Iranian pharmaceutical industry figures warned that illicit Iranian-made medicines are increasingly appearing in Afghanistan, undercutting legal exports and deepening shortages at home.
Pharmaceutical sector representatives say the flow has accelerated after Pakistan curtailed drug exports to Afghanistan, turning Iran’s subsidized market into an attractive source for traffickers.
They argue that wide price gaps between Iran and neighboring countries have made smuggling structurally profitable, sidelining legal export channels.
Drug production has increased by around 50% but shortages persist, Mohsen Abdollahzadeh, a board member of the Drug Distributors Syndicate said on Tuesday.
“Drug smuggling from Iran to Iraq and Afghanistan is so extensive that traders in those countries are unable to import medicines legally and cannot compete with smuggled Iranian drugs,” he added.
Food and Drug Administration of Iran has conceded that so-called “reverse smuggling” exists, driven by sharp price differences with neighboring markets.
However, spokesperson Mohammad Hashemi disputed a widespread surge, saying documented cases remain limited. Continued leakage, he warned, could trigger intermittent shortages and place further strain on an already fragile supply chain.
Recent talks with an Afghan delegation, Hashemi said, focused on expanding formal pharmaceutical exports and improving monitoring, a move critics say reflects belated damage control rather than a solution to entrenched enforcement gaps.
Food market shows same fault lines
The controversy mirrors developments in food markets, where currency policy shifts and the removal of subsidized exchange rates have driven sharp increases in staple prices.
Analysts say both sectors show the same pattern: multiple pricing regimes and weak oversight have encouraged arbitrage and cross-border leakage.
For consumers, the result has been recurrent shortages and rising costs, as subsidized goods – whether medicine or food – slip out of regulated channels faster than authorities can contain them.
Authorities say medicines are still available for now, but concede that delays in transferring allocated foreign exchange, mounting arrears to suppliers and dwindling inventories have pushed the sector to the brink, increasing the risk of shortages in the final months of the Iranian year, which ends on March 20.
In an economy battered by chronic inflation and currency volatility, officials say, keeping drug prices frozen shifts the burden onto manufacturers and ultimately jeopardizes national drug supply chain.
The session was held to share information between the government and lawmakers on how to address public grievances, Abbas Goudarzi, spokesperson for parliament’s presiding board, told reporters after the meeting.
He said a five-member joint committee had been formed between the government and parliament, with briefings delivered by the heads of the Planning and Budget Organization and the Central Bank of Iran.
Ineffective policies
Goudarzi cited oil sales, the return of export earnings and unresolved foreign-currency obligations as key factors shaping current economic conditions, saying their combined impact had produced the present situation.
He pointed to the allocation of about $10 billion in subsidized foreign currency for essential goods as an example of ineffective policy design, adding that roughly $8 billion was directed to livestock feed while consumers continued to pay market prices for basic items.
“There is no logic in allocating this volume of currency if it does not reach its target,” Goudarzi said, adding that existing mechanisms had failed to translate support into lower costs for households.
Iran introduced its preferential foreign-exchange system in April 2018 under then president Hassan Rouhani, fixing the dollar at 42,000 rials in an effort to cushion households from price shocks and ensure imports of essential goods and medicines using oil revenues.
As the gap between the official and market rates widened – and the rial slid to record lows above 1.32 million per dollar this week – the policy became increasingly costly.
The administration of Ebrahim Raisi dismantled the system as part of what it branded “economic surgery,” arguing that it fueled arbitrage, corruption among importers, and failed to benefit consumers.
Several months later, the government reinstated subsidized currency at 285,000 rials to the dollar, roughly half the market rate at the time. The scheme initially covered 25 categories of goods, though the list has since been pared back.
In recent months, preferential currency has been removed from imports of staples including rice, vegetable oil, red meat, animal feed, and some medicines.
Budget pressure builds
The Tuesday morning session, Goudarzi said, was held behind closed doors, with an open afternoon meeting scheduled with the president.
The government will submit the draft budget to Iran’s parliament on Tuesday for the first time based on the new rial, following the removal of four zeros from the national currency.
The new year's budget bill is being submitted to parliament amid signs it has been drafted as one of the most contractionary budgets in recent years.
Goudarzi described the Tuesday meeting as an attempt to coordinate the executive and legislative branches to manage economic and currency challenges.
He outlined a compressed review timetable, saying the draft budget will be examined by the combined budget committee within three days before being sent to the plenary, whether approved or rejected.
If endorsed, it will then move to specialist committees for further study under strict deadlines before returning to the combined committee and, ultimately, the full chamber.
Goudarzi noted that under parliamentary rules the government was required to submit the budget on December 23, but did so a day later because no open session was held to formally trigger the review process.
