Insulin Shortage Under Sanctions: Domestic and foreign profiteering, incompetence, and corruption
by Mahtab Dehghan 26 November 2020
Over the past few weeks, the hashtag “#انسولین_نیست” (“there is no insulin” in Persian), has spread via social media. This trend suggests a dire prospect for hundreds of thousands of diabetic patients in Iran: the diminishment of their access to this vital drug. Following its investigation into insulin production in Iran, Zamaneh Media looked into this issue.
Following the insulin shortage in Iran, Dr. Amir Kamran Nikoosokhan, the CEO of the Iranian Diabetes Association, asked the prominent insulin pen supplying companies such as Novo Nordisk and Sanofi to not cease the importation of insulin to Iran. Additionally, he requested their patience in receiving the money that the Central Bank of Iran owes to them. Otherwise, Dr. Nikoosokhan explained, a persistent insulin shortage would force diabetic patients to change their drug regimens.
The global COVID-19 pandemic had compounded the severity of this crisis: given the high risk of going to hospitals diabetic patients would not be able to consult with their physicians in person about changing their medications, which could prove fatal.
#انسولین_نیست
Diabetic patients, feeling helpless and terrified by the current circumstances, have turned to social media.
The hashtag #انسولین_نیست was trending among Iranian social media users over the past few days. Many of these users have expressed complaints about the insulin shortage and their deep concern over whether the current situation will continue. They maintained that they are unable to find imported analog insulin pens in even the “selected pharmacies,” even though hundreds of thousands of lives depend on them. On 18 October 2020, one user, Luna, tweeted:
“I have been diagnosed with Type 1 Diabetes for three years and it cannot be controlled with pills. I am only 18 and instead of worrying about my education and future, I worry that my insulin will run out and that I will not be able to find any. Without insulin, I would live for 4 days at most. #انسولین_نیست And this is a death sentence for me, and others like me.”
This tweet has been liked approximately 17,000 times and retweeted around 3,000 times thus far.
Many users tweeted in English in order to appeal to the international community; some only wrote “my mom,” “my dad,” “my grandfather,” followed by the hashtag in Persian.
👉🏽 About this investigation:
In the midst of the COVID-19 pandemic, hundreds of thousands of diabetic patients in Iran are facing the bleak prospect of a periodic shortage of insulin pens.
What is the underlying cause of this shortage in the market? Who is the main culprit?
Some blame the government deficit under sanctions, while some believe that the incompetence of the authorities in resource management is the main issue. Others maintain that corruption is the main factor contributing to this crisis, pointing to contraband smuggling and drug selling in domestic and foreign black markets.
According to experts and Zamaneh Media’s investigation, however, this multifaceted issue has several underlying causes. Sanctions do play a crucial role, as they both bankrupt the government and create opportunities for pharmaceutical avarice. The sanctions also enable the authorities to justify their inadequacy in managing the resources at their disposal. Corruption plays a critical part in this crisis as well. Some brokers import the drugs with the government subsidy and sell them for a much higher price to domestic and foreign buyers instead of distributing the drugs through legal channels.
Dr. Nikoosokhan spoke with Zamaneh Media on 21 October 2020 and insisted that this issue is not an insulin shortage but rather that “there is no insulin whatsoever,” going on to say that “even the state-owned and selected pharmacies do not have any insulin.” He added that if this crisis continued into the next week, many patients’ lives would be in jeopardy.
One pharmacist confirmed to Zamaneh Media on 20 October2020 that there were no insulin pens even in selected Iranian pharmacies, stating that the insulin rations had further decreased.
One week later, some diabetic patients told Zamaneh Media that they had managed to temporarily find insulin.
According to Mohsen S. from Mashhad: “Based on me and my family’s observations as we are grappling with this issue, the insulin situation in the free market is a little better than it was a few weeks ago. We could find insulin more easily, albeit at a higher price.”
One diabetic patient who requested to remain anonymous reported: “I used to get my insulin from the state pharmacies. I have a two-month insulin stash for now and am currently considering Iranian insulin. It is not an easy task to shift to Iranian insulin and it would take my body at least one month to adjust, during which I would have to monitor my blood sugar constantly. That is why I am buying test strips from anywhere I can, and the prices are so high.”
