Sanctions and Medical Supply Shortages in Iran

Thursday, February 14, 2013

Siamak Namazi
Dubai-based consultant and former Public Policy Scholar, Woodrow Wilson Center

Reports from Iran that describe patients who are suffering from or dying of treatable maladies due to shortages of life-saving medical supplies are well established by now. As more and more news of medicine scarcity reached the press, a team of consultants with Iran expertise attempted to evaluate the scale and nature of the problem.

It is often forgotten that despite the humanitarian angle, the medical industry is a business, managed largely by for-profit companies. The pharmaceutical sector in Iran alone is estimated to be a more than $3 billion-a-year industry, with roughly 30 percent of that figure coming from imported drugs. Dozens of private, semi-private, and governmental Iranian enterprises active in the manufacture, import, and distribution of medicine, along with a plethora of international pharmaceutical and chemical supply companies, are present in the Iranian market.

Through in-depth interviews in Tehran and Dubai with Iranian importers, manufacturers, and distributors of pharmaceuticals and medical equipment as well as their Western counterparts, our study team intended to find out whether and how sanctions on Iran were contributing to the existing shortages and if any solutions could be found.

Key Findings

We learned that despite existing legal loopholes meant to facilitate humanitarian trade, sanctions are indeed causing disruptions in the supply of medicine and medical equipment in Iran. Procurement of the most advanced life-saving medicines and their chemical raw materials from the United States and Europe has been particularly challenging.

As a result, Iranian patients find it increasingly difficult and expensive, if not impossible, to obtain some of the medicines they need. When they do fill a prescription, they risk amplified side effects and reduced effectiveness because Iran is forced to import more and more medicines, or their chemical building blocks, from India and China, thereby replacing the higher quality products from Western manufacturers. Imports from American and European drug makers were down by an estimated 30 percent in 2012 and falling. In the highly patented world of pharmaceuticals, substitution is often unfeasible, particularly when it comes to advanced medicines used to fight diseases such as cancer and multiple sclerosis.

The outlook is bleak, and, without further targeted sanctions relief, the humanitarian predicament caused by these shortages will intensify.

Put plainly, Washington and Brussels’ stated intention that sanctions “pressure the Iranian government…without contributing to the suffering of the ordinary [Iranians],” as former Secretary of State Hillary Clinton once put it, is not being reflected by the reality on the ground.

This paper aims to explain how sanctions have impacted the Iranian pharmaceutical and medical supply business, leading to the shortages we see today. It will also look at why the legal exemptions put in place to prevent such shortages from happening are ill-designed and insufficient at achieving that goal. The paper concludes by offering specific recommendations on necessary changes in the sanctions regime in order to ameliorate the situation and limit the unintended effects of the sanctions on Iranians in need of medical attention.

A Skeptical Viewpoint

There are skeptics who have reservations about the root cause of the crisis at hand, pointing to Tehran’s own mismanagement, along with other factors, rather than American and European sanctions, as the real culprit behind medicine and medical supplies shortages in Iran. Broadly speaking, the skeptics rest their conclusion on three pillars:

First, they refer to select news stories coming from within Iran itself—including the fact that luxury consumer products and even European sports cars were at one point somehow entering the country while there was a scarcity of humanitarian products.

Second, they are quick to point out that there is no de jure ban on humanitarian trade with Iran, and even the strictest sanctions put in place by the United States specifically provide provisions for waivers for exchanges of food and medicines. Indeed, some of the largest American and European drug and medical equipment manufacturers continue to supply the Islamic Republic with goods up to this day.

Finally, there is the flawed argument made by those who believe that Iran could solve its problem by importing even more medical supplies from India and China than it already does.

Adopting a scientific approach, our study team started by examining the skeptics’ key arguments, setting them as our initial hypotheses, and then looked for evidence that would disprove or confirm their veracity. Each of the above arguments will be discussed in depth in the following sections.

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Source: Middle East Program, Woodrow Wilson International Center for Scholars

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