The Central Bank of Iran said it gave $1.1 billion in subsidized foreign currency for importing medicine in the first three months of the current fiscal year that started in March.
Forex was allocated in the framework of government policy to control the rising price of medicine and as a part of plans to spend $3.5 billion for pharmaceutical imports this year, the CBI website said.
Importers of medicine and medical equipment received currency at 285,000 rials to the US dollar. The update came following a meeting attended by pharma companies, the CBI chief and the health minister.
Mohammadreza Farzin of the CBI referred to the provision of forex for pharmaceutical companies and said, “Given the importance of timely access to medicine and address the people's needs, banks are required to follow rules to ease pharma and health companies’ access to currency”.
Farzin issued instructions to expedite and improve forex allocation for medicine including petty cash for pharma companies to the tune of €100 million.
The Minister of Health Bahram Einollahi appreciated the CBI support as well as the provision of facilities and credit to the health and pharma sectors and called for curbing the bloated bureaucracy.
During the meeting, representatives of drug manufacturers, raw material suppliers and medicine importers expressed concern about the future.
The CBI boss discussed solutions to the problems and issued instructions to the forex and credit departments of the central bank.
He said in May the regulator would make available subsidized forex ($1=285,000 rials) worth $3.5 billion for medicine import in the current year.
“Considering the need for medical equipment and medicine, $3.5 billion has been allocated for importing medicine, raw material and medical equipment.”
He noted that loans worth 300 trillion rials will be given to pharma companies to help them meet needs for working capital and ease medicine and raw material challenges.
Plethora of Problems
Mohammad Abdozadeh, the head of the Syndicate of Owners of Human Drug Industries, has said that “The pharmaceutical sector is grappling with a plethora of problems, namely currency allocation, cash-flow and irrational drug pricing [by the government].”
He complained that forex allocation for medicine and medical equipment has plunged from $4.8 billion dollars last year to $3.2 billion this year, SanatSenf.ir, a website specializing in guilds reported.
"Today, the pharmaceutical industry is earnestly calling on the government to provide currency so that it can produce medication and prevent a shortage of drugs."
Over the months there have been consistent complaints in the local media about shortages and the high and rising prices of medicine. The focus has been mainly on medicine imports for rare and special diseases that have become unaffordable for large sections of the society.
"Pharmaceutical companies have received zero foreign currency since February,” Abdozadeh complained. “If the trend continues in the coming months we will face escalating shortages of drugs."
In related news, the CBI announced incentives for medicine exporters per which exporters will have access to more subsidized currency. "However, exporters must be fully committed to repatriate their earnings through official channels."
Subsidizing currency in its current format came into effect after the steep rise in forex rates in the spring of 2018 when the past government pegged the subsidized dollar at 42,000 rials and cut the list of goods eligible for subsidies to barely a few essential items, including food, medicine and some raw materials.
Former governments allocated billions in subsidies for importing food and medicine selling the greenback for 42,000 rials up until 2021.
Subsidized currency is sourced largely from oil export for importing essential goods, pharmaceuticals and machinery. The past subsidy policy was designed to avoid price hikes in food and raw materials and protect consumers against inflation and price gouging almost always blamed on high forex rates.
The Raisi administration said it was ending the increasingly costly and “corruption-tainted subsidy policy” and instead started selling the dollar at 285,000 rials to help prevent huge jumps in consumer prices.