Forced to Change the Insulin Type
Some health officials and experts have suggested that diabetic patients in Iran change the type of insulin they use. This approach of trying to change consumer behavior is not new, and pharmacists and pharmaceutical stakeholders have used it several times in the past year.
Among the stakeholders trying to influence consumer decisions is Mohsen Kordi, CEO of Exir Pharmaceutical Company, which is the most prominent manufacturer of second-generation NPH and regular insulin in Iran. Kordi announced on television that he was hopeful that around 90 percent of patients would be able to use domestically produced insulin with the support of doctors. He also stated that only patients unable to use Iranian-produced insulin would be able to use the imported insulin pens.
Following the recent crisis, Asadullah Rajab, the Chairman of the Iranian Diabetes Association, suggested that some patients who can use human insulin might receive pertinent trainings and switch to domestic insulin to prevent their concerns about the future.
According to patients and endocrinologists, however, changing an insulin regimen is not that simple. Diabetic patients report that insulin pens are not only easier to use but also act faster and are more efficient.
Dr. Nikoosokhan stated that “many diabetic patients do not have even one insulin pen and are forced to use regular and NPH insulin.” Although domestically produced insulin is accessible, he expressed his concern that this type of insulin “is not suitable in some cases” and that “shifting is not an easy task.” The reason is not only potential allergic reactions, but also the inconvenience of human insulin injections in the patients’ daily lives. COVID-19 is spreading rampantly in Iran and those with diabetes are a high-risk group.
Due to the pandemic, many diabetic patients have opted for online doctor visits because they are unable to go to the hospital. This is problematic because adjusting an insulin regimen requires training and precise monitoring by a physician.
Dr. Nikoosokhan explained, “We cannot teach the patients how to use human insulin in online visitations. Injection of this kind of insulin is far more difficult than the insulin pens. Furthermore, there is no blood sugar monitoring with human insulin. Changing insulin regimens is a time-consuming process. The patient may experience sudden hypoglycemia, and so we should regulate the insulin for each patient. We used to do this in the hospitals, but now we have to increase daily tests to set the right insulin dosage.”
In addition to the insulin pens, there is also a shortage of blood sugar test strips in Iran. Most of these blood sugar test devices are imported, but there has been no foreign currency allocated to importing these strips. Many patients have already run out of test strips.
Dr. Nikoosokhan characterised this situation as burdensome, saying, “Because of the COVID-19 pandemic, diabetic patients cannot be visited in person and they are out of test strips and insulin pens. The patients’ insulin regimens should only be changed in person. Otherwise, it can lead to death. Insulin can be as lethal as it is necessary to the body.”
Reasons Behind Insulin Shortage
This crisis is not particularly new, as there have been reports of periodic shortages in the insulin market for at least for one year. This time, however, has proven to be the most difficult period for diabetic patients thus far. Considering sanctions, COVID-19, and state mismanagement, patients are grappling with a system of entangled difficulties.
Social media users and the media perceive two primary possible causes for this crisis: sanctions on Iran and drug smuggling into Iraq.
Despite the fact that some drugs and essential goods are exempt from the sanctions regime imposed by the United States, Iranian authorities and some experts blame sanctions for complications in importing medical drugs. They argue that after the onset of the maximum pressure campaign in October 2018, Iranian banks have been largely cut off from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system, which has impeded trade between Iran and other countries.
The authorities have stressed for months that imported drugs, especially insulin, are extremely foreign currency consuming.
Iranians’ day-to-day experience with the drug shortage and the rarity of some pharmaceutical goods support the claim that sanctions are the root cause of the shortage. The following thread further explains this issue:
Patients, the Blamed Victims
In a written response to Zamaneh Media, Mette Kruse Danielsen, Novo Nordisk’s Director of Media Relations, pointed to sanctions and drug hoarding by patients as the reasons behind the shortage.
“Because of the sanctions against Iran, trade and access to goods has become extremely difficult. Due to macroeconomic conditions and patients’ hoarding of drugs due to COVID-19 panic, we will experience periods when there is no access to drugs.”
