The pharmaceutical sector in Iran faces a liquidity crisis because drugs companies are not receiving their dues from insurers, said Mr Mohammad Baqer Zia, Chairman of the Pharmaceutical Association of Iran.
He made these comments last month as the funding gaps in Iran’s Health Reform Plan (HRP) have surfaced, caused by international sanctions, lower crude prices and domestic policymaking, according to a report in Financial Tribune.
In July, there were reports that some private hospitals had stopped accepting patients under the national healthcare scheme as they have not received payments from insurers.
In June, Deputy Chairman of Majlis Health Commission Homayoun Yousefi sounded the alarm over debts hospitals owed to drug manufacturers.
In 2014, the HRP was launched by President Hassan Rouhani to reshape Iran’s health sector after it had been grounded around 2010 under harsh international sanctions during the previous administration. At that time, drugs became scarce and a black market thrived.
The HRP, dubbed Rouhanicare, included different interventions to boost population coverage of basic health insurance, increase quality of care in the government-affiliated hospitals, reduce out-of-pocket payments for inpatient services, improve the quality of primary healthcare, and update tariffs to more realistic values. The funding of the plan and equity of financing have been concerns since.
The HRP was implemented at a time when international sanctions against Iran were at their peak, hard pressing the government whose main source of income was oil export. Later, after sanctions were lifted following Iran’s nuclear deal with world powers, a huge plunge in oil prices followed, leaving the Iranian government with little improvement in oil revenues.
Just before the HRP was introduced, the government had allocated IRR160,000 (US$4.70) to each patient as the health subsidy to be given via the Ministry of Cooperatives, Labour and Social Welfare’s Social Security Organisation to insurers. However, the HRP authorised IRR320,000 for each insured person instead.
In July 2016, Minister of Cooperatives, Labour and Social Welfare Ali Rabiei had admitted that the way the plan was implemented had resulted in a huge liquidity crisis.
“First, I thought there were five million people in Iran who did not have insurance coverage and were to be covered under the HRP. But later, as the country’s statistics infrastructure improved, the number was found to be 11 million. Also, the per capita health insurance allocation had increased from IRR160,000 to IRR320,000. As a result, a fiscal load of IRR3.52 trillion appeared out of the blue, whereas we had planned for IRR1.1 trillion. That is why we hit a liquidity crisis,” he said.
The minister had also said that about 80% of the fiscal burden of the HRP rest with insurers. For the fiscal year ended 20 March 2016, insurers faced a deficit of IRR8 trillion.
Health Minister Hassan Qazizadeh Hashemi admitted the fact and said insurers did not possess sufficient resources to pay claims. M
IRR1,000 = US$0.03