Source of Crisis of Medicine, Medical Facilities, and Equipment in Iran: Regime’s Conducts or Sanctions?

Written by
Secretariat of the National Council of Resistance of Iran (NCRI)
Source of Crisis of Medicine, Medical Facilities, and Equipment in Iran: Regime’s Conducts or Sanctions?
Foreign Affairs Committee
National Council of Resistance of Iran

Executive Summary: In the past few weeks, Iran has become a significant epicenter of the coronavirus pandemic, with massive fatalities occurring across the country. As of April 1, according to the network of the People’s Mojahedin Organization of Iran (PMOI/MEK), the death toll due to Coronavirus reached to 15,500 in 237 cities in Iran.

Iran, coronavirus outbreak map with death toll
Iran, coronavirus outbreak map with death toll
The coronavirus crisis has highlighted the preexisting shortage of medical facilities, equipment, and medicine in Iran.

The Iranian regime has resorted to a systematic campaign to depict US sanctions as the leading cause of those shortages and thus of Iran’s national calamity. Tehran’s lobbies and apologists have echoed this notion. Hassan Rouhani, the regime’s President, explicitly said on March 27 that the Foreign Ministry is pursuing this campaign.

This study shows that the regime’s propaganda is totally at odds with reality.

Corruption is institutionalized. It has become so rampant that even the regime’s leaders describe it as a seven-headed dragon. Corruption has permeated Iran’s medicine and pharmaceutical sector with the involvement of the most senior officials On July 15, 2019, Health Minister Saied Namaki said: “1.3 billion dollars for the purchase of medical equipment has gone out, and no one knows who exactly has taken them and what has been brought in and to whom they were handed over.”

The Governor of the Central Bank said on December 19, 2019: “We have provided 22 billion dollars’ worth of foreign currency for the imports, out of which 11 billion dollars has not returned to the country. What has happened to the rest of the money?” A regime newspaper wrote on December 18 that information from 15 Iranian banks made it evident that financial assets and funds provided to 456 real and legal entities were about 86.5 billion dollars, which is equivalent to the whole budget of the Iranian year 1399 (that started on March 20).[1]

As US authorities have repeatedly made clear, medicine has never been under sanction. The Swiss Ambassador in Tehran announced on January 30, 2020, that the mechanism to import medicine to Iran without any glitches had been activated. This commercial channel for exporting medicine to Iran started processing its first payments on a pilot basis on January 27. It is said it would be fully operational in the immediate future.

On February 2, the Swiss Embassy in Tehran tweeted: “Today, some 180,000 packs of transplant medication – part of the pilot transaction of the Swiss Humanitarian Trade Arrangement (SHTA) – have arrived at Tehran IKA airport. Thanks to a strong due diligence mechanism, the SHTA will ensure that products reach Iranian patients.”

In reaction to dispatch of Swiss medicine to Iran, Abdolnaser Hemmati, the Governor of Iran’s Central Bank said on February 3, “The amount of foreign currency that has been provided by the Central Bank for medicine and medical equipment and has been imported to Iran in the past ten months is over four billion dollars… Because of the endeavors of the Central Bank and other government institutions, we have pushed back sanctions, and the necessary medicines have been provided. The trend will continue in the future.”[2]

Palpably, Abbas Mousavi, the Foreign Ministry Spokesman, said on February 4, “We do not recognize humanitarian channels or anything similar. We do not recognize the sanctions. Medicine and food were not sanctioned, so no channel was needed to provide them and to create all this ballyhoo.”[3]

On the same day, Saeed Namaki, the Minister of Health, said, “At least for the next months we have no problem in providing medicine, medical equipment, and facilities for the operating room.”

The Director of the Organization of Food and Medicine announced on Saturday, March 21, that unique clothes, masks, and hygienic material are imported quickly. That needed materials are introduced in 48 hours. In reality, the regime has been able to import testing kits without obstacle since January.