Dr. Nikoosokhan dismissed Novo Nordisk’s argument of drug hoarding. He stated that, per physicians’ advice, diabetic patients should always have extra insulin on hand for emergencies. He noted that there was not enough insulin for this type of emergency supply, which created the crisis.
“I am a physician who still visits patients. I see desperate patients with no stored insulin. We advise diabetic patients to have enough extra insulin for two or three months in advance. Insulin is their lifeline; crises like earthquakes may happen and they should always have extra. But the current situation is that many of the patients have already gone through their stored insulin and have turned to NPH and regular insulin.”
He stated that these periodic shortages rendered the patients unable to store extra insulin as in the past. Furthermore, finding free market insulin was difficult without medical files and documents.
Sanctions: One Conundrum and One Simple Justification
Dr. Nikoosokhan agrees with Novo Nordisk’s reasoning about the impact of sanctions, emphasizing that Iran is in an economic crisis and consequently has difficulty paying for insulin.
In a conversation with DanWatch and Zamaneh Media, Dr. Nikoosokhan quoted Novo Nordisk’s sources in Iran: “Importing insulin is excruciatingly expensive for Iran. Due to the ever-growing budget deficit, the Iranian government has not been able to fully pay the price of the drugs for the past few months.”
He once again emphasized the role of sanctions and implored international institutions and pharmaceutical companies to be more lenient towards Iran.
“We want the European Union to think of arrangements so that Iran can buy [insulin] more easily. Foreign companies should understand Iran’s situation and continue importing insulin to Iran so that it fulfills its financial obligations as soon as the sanctions are lifted.”
Dr. Nikoosokhan pointed out that one possible source of foreign currency for insulin importation is the money frozen in foreign banks:
“We are aware that Iran has money frozen in Europe and other places; using that money can make the importation of insulin possible.”
Zamaneh Media has asked Novo Nordisk whether they have stopped the importation of drugs to Iran because of Iran’s debt, but the company’s Director of Media Relations declined to answer this question. Instead, he insisted that the shortage was exclusive to pharmacies and reiterated that negotiations were underway with Iran’s Ministry of Health:
“We negotiated with the Ministry of Health in order to prevent the drug shortage and we continue working with the local authorities to improve the situation.”
Sanofi did not answer Zamaneh Media’s questions on this matter
Exploitation or the Market Law?
Iranian officials have downplayed the insulin pen deficiency and, in response to the patients’ grievances, have urged diabetic patients to use domestic insulin. Officials have stressed insulin’s expense and high consumption of foreign currency several times over the past year.
Dr. Kianush Jahanpur, the speaker of the Iran Food and Drug Administration, faced an enormous backlash in social media, after advising patients to “lessen [their] insulin dosage.” He said of the tension between Iran and foreign pharmaceutical companies:
“Analog or insulin pens are one of the most currency-consuming drugs in Iran. Our intelligence from various countries shows that a minority of companies, in the current quasi-exclusive terms of the last few years, are abusing sanctions and selling their insulin at the previous prices.”
Dr. Jahanpur posted on Twitter:
“Several pharmaceutical companies that manufacture insulin, namely Novo Nordisk, Sanofi, Gan and Lee, Eli Lili, etc. under the commercial names of Lantus, NovoRapid, Lumiere, Glargine, Lispero, Aspart, Humalog, etc. are among the insulin brands distributed globally in insulin pen or biosimilar versions.”
He does not mention the foreign currency deficiency for drugs in this twitter thread, but emphasizes pharmaceutical extortions against Iran.
Zamaneh Media and DanWatch disclosed in a previous investigation that pharmaceutical companies took advantage of the sanctions and high number of diabetic patients in Iran.
Dr. Jahanpur is one of the few Iranian authorities who has confirmed that buying insulin in USD is extremely expensive for Iran. In another tweet, he explained that purchasing insulin through intermediaries would be cheaper than buying directly from companies.
“Allocating governmental currency for the importation of insulin appears to be less expensive compared to neighboring countries; but the real price of some brands cannot be calculated with the current currency prices. Interestingly, the hasty purchase of these [medical] drugs, even through intermediaries, would be cheaper for Iranians than the price offered by some pharmaceutical companies.”
