Iran sanctions: What impact are they having on medicines?
8 August 2019
Iran says sanctions are preventing lifesaving drugs from reaching the country, despite special exemptions for medical supplies. This is disputed by Washington. "The United States exempts medicine and medical devices for the Iranian people from US sanctions," says Brian Hook, the American special representative for Iran. So how are sanctions affecting access to medicines in Iran? Iran produces most of its own basic pharmaceuticals - but when it comes to the most advanced medicines, it relies heavily on imports. It's estimated that although only about 4% of its medicines come from abroad in terms of volume, the more expensive imported drugs make up about a third of the total value. There is only limited data on drug imports and prices paid inside Iran but anecdotal evidence can give some idea of the situation. The BBC's Persian Service has heard from its audience about rising costs of medicines. A sufferer of Crohn's disease described the difficulties of accessing vital drugs. "I have to travel to other towns and cities to check if their pharmacies have the drugs," they said. "Some of them do but the prices are so high that I cannot afford them." The BBC also spoke to a pharmaceutical importer from inside Iran who said the past two years had brought shortages and price rises. Drugs for anaesthetics, cancer-treatment and diabetes were particularly hard to find, they said. In the past 12 months, the cost of health and medical services rose by 19%, according to official Iranian statistics. But these shortages and price increases could be for many reasons, not only as a consequence of sanctions against Iran. International sanctions were lifted in 2016 following an agreement with Iran over its nuclear programme, but in November 2018 the United States reinstated "the toughest ever" sanctions on Iranian industry and banks. It threatened heavy punishment and exclusion from the US financial system for foreign companies seeking to circumvent these restrictions. However, exporters of humanitarian supplies such as medicines and medical devices - and the companies facilitating this trade - should not be punished by the US for doing business with Tehran. "The problem is that you need to find banks willing to keep open the business lines and compliance functions to process those transactions," says Richard Nephew, an expert on US sanctions. "Often, they're seen as not worth the headache... so there is a practical problem in getting banks to do it.  But can they?  Sure." Also, not all medicines or medical devices qualify for the exemption. "Trading humanitarian goods and processing payments with Iran remains complex," says Justine Walker, director of sanctions policy at UK Finance, which represents British banks. "Legally, medicines are not prohibited under sanctions. However, they do become prohibited if they are found to be going to a designated actor or entity." These include Iran's major banks. Official Iranian figures seen by BBC News show a snapshot of the past 16 months of overall Iranian imports of medical drugs and devices. These imports reached a peak of $176m (PS145m) in September 2018, then fell significantly. By June 2019, imports of medical supplies had fallen by 60% to about $67m. This fall coincides with the imposition of US sanctions but the data is limited and it's not possible to say with any certainty that sanctions are responsible. There is also data available from the EU, a key trading partner with Iran. Since sanctions were imposed in November last year, medical and pharmaceutical sales to Iran fell at first before rising slightly in May. This followed a period when trade in medical supplies fluctuated, reaching a peak in 2016 (when international sanctions were lifted) and then falling in the following two years. Navigating new regulations and incurring extra costs, for example by changing banks, makes trade with Iran "daunting for smaller firms", says Esfandyar Batmanghelidj, founder of Bourse & Bazaar, which tracks Iran's economy. The lack of foreign currency inside Iran and the volatility of the Iranian currency also make imports more expensive. Iran has been calling for the urgent implementation of a proposed European plan to support companies wishing to bypass US financial restrictions. But this has proven complex and politically difficult to implement. Read more from Reality Check Send us your questions Follow us on Twitter
Iran produces most of its own basic pharmaceuticals - but when it comes to the most advanced medicines, it relies heavily on imports. It's estimated that although only about 4% of its medicines come from abroad in terms of volume, the more expensive imported drugs make up about a third of the total value. There is only limited data on drug imports and prices paid inside Iran but anecdotal evidence can give some idea of the situation. The BBC's Persian Service has heard from its audience about rising costs of medicines. A sufferer of Crohn's disease described the difficulties of accessing vital drugs. "I have to travel to other towns and cities to check if their pharmacies have the drugs," they said. "Some of them do but the prices are so high that I cannot afford them." The BBC also spoke to a pharmaceutical importer from inside Iran who said the past two years had brought shortages and price rises. Drugs for anaesthetics, cancer-treatment and diabetes were particularly hard to find, they said. In the past 12 months, the cost of health and medical services rose by 19%, according to official Iranian statistics. But these shortages and price increases could be for many reasons, not only as a consequence of sanctions against Iran.
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What medicines does Iran import?
International sanctions were lifted in 2016 following an agreement with Iran over its nuclear programme, but in November 2018 the United States reinstated "the toughest ever" sanctions on Iranian industry and banks. It threatened heavy punishment and exclusion from the US financial system for foreign companies seeking to circumvent these restrictions. However, exporters of humanitarian supplies such as medicines and medical devices - and the companies facilitating this trade - should not be punished by the US for doing business with Tehran. "The problem is that you need to find banks willing to keep open the business lines and compliance functions to process those transactions," says Richard Nephew, an expert on US sanctions. "Often, they're seen as not worth the headache... so there is a practical problem in getting banks to do it.  But can they?  Sure." Also, not all medicines or medical devices qualify for the exemption. "Trading humanitarian goods and processing payments with Iran remains complex," says Justine Walker, director of sanctions policy at UK Finance, which represents British banks. "Legally, medicines are not prohibited under sanctions. However, they do become prohibited if they are found to be going to a designated actor or entity." These include Iran's major banks.
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How do the sanctions work?
Official Iranian figures seen by BBC News show a snapshot of the past 16 months of overall Iranian imports of medical drugs and devices. These imports reached a peak of $176m (PS145m) in September 2018, then fell significantly. By June 2019, imports of medical supplies had fallen by 60% to about $67m. This fall coincides with the imposition of US sanctions but the data is limited and it's not possible to say with any certainty that sanctions are responsible. There is also data available from the EU, a key trading partner with Iran. Since sanctions were imposed in November last year, medical and pharmaceutical sales to Iran fell at first before rising slightly in May. This followed a period when trade in medical supplies fluctuated, reaching a peak in 2016 (when international sanctions were lifted) and then falling in the following two years.
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Are medicines reaching Iran?
Navigating new regulations and incurring extra costs, for example by changing banks, makes trade with Iran "daunting for smaller firms", says Esfandyar Batmanghelidj, founder of Bourse & Bazaar, which tracks Iran's economy. The lack of foreign currency inside Iran and the volatility of the Iranian currency also make imports more expensive. Iran has been calling for the urgent implementation of a proposed European plan to support companies wishing to bypass US financial restrictions. But this has proven complex and politically difficult to implement.
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Is trading with Iran risky?