It is very telling that while outside of Iran; the regime claims that it lacks basic needs due to the sanctions. Inside Iran, it insists that it is in total control. On March 25, Hassan Rouhani claimed, “Until today, we had no shortages of beds, nurses, or doctors. Even in intensive care units (ICU), in most cities and provinces, we have reserves. Yesterday, I was particularly worried about Mashhad in these days; however, it turned out that 30% percent of ICU beds were empty. There is good planning in place!” The regime’s President also claimed yesterday, “Hospital admissions (for Coronavirus) have decreased and the death toll is declining.”[4]

General state of medicine- Assessments & claims of authorities
On August 9, 2019, Minister of Health Saied Namaki claimed that 97% of the medicine needed in Iran is produced domestically, with only 3% imported.[5]

The General Manager of the office of technology and trade, within the Office for Science and Technology, made the same claim on May 7.

The spokesman for the Food and Medicine Organization, Kianoush Jahanpour, claims that 96% of the medicine needed in the country is produced domestically and 4% imported. He said that the drugs imported are primarily those who are very rare or new to the market, with no comparable domestic alternatives. They also include medicines needed for extraordinary and terminal ailments. He claimed that domestic pharmaceutical production could cover the needs of a population of 200 million people.

Some officials involved in pharmaceutical production claim that Iran’s level of science and production capability is among the ten best in the world.

A crisis caused by institutional theft
The regime and its lobbies have extensively argued that the sanctions have caused the pharmaceutical crisis in Iran. But food and medicine have never been the subject of sanctions, and their import to Iran never been blocked.

Annually, a large portion of the country’s budget is allocated to pharmaceutical production and imports. Still, due to widespread state corruption, a significant part of the money is stolen or embezzled.

Saeed Namaki said on July 15, 2019: “An amount of $1.3 billion allocated for medical equipment has gone out and no one knows who exactly has taken them and what has been brought in and to whom they were handed over.” The task of this organization is to import medicine, medical equipment, milk powder, and other necessary items in the health care domain. But it is not clear that the organization has maintained this focus.[6]

Investigations have shown that a computer system was set up by the Health Ministry at the same time as the Food and Medicine Organization, whose server was located outside Iran and was accessible to only a few individuals. It has also been shown that some individuals within the Ministry have used funds based on the exchange rate used to by the government, allocated for the import of medicine and medical equipment, to purchase other items such as power cables.

Beginning in June 2018, the regime set an unusually low exchange rate of 4,200 tomans to a dollar for the purchase of some essential commodities such as medicine. Two months later, on August 12, 2018, it was announced that some importers had used dollars at this rate to import vacuum cleaners and steam cleaners instead of medicine. Because the market exchange rate at the time was 10,000 tomans, these importers made more than 250% profit.

Even higher profits have been derived from luxury goods purchased according to the same scheme, using funds from the Food and Medicine Organization.

On December 23, 2018, it was announced that 500 million euros had been given to the pharmaceutical Industry out of the national funds to deal with the medical crisis. It was then decided that part of this money would be provided to companies producing medical equipment. In contrast, part of it would be provided to universities to spend on medicine and medical equipment.[7]

Two months later, it became clear that half of that money, i.e., 250 million euros, had not reached the pharmaceutical and medical equipment Industry and could not be located.

Connection with sanctions, situation during JCPOA
Organized corruption in purchasing medicine and misallocating funds has been ongoing for years.

Marzieh Vahid Dastjerdi, the Minister of Health during Mahmoud Ahmadinejad’s second presidential term, said the following in a TV interview in 2014:

“In 2012, at the height of sanctions, I told friends in the government’s special measures committee that you should do everything to obtain foreign currency for medicine. We needed some $2.5 billion worth of foreign currency to import medicine and some medical essentials such as equipment for heart conditions and other necessary items… but only $41 million of foreign currency were given to the Ministry. Some of the money was given to women’s cosmetics and other things… state currency is being used to import Porche cars… our medical equipment and necessary items took only the eighth place in the priority list. Dog food, shovels, and saddles were fourth, fifth and so on.”[8]

Earlier, in July 2013, Mohammad Reza Naderi, a customs office deputy said: “There is enough medicine in the country, but due to state bureaucracy a large volume of medicine has been piled up in the customs warehouses and are not released due to currency problems. In circumstances where we are under sanctions, we ourselves have also boycotted imports of medicine.”