Zamaneh Media and DanWatch have discovered that Novo Nordisk, the biggest supplier of insulin products to Iran, sells insulin pens to Iran at double the price offered to the United Kingdom and more than five times its production cost.
Dr. Jahanpur commented on this pricing issue:
“The high consumption volume, the variety of the brands and biosimilar versions of the analog insulin in the international market, and the start of their manufacturing in Iran, mandate the lowering of the price of this drug in Iran, and that the market monopoly should break and the prices become reasonable.”
Novo Nordisk denies insulin price gouging. Charlotte Zarp-Andersson, Novo Nordisk’s Associate Director of Media, stated in an email:
“The prices are set based on negotiations with the authorities, Iranian brokers and intermediaries, and current mechanisms in international pricing. The drug pricing in Iran is totally lawful and supervised; the pharmaceutical companies cannot influence the pricing of the drugs.”
The chart below shows insulin market shares based on the supplying companies. It is clear that Novo Nordisk tops this list by a large margin.
Smuggling, Middlemen, Rent-Seeking, and What Else?
The government has set the official exchange rate as 42000 rials per dollar. The free market rate is five times higher. This difference has led to cheap price for imported drugs — cheaper than their price in neighboring countries and around the world.
This issue has not only caused rent-seeking but also drug smuggling. Drug and insulin smuggling, however, is not a novel problem. Approximately one year ago, Mohammadreza Shanehsaz, the Chairman of the Iran Food and Drug Administration, confirmed instances of insulin smuggling to neighboring countries.
In recent months, the continued growth of foreign currency prices and their gross difference from governmental currency prices, has resulted in unprecedented drug smuggling and selling on black markets. This trend has caused some people to blame the insulin shortage on smuggling.
Two weeks ago, in the midst of an insulin shortage, news broke that 19 trucks containing hundreds of thousands of drugs had been seized while bound for Iraq. This news caused an uproar.
Ministry of Health authorities denied drug smuggling in this case, but several governmental authorities confirmed the news. These other governmental authorities saw this problem as an effect of the government’s currency rent and the low prices of drugs in Iranian Rials compared to the prices in neighboring countries.
Instances of drug smuggling to Iran’s neighbors have evoked emotional responses from social media users and resulted in the belief that smuggling and the insulin shortage are very much interrelated.
Hassan Nayeb Hashem, a physician and human rights activist, commented on the issue of drug smuggling to neighboring countries, stating that the insulin shortage began in cities along Iran’s borders. According to him, it was plausible that smuggling started with minor traders rather than major importers:
“Businessmen close to the government have been able to import some of the needed drugs at the governmental currency of 42,000 rials. But since the real prices of imported drugs like insulin are eight to 15 times more than that, these businessmen sell 75 percent of the imported drugs to neighboring countries. In fact, only a small portion of imported drugs reaches the Iranian market and even this small portion is sold on the black market and does not enter the proper channels.”
However, Dr. Nikoosokhan believes that smuggling is not the main problem but rather a side effect of the drug shortage:
“Any kind of shortage has consequences, like smuggling and drugs being sold on the black market. These are effects of the same cause. We should seek the root of the problem. Otherwise, why were there not such problems when there was adequate insulin?”
Ineptitude and Lack of Proper Management
In this situation, the authorities’ ineptitude has exacerbated the crisis, causing an amalgamation of unsolved issues.
For a long time, medical and economics experts have stressed that the allocation of 42,000 rials to the importation of drugs is ineffective. They believe that the government should halt currency allocations and direct its assistance to patients contending with buying drugs and insurance.
Proper drug management and import regulations based on market demand necessitate correct statistics and close estimation of the insulin need in the country. There is still no reliable estimation of the number of insulin users in Iran, however. The number of insulin pens used is also unclear.
Dr. Nikoosokhan stated that the lack of reliable statistics and information makes proper management impossible. He declined to provide any concrete numbers, noting that statistics roughly estimate that 11 percent of the Iranian population over 25 years old is diabetic.
