine and medical equipment is the mafia-style management of the healthcare and medicine industry.
The import, production, and distribution of medicine is controlled by bands that have very close ties to regime officials and agencies. Regime-run organizations, including the Setad (controlled by regime supreme leader Ali Khamenei), the Social Security Investment Company, and Shafa Daru, control 70 percent of the medicine market.
These organizations control supplies and prices, and their only loyalty is their bottom line, not the people’s welfare.
According to an April 16 article by the state-run Jam-e Jam newspaper, “About 250 trillion of the 340-350-trillion-rial yearly financial cycle of medicine in the country can’t be tracked.”
Jam-e Jam acknowledged the medicine mafia as the “most powerful mafia in Iran” and described it as “profit-seekers that import second-hand medical equipment as brand new or raise the prices of chemotherapy and other special medicines so much that many patients die because they can’t afford to buy the drugs.”
Jam-e Jam confirms that the medicine mafia is deeply linked to government bodies and can’t function without having close ties with regime officials in this sector.
Local reports indicate that there’s no shortage of medicine in Iran’s black market. But the prices are so high that most people can’t afford them.
While regime officials acknowledge the existence of the medicine mafia, they have so far done nothing to stop it, simply because their own organizations are deeply enmeshed in this corrupt network.
Reverse smuggling
The decline in the value of Iran’s currency has led to “reverse smuggling,” in which smuggler gangs purchase medicine in Iran and sell them at much higher prices abroad. This growing trend has caused a shortage of medicine supply and led to a surge in prices.
In this regard, Darai said, “In the past year, the reverse smuggling of medicine has increased dramatically. We don’t have precise numbers on the reverse smuggling of medicine, but the figures are significant and alarming.”
There have been reports of truckloads of medicine having been smuggled out of the country. In one case in 2020, as many as 19 trucks smuggling medicine from Iran to Iraq were seized by the Iraqi army. In his interview with Hamshahri, Darai acknowledged that some drugs are being smuggled to Afghanistan in trucks and large containers.
