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jha 2025, 28(2): 82-89 |
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Dehghan Tooranposhti A, Eslamitabar S, Sobhanian A. Comparative study of pharmaceutical pricing systems in Iran and selected countries. jha 2025; 28 (2) :82-89
URL: http://jha.iums.ac.ir/article-1-4592-en.html
URL: http://jha.iums.ac.ir/article-1-4592-en.html
1- Department of Pharmacy, TeMS.C., Islamic Azad University, Tehran, Iran
2- Smart Medical Sciences University, Ministry of Health, Tehran, Iran.
3- Department of Pharmacoeconomics & Pharmaceutical Management, TeMS.C., Islamic Azad University, Tehran, Iran. ,sasobhanian@yahoo.com
2- Smart Medical Sciences University, Ministry of Health, Tehran, Iran.
3- Department of Pharmacoeconomics & Pharmaceutical Management, TeMS.C., Islamic Azad University, Tehran, Iran. ,
Keywords: Healthcare systems, Drug pricing regulations, Reference pricing, Negotiated pricing, Value-based pricing
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Discussion
Pharmaceutical manufacturers are always looking to maximize the profits of their products, and one of the main ways achieve this is through pricing. On the other hand, drugs play a fundamental role in the healthcare system of every society and account for a significant percentage of total healthcare expenses. Inappropriate drug pricing has long effects on the health of the community, the quality of products, patient access, and ultimately the services provided by the healthcare sector. Therefore, every society needs to develop comprehensive laws and regulations to regulate and control drug pricing [1-3]. Most governments have national laws and regulations that specifically cover drug pricing, which are often developed and implemented by institutions or committees compromising both industry stakeholders and the government.
In the three countries, Spain, France, and Turkey, that were compared with Iran, there are distinct and transparent pricing laws for each category of drugs, including imported, original brand, generic, etc., designed to protect manufacturers and consumers. This has led to advancements and innovation in the pharmaceutical industry, while maintaining quality and ensuring easy access to drugs for patients [4-7]. Currently, one of the main challenges in the Iranian pharmaceutical industry is reaching a balance between price and other aspects such as drug quality and innovation. When comparing the conditions in the studied countries with Iran, several key weaknesses in Iran’s pricing structure emerge, including mandatory pricing, lack of full transparency in the pricing process, unpredictability of prices for industry owners, and insufficient attention to consensual negotiations between stakeholders and decision-making institutions.
In Turkey, direct price control is applied to all drugs, with the foreign and domestic reference pricing system, coupled with negotiations with manufacturers, are the main drug pricing strategies. To identify drugs eligible for reimbursement, a list called “positive list” is used. In Turkey, the lowest price available among the reference countries, including Spain, France, Portugal, Greece and Italy, is considered the reference price. The retail price is determined after applying the fixed Euro rate to the ex-factory price, along with the profit margins of wholesalers, pharmacies, and taxes [8].
In Spain, direct price control is applied only to drugs included in the reimbursement list, while drugs outside this list are priced by the market. The pricing system in Spain is a combination of a mark-up system, negotiated pricing, reference pricing and value-based pricing. Additionally, in Spain, when determining the price based on cost, production costs, research and development, marketing and other commercial and administrative costs are taken into account. In Spain, different strategies are employed depending on whether the drugs are innovative and under patent or if generics have been introduced. In this country, there is a list to identify drugs eligible for reimbursement (similar to Turkey). In Spain, 14 countries are considered for foreign reference pricing, and the price should not exceed the lowest price of that drug in these countries [9].
In France, as in Spain, direct price control is applied only to drugs included in the reimbursement list, while drugs outside this list are priced by the market. The pricing of specific drugs is semi-controlled and determined through negotiation. In France, the negotiated and value-based pricing system is the main strategy, with reference pricing also being used. The cost-based pricing system is not used in France. In this country, four countries, Germany, Italy, Spain, and the United Kingdom, are considered reference countries. France also have a positive list, in which drugs covered by reimbursement are specified [10].
In Iran, as in France and Spain, direct price control is applied to drugs, but over-the-counter drugs are exempt from this regulation. Like all the studied countries, Iran also has a list of drugs covered by insurance, called the “positive list”. Currently, in Iran, foreign reference pricing systems (similar to the three other countries) are the basis for pricing, along with manufacturer proposals. However, for some drug categories, pricing is still based on cost and mark-up, whereas previously all drugs in Iran were priced this way. The pricing of patented drugs, original brands, generics, and others follows specific and different processes. Reference countries considered in Iran include Greece, Hungary, Turkey, Spain, and South Africa. The reference price in Iran is the lowest wholesale price among the reference countries or the manufacturer's factory price.