Hossein Ali Shahriari, former Chair of the Health and Treatment Committee of Majlis (Parliament), emphasized that the medicine shortage started in March 2011 due to a lack of coordination between the Central Bank and the Health Ministry. On October 10, 2013, he said:

“Regrettably, the officials of the Ministry of Health at the time did not report to us the reality of the situation… and every time we asked them if they had any problem with the foreign currency, they would say no, they have no problem. This was the trend until September and October 2012 when they announced that the total foreign currency allocated to them was 120 million dollars, out of which 50 million euros were used to import women’s cosmetics and sanitation goods and only 70 million euros were allocated to medicine.”[9]

Mahmoud Bahmani, President of the Central Bank, said in 2013: “Some wanted to take advantage of the low rate for foreign currency offered by the government for import of medicine to import 75 ships of vehicles and luxury goods that are not essential.”[10]

Monopolies, hoarding, plunder by medicine distribution companies

Imports and the market for medicine are in the hands of specific individuals with unique connections in the regime. These monopolies actively control the market and safeguard the interests of institutions operating behind the curtain.

On July 25, 2018, the daily newspaper Javan, affiliated with the IRGC, quoted the head of pharmaceutical production syndicate as saying that 70 percent of imports of medicine is in the hands of two companies, contradicting the former head of the Food and Medicine Organization, who had said six companies manage 50 percent of medicine imports.

A while ago, some medicines such as IVIG, Albumin, Factor 8, and Oxaplex, which are all blood-related, fell short and became extremely rare in the market. Most of them are widely used in hospitals and are among the strategic medicines that the Ministry of Health put on top of its list of priorities. At that time, the state-run daily Mashreq reported that a significant portion of these items was hoarded in medicine warehouses. An employee of one of the substantial medicine distribution companies, who did not want to be identified, said:

“It can be said with confidence that at least three to four companies have these medicines in their warehouses. Monthly consumption of Albumin is between 150 to 200 thousand vials; it is close to a month that it has not been distributed in the market, whereas some 600,000 Vials of this medicine are available in the warehouses of these companies. This can cover the country’s needs for about 3 to 4 months. These companies are, in fact, rivals, but for their common interest, they have coordinated not to distribute the medicine until its price goes up.”

The price of hoarded medicines amounts to about $49 million.

In an interview with the state-run newspaper Sharq, economic expert Ehsan Soltani said of the import of the above medicines:

“Figures show that total imports of these medicines during the Iranian calendar year 1396 (mid-March 2017 to mid-March 2018) were close to $150 million. We had about $19 million in imports from mid-March to mid-June of 2017. This rose to $49 million in the same period of 2018, which is a 2.5-fold rise. In the past six months, we have imported $88 million of these medicines, which means a 17 percent rise on average. In other words, whether we consider the four months or 6-months period, we should not have any shortage of these items.”[11]

Medicine is so openly hoarded in Iran that Mohsen Jalavati, vice-chair of the Transparency and Justice Watch Organization told the state-run Channel One TV: “One of the import companies benefitting from low rate dollar for import of medicines had recently threatened the Deputy Minister of Health that if the prices of its medicines are not raised by 60 percent, these items would not be released from customs to cause a shortage in the country.”[12]

Abbas Zare-Nejad, an advisor to the Minister of Health, said: “Some shortages have been caused in some of the medical items not due to sanctions but due to foreign currency allocations, storage or problems of distribution.”[13]

Playing with the lives of people – importing expired medicine with the support of the regime
The regime also imports off-the-market medicine with low prices, and offers them to the internal markets, seriously endangering the lives of patients.

On September 8, 2019, it was announced that Shabnam Nemat-Zadeh, daughter of the former Minister of Industry Mohammad Reza Nemat-Zadeh, had been arrested for financial reasons.[14]

It was uncovered that she had been involved in imports of medicine whose dates for consumption had expired. She did this with the support of some elements within the regime.

It was reported in July-August 2018 that a warehouse had been discovered where outdated medicine imported by Nemat-Zadeh was stored. The total cost of medicine recognized was assessed to be about 80 million dollars.

Nemat-Zadeh graduated from university in 1996, entered the business about ten years ago, and quickly joined the club of Iranian female billionaires. She registered several medical-related companies during the 2000s. She began trading in medicine in 2009 and managed these companies together with her mother and sister.

According to a former employee of Nemat-Zadeh’s company (RASA): “Generally no one knew about the medicine warehouse. Only a few knew about the medicines stored, including the company director, technical officer, and another woman, who had the full information about the warehouse.”[15]

This pharmaceutical company, which was established on March 9, 2015, owed the country’s medical Industry about 95 million dollars. A significant part of its debt is owned by Shafa Medical Group, which is affiliated to Meli Bank. All members of Nemat-Zadeh’s family, including her husband and her 20-year-old daughter, were authorized, signatories. Her 12-year-old son was also among directors of the company. Before Rouhani’s presidency, his father was also a member of the company’s board, but his name was removed when he received a notice from the Majlis, and the names of his children were added instead.

Mohammad Reza Nemat-Zadeh
Mohammad Reza Nemat-Zadeh
This company enjoyed very close contact with the Ministry of Health and received the list of urgently required medicine well in advance. There were few other medical companies with such privileges, and this gave Nemat-Zadeh’s company an advantage that allowed it to dominate the market.

According to some former employees of the company, it was also engaged in price-manipulation. For instance, medicine bought for 10 euros might be listed as having cost 50 euros. Nemat-Zadeh was also a member of the Supplementary Medicine Importers Union and supervised the pricing of the medicine and had information on rivals’ prices.

This is not the only case. The Minister of Health said on July 16 that some of the medicine imported using low-rate foreign currency included outdated medicine. Those involved in this affair were working within the Food and Medicine Organization that is part of the Ministry.

Economic policies and the regime’s priorities
Amid all the above-described corruption, the Iranian regime continues to dispatch free medicine to other countries in the region, as part of its effort to exert influence beyond its borders.

For example, in connection with a religious ceremony in September 2018, the Iranian Red Crescent dispatched some 200 tons of medicine and consumable medical items to Iraq and supplied 40 medical centers. Ali Mar’ ashi, head of the medical center of the regime’s Red Crescent announced that the items included 400 types of various medicines and 80 types of various medical consumables.

Conclusion
The critical problems concerning medicine in Iran are a direct result of the regime’s practices and policies. No area in Iran is not affected by institutionalized corruption involving the regime’s top officials. Alongside widespread theft, medical shortages and high prices are caused by monopolies hoarding medicine with the backing of senior officials. The crisis in the making over the years has been highlighted during the Coronavirus pandemic.

The regime is exploiting the Iranian people’s predicament to alleviate sanctions to have more means to continue its repression, terrorism, and belligerence. Not even a dime that is given to this regime will reach the Iranian people. All assistance to Iran should be sent and distributed directly by the international agencies. Otherwise, they will be stolen by the regime.

As far as policies on foreign currency and budget allocation are concerned, one must realize that the regime’s absolute priority is to dedicate financial resources to suppression, the export of terrorism, support for terrorist groups, and warmongering in the region and proliferation of weapons of mass destruction. In these circumstances, medical problems and crises concerning medical shortages are at the bottom of the regime’s priorities.

Regarding the sanctions, the President-elect of the National Council of Resistance of Iran, Maryam Rajavi, said that those who are shedding crocodile tears for the religious fascism ruling Iran because of the sanctions should also show some empathy for the Iranian people. And if they are true to their words, they should force the regime to allow journalists, observers, missions, and foreign aid into the country and allow assistance to reach the needy without go-betweens. They should also press the regime to release all prisoners and to stop arrest, torture, and execution, and especially, compel the regime not to prevent the youth from helping their fellow citizens.

[1] Arman State-run newspaper- December 19, 2019

[2] https://www.eghtesadonline.com/- February 14, 2020

[3] https://www.aznews.tv/- February 3, 2020

[4] http://cabinetoffice.ir/fa/news/6702/- March 25, 2020

[5] https://tejaratnews.com/- July 15- 2019

[6] https://www.irna.ir/- November 11, 2019

[7] https://www.irna.ir/news/83143880

[8] https://www.khabaronline.ir/news/445489, August 11, 2015

[9] Salamat News website- October 10, 2013

[10] Parsineh website, August 5, 2013

[11] Sharq state-run daily, August 8, 2018

[12] Mashreq state-run daily, August 13, 2018

[13] ILNA state-run news agency, July 15, 2018

[14] Tasnim state-run news agency, September 8, 2019

[15] ISNA state-run news agency, August 18, 2018

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