Poor Subsidizing Rich Pharma Companies

The government has heavily subsidized the health sector since taking office in 2013 with the pharmaceutical sector receiving special attention and funding to help develop and produce essential medicine.

While the subsidies have helped reduce out-pocket-payment, little progress has been made in the pharmaceutical sector prompting many to question what happens to the money injected into the industry.

According to the Persian-language daily Shargh, subsidies allocated to the sector is not in fact used for the intended purpose because the drug companies are selling their products at high prices in the absence of proper supervision, rendering the subsidy irrelevant.

Overcharging not only wastes public funds, but also exposes patients to health hazards because high medical costs still are an important deterrent in timely visits to doctors.

Take the case of Buserlin: an injection used in the treatment of infertility as well as hormone-responsive cancers such as prostate cancer or breast cancer, estrogen-dependent conditions (e.g. endometriosis or uterine fibroids).

Up until a few years ago, the drug was only available under the brand name Suprefact, manufactured by the renowned French drug maker Sanofi. However, Iranian companies began producing the medicine in 2015 and both domestic and foreign brands are available in the market.

  Wishful Thinking  

One would think domestic production of the drug should make it affordable. That simply turned out to be wishful thinking. When local production began, the Suprefact was priced at 800,000 rials ($21) by the importer. The price of the domestic alternative was 450,000 rials ($12).

While the price difference may seem decent, knowing the price of Suprefact in neighboring Turkey, where it is also imported, puts things into perspective. The drug is sold for 33 Turkish lira, which is 355,000 rials or $9.3.

In other words, the domestically-manufactured injection has been sold at a higher price compared to the retail price of the French drug in Turkey. The  government has been paying subsidies to Iranian companies over and above the real price of the foreign drug. However, local pharmaceutical companies have been jacking up prices at will.  

The same is true for some other important medicines for migraine, epilepsy, and hepatitis.

As per available data, 5.1% of Iran’s population suffers from epilepsy, and 10% have experienced throbbing pains due to migraine headaches. This means the drugs for these illnesses are in high demand.

It is high time the government, and particularly the Health Ministry, exercise more stringent measures when it comes to the oversight on drug makers to ensure that public money in the form of subsidies are used only for the intended purpose and not anything else.