Conclusion
According to the results, one of the recent changes in the drug pricing process has been the abandonment of the inflexible and outdated mark-up method. Instead, prices are now determined through the decision of the pricing committee, consultations with manufacturers, and the use of the reference pricing method, which has led to a major improvement in drug pricing. The combined negotiated and reference pricing method is among the primary methods used by leading countries in the world. Another important finding is the recent effort by the pricing commission to identify and publish the variables and regulations influencing drug pricing in Iran. These variables include exchange rate fluctuations, customs tariffs, company financial costs, and general inflation rates; however, they have not been fully considered in the pricing process, resulting in limited transparency. On the other hand, pharmaceutical market stakeholders face difficulties in accurately predicting the price of their products.
Limitations
This study has mainly addressed drug pricing laws and regulations from the prespectives of pharmaceutical science and drug economics and management. Given the interdisciplinary nature of this issue and its connection with both law and pharmacy, future research by legal scholars is recommended to explore legal dimensions of this topic. Due to the competitive complexities and regulatory restrictions within the pharmaceutical industry, manufacturers are usually under more pressure than other actors in this chain. Since pressure on one sector can affect the entire performance of the pharmaceutical industry, greater care and balance are required when determining the key indicators of drug pricing to enhance quality and productivity for both manufacturers and consumers.
Declarations
Ethical considerations: Not applicable.
Funding: This research has no financial support and all costs of its implementation were paid by the authors.
Conflict of interest: The authors declare that there are no conflicts of interest.
Author contributions: A.DTP: Conceptualization, study design, data analysis, writing– original draft; S.ET: Study design, writing–review & editing, validation; SA.S: Study design, data analysis, supervision , validation.
Consent for publication: Not applicable.
Data availability: The data used in this study are available via the email of the corresponding author.
AI declareation: The Grammarly was used to edit the English part of this article. All content edited with this program has been reviewed and approved by the authors.
Acknowledgements: This research is derived from the PhD thesis in General Pharmacy at the Faculty of Pharmacy, Islamic Azad University of Medical Sciences, Tehran, which was approved on 30/03/1401 and with the code 13632327526190226018162586655. All respected colleagues who participated in this research are hereby thanked and acknowledged
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Introduction
Iran's pharmaceutical system, like other pharmaceutical systems worldwide, is struggling with the high costs of new drugs. Obviously, in such circumstances, Iran's pharmaceutical pricing system, with its old structure, policies, and regulations, will not be efficient and effective. Since pharmaceutical costs account for a large portion of the country's healthcare costs, and foreign currency is needed to purchase pharmaceutical products, inefficiency in drug selection and pricing can be considered a major factor in healthcare cost wastage [1]. The pharmaceutical policy and system governing the country are known as the generic system, which is overseen by the Ministry of Health and the Food and Drug Administration. The primary goal of implementing the generic plan was to increase domestic drug production, reduce foreign exchange outflows, and reduce dependence on foreign countries for drug supplies [2]. In addition to the limitations of the generic system in drug pricing, another major problem in Iran is the use of traditional cost-based pricing methods, where the drug price is calculated using the compensatory increment method [3].
Given that leading pharmaceutical countries such as France, Spain, and Turkey have adopted specific and well-defined drug pricing strategies [4-7], comparing their reference pricing system with that of Iran can provide insights for improvement. Therefore, different drug pricing strategies and policies in Iran and these countries have been examined and compared in this study.
Methods
In this comparative study, the data were collected from relevant articles, laws, regulations, and guidelines in both law and pharmacy literature between 1995 and 2021. Then, the common and frequently cited items among the countries were reviewed and compared. Printed and non-printed books, articles identified from reputable scientific databases such as PubMed and global legal and pharmaceutical databases were also reviewed for domestic and foreign articles. The official websites of the Ministries of Health of the selected countries were also searched.
The countries were examined and selected in terms of income level, regional and geographical location, and the level of development and progress in the pharmaceutical industry. France was selected as a global leader in the pharmaceutical industry and as a representative of the most advanced countries in this industry. Spain was selected as a major pharmaceutical hub of the European :union: with a large market and a distinc drug pricing system. Turkey has also made significant progress in the pharmaceutical industry in recent years and implemented major changes to its health system. Owing to its geographical proximity and legal similarities to Iran, Turkey was also selected as the third comparison country.
Results
Table 1 comapres drug pricing systems among Turkey, Spain, France, and Iran [8-10].
