The Policy of Subsidy Elimination from Currency Allocated to Pharmaceutical Sector in Iran; Concerns of Patients, Payers, and Industry

Abstract

Background: Pharmaceutical sector in Iran is a generic-based market in which local manufacturers supply over 98% of sales volume and 85% of sales value, according to the latest published data by the Iran Food and Drug Administration (IFDA) in 2021. Share of imported generics and original brands from the market has been decreasing due to Iran MOH's cost-containment and localization support policies Methods: The generalized conditional heterogeneous variance self-regression econometric method (GARCH-M) is used to analyze the data and estimate the actual exchange rate uncertainty index. Results: Strict and unfair cost-plus approach in repricing could cause margin loss for local companies and put the sustainability of the whole local generic industry at risk. Conclusion: Given the consequences of subsidized currency on the pharmaceutical and healthcare systems, the government's decision to eliminate subsidies from money seems rational and defensible. However, all concerns of different stakeholders must be heard and addressed before the implantation of this policy. With good budget raise for health insurance from subsidy elimination revenues (cross-subsidization) sources, the government should ensure that this policy will not burden any unaffordable cost or loss to either patients or industry. In addition, agility in the pricing, budgeting, and reimbursement processes is a critical success factor for MOH and IFDA to avoid harm to stakeholders.

Keywords

• Subsidy Elimination
• Policy
• Pharmaceutical industry