Health minister blames currency collapse for soaring drug costs

Iran's health minister said on Sunday that currency fluctuations and collapse of the rial are fueling a rise in medicine costs across the country while a mass shortage is crippling the system.

Mohammadreza Zafarghandi added that the government plans to offset currency-driven price hikes by compensating insurance companies to prevent patients from bearing the cost.

Iran is grappling with a dire economic situation as the rial, which has depreciated by over 30% since September, sending ripple effects across multiple industries including the pharmaceutical industry, which heavily relies on the cash-strapped government for hard currency to import raw materials.

While Zafarghandi promised government action on rising medicine costs, Mehdi Pirsalehi, head of the Food and Drug Organization revealed that the government owes 360 trillion rials (approximately $4.47 billion) to the pharmaceutical sector, alongside 200 trillion rials ($2.48 billion) in medical equipment debt.

In July last year the head of Tehran Chamber of Commerce for Industries, Mines and Agriculture (TCCIMA) warned that Iran’s pharmaceutical and medical equipment sectors are struggling to secure both foreign currency and local rials, in an interview with the state-affiliated ILNA news website.

In 2022, Iran’s parliament decided to scrap an annual $9 billion subsidy for essential food and medicines, despite warnings of more inflation and hardship.

The subsidy was introduced in April 2018 when Donald Trump signaled his intention to withdraw from the Obama-era nuclear agreement with Iran known as JCPOA, and Iran’s national currency began to nosedive.

Before becoming Iran’s president, Masoud Pezeshkian criticized the Raisi administration for eliminating government subsidies, warning that such measures would hinder drug manufacturers from importing the raw materials needed to produce medicines.

Now, as president, Pezeshkian himself plans to cut the allocation for importing essential goods, including agricultural products, pharmaceuticals, and raw materials, to €12 billion, according to the 2025 budget outline released in October.