Letter to the Editor: Did the Daruyar Plan Increase Out‐of‐Pocket Spending on Medicines in Iran?

Ensuring the availability of high-quality, safe, and efficacious medicines is essential for the optimal functioning of a healthcare system. The cost of medication continues to pose a significant barrier to access, and the economic ramifications of pharmaceutical expenses are substantial. In many low-income countries this financial burden stands as a primary driver of household impoverishment and debt [1]. According to data from Iran's National Health Accounts from 2011 to 2020, an average of 18.3% of healthcare expenditures was allocated to pharmaceuticals and other medical products dispensed to outpatients [2]. In Iran, imported medicine represent a significant portion of the total monetary value of the pharmaceutical market. Furthermore, many domestically manufactured pharmaceutical products depend on imported raw materials. Consequently, fluctuations in the exchange rate impact not only imported medicines but also exert a significant influence on the entire pharmaceutical market of the country, leading to substantial price increases. Hence, in 2018, amid escalating economic sanctions and a currency crisis in the country, efforts were made to facilitate public access to medicine, such as the allocation of preferred currency subsidies at an exchange rate of 42,000 Rials for medicines. However, in subsequent years, ongoing economic challenges and a scarcity of foreign exchange resources prompted modifications to this policy [3]. During the summer of 2022, a program named ‘Daruyar’ was initiated in the country, targeting a modification in the supportive policy of currency subsidies within the pharmaceutical sector. Previously, the preferred currency subsidy was directed towards raw materials, whether locally manufactured or imported into the country, primarily focussing on the initial stages of the supply chain. However, with the introduction of this plan, subsidies for medicines have been shifted towards the end of the supply chain, and are allocated to the final consumer through insurance mechanisms [4]. In this letter, we examined households' out-of-pocket (OOP) payments for medications, utilising data from the household income and expenditure survey [5]. In light of the implementation of ‘Daruyar’ in the summer of 2022, a comparison was conducted regarding the changes in households' OOP payments expenses for medicine between the spring (season before intervention) and autumn (season after intervention) seasons of both 2021 and 2022 (to control seasonal changes). Additionally, the costs incurred in 2022 were adjusted to the constant values of 2021, using the consumer price index specific to pharmaceutical products. Household OOP spending on medicines increased by 31.7% in autumn 2022 versus spring, compared to 26.9% in 2021—a 5% excess rise attributable to Daruyar. This is while the percentage change in the increase in OOP payments for total health expenditures has not only not increased, but has also decreased from 22.4 in 2021 to 21.4 in 2022. See more data in terms of absolute and relative in Table 1. Based on this initial analysis, it has been determined that the plan has resulted in an increase in households OOP payments for medicines. The increase in household pharmaceutical expenditure due to the implementation of Daruyar plan was predictable, because by eliminating preferred currency subsidy to medicines manufacturers and importers, the price of medicine products actually increased by 3–4 times. Of course, policymakers claim that by not changing out-of-pocket payments, we mean that the household share (OOPs) of total drug spending does not change, that is, if the share of the people and insurance for insured drugs was 30 and 70 respectively before the Daruyar plan, it will not change after it. But the point to consider is that the absolute increase in household pharmaceutical expenditure is more important than the household share in drug financing. For instance, if a drug cost 100 before Daruyar, the household paid 30. After prices quadrupled, households paid 120 despite the same 30% share. This absolute increase matters more than the relative share, as households face higher financial risk without increased purchasing power. As conclusion, Daruyar increased household OOP spending on medicines despite intentions. Absolute households' OOP increases undermine financial protection and risk catastrophic expenditure. Sustainable financing and timely payments to insurers are essential for policy success. Given these early insights, further empirical inquiry is essential to fully understand the implications and guide evidence-informed policy. The author declares no conflicts of interest. The data that support the findings of this study are available from the corresponding author upon reasonable request.