Iran's pharmaceutical system, like other pharmaceutical systems worldwide, is struggling with the high costs of new drugs. Obviously, in such circumstances, Iran's pharmaceutical pricing system, with its old structure, policies, and regulations, will not be efficient and effective. Since pharmaceutical costs account for a large portion of the country's healthcare costs, and foreign currency is needed to purchase pharmaceutical products, inefficiency in drug selection and pricing can be considered a major factor in healthcare cost wastage [1]. The pharmaceutical policy and system governing the country are known as the generic system, which is overseen by the Ministry of Health and the Food and Drug Administration. The primary goal of implementing the generic plan was to increase domestic drug production, reduce foreign exchange outflows, and reduce dependence on foreign countries for drug supplies [2]. In addition to the limitations of the generic system in drug pricing, another major problem in Iran is the use of traditional cost-based pricing methods, where the drug price is calculated using the compensatory increment method [3].
Given that leading pharmaceutical countries such as France, Spain, and Turkey have adopted specific and well-defined drug pricing strategies [4-7], comparing their reference pricing system with that of Iran can provide insights for improvement. Therefore, different drug pricing strategies and policies in Iran and these countries have been examined and compared in this study.
Methods
In this comparative study, the data were collected from relevant articles, laws, regulations, and guidelines in both law and pharmacy literature between 1995 and 2021. Then, the common and frequently cited items among the countries were reviewed and compared. Printed and non-printed books, articles identified from reputable scientific databases such as PubMed and global legal and pharmaceutical databases were also reviewed for domestic and foreign articles. The official websites of the Ministries of Health of the selected countries were also searched.
The countries were examined and selected in terms of income level, regional and geographical location, and the level of development and progress in the pharmaceutical industry. France was selected as a global leader in the pharmaceutical industry and as a representative of the most advanced countries in this industry. Spain was selected as a major pharmaceutical hub of the European :union: with a large market and a distinc drug pricing system. Turkey has also made significant progress in the pharmaceutical industry in recent years and implemented major changes to its health system. Owing to its geographical proximity and legal similarities to Iran, Turkey was also selected as the third comparison country.
Results
Table 1 comapres drug pricing systems among Turkey, Spain, France, and Iran [8-10].
Table 1. General comparison table of drug pricing between Turkey, Spain, France and Iran
| Basis of pricing | Iran | France | Spain | Turkey |
| According to pricing rules | Based on pricing negotiations | According to pricing rules | According to pricing rules | |
| Main pricing strategies | Premium and reference pricing | Combination of value-based pricing and reference and negotiated pricing | Combination of mark-up and reference pricing | Internal and external reference pricing |
| Direct price control | Applies to all drugs | Applies only to original brand drugs | Applies only to original brand drugs | Applies to all drugs |
| Reference pricing | Applies | Applies | Applies | Applies |
| Different pricing between generics and branded drugs | Implemented | Implemented | Implemented | Implemented |
| Price reduction and discount | Not implemented | Volume-based contracts and forced discounts | Refund and mandatory discount | Not implemented |
| How to determine the percentage of surcharge | Based on the price range of the drug | Based on the price range of the drug | Based on the price range of the drug | Based on the price range of the drug |
| Drug pricing authority | Drug pricing commission (affiliated with the Food and Drug Administration) | Economic committee on healthcare products | Inter-ministerial committee on pricing and reimbursement |
| Medicines and medical devices agency |
Discussion
Pharmaceutical manufacturers are always looking to maximize the profits of their products, and one of the main ways achieve this is through pricing. On the other hand, drugs play a fundamental role in the healthcare system of every society and account for a significant percentage of total healthcare expenses. Inappropriate drug pricing has long effects on the health of the community, the quality of products, patient access, and ultimately the services provided by the healthcare sector. Therefore, every society needs to develop comprehensive laws and regulations to regulate and control drug pricing [1-3]. Most governments have national laws and regulations that specifically cover drug pricing, which are often developed and implemented by institutions or committees compromising both industry stakeholders and the government.
In the three countries, Spain, France, and Turkey, that were compared with Iran, there are distinct and transparent pricing laws for each category of drugs, including imported, original brand, generic, etc., designed to protect manufacturers and consumers. This has led to advancements and innovation in the pharmaceutical industry, while maintaining quality and ensuring easy access to drugs for patients [4-7]. Currently, one of the main challenges in the Iranian pharmaceutical industry is reaching a balance between price and other aspects such as drug quality and innovation. When comparing the conditions in the studied countries with Iran, several key weaknesses in Iran’s pricing structure emerge, including mandatory pricing, lack of full transparency in the pricing process, unpredictability of prices for industry owners, and insufficient attention to consensual negotiations between stakeholders and decision-making institutