US blockade and sanctions more than triple some medicine prices in Iran

The strain shows first at the pharmacy counter. So far there is little sign of major medicine shortages in Iran's hospitals, but the difficulties are visible in pharmacies ^[18]. Gholamreza Rahmani, a Tehran welder, spent two days searching pharmacies with his wife for four medicines prescribed to their 12-year-old daughter. He could not find one of them anywhere, and the search cost him two days of wages ^[20]. "Each one would have one or two items, not all of them," he said ^[21]. "My daughter's illness and the loss of income are like scissors, cutting from two sides," he said ^[22].

The board-deck version of this war is an energy story. Iran has tried to push world energy prices higher by attacking the region's oil shipping routes ^[4]. The United States, in turn, has blockaded Iran's ports since June and kept tightening sanctions ^[3]. That version is incomplete for any firm whose exposure to Iran runs through a payment or a ship. Years of financial sanctions make international banks and companies cautious enough to refuse transactions they fear could breach the rules, according to Reza Majdzadeh, a professor at the University of Essex ^[8]. "A medicine may be perfectly legal to sell to Iran, but a bank may refuse to process the payment," he said ^[9].

The trade-off he describes is made outside Iran, one counterparty at a time. "A pharmaceutical or shipping company may simply decide that dealing with Iran is not worth the risk," Majdzadeh said ^[10]. In my view the carve-out settles what is legal and leaves the question of risk appetite with each bank, shipper and supplier. "The transaction is legal on paper, but it does not happen in the real world," he said ^[11].

Currency explains part of the price rise. More than 80% of Iran's medicines are made at home, by official count, but many depend on imported raw materials ^[5]. With the rial at half its former value, an input bought at an unchanged dollar price costs twice as many rials ^[2]. Some prices have gone well past that. Ali Fallah, a Tehran resident, said an inflammation ointment he buys rose from 750,000 rials to 3.25 million rials in three months ^[17]. That is about 4.3 times the old price ^[1]. "The price of almost everything has gone up, in some cases doubling, quadrupling, or even increasing sixfold," said Mina Mohammadian, a salesperson at a Tehran pharmacy ^[19].

Part of the pressure is domestic. Insurance companies are as much as nine months behind on payments to pharmacies because of the "current situation," said Mohammad Jamalian, a member of parliament's health committee ^[13]. Medicines are also being smuggled to Afghanistan, Pakistan and Iraq, where prices are higher, state media reported ^[15].

The government has not said how much medicine production has fallen ^[23]. The report does not count the banks or suppliers that have stopped handling Iranian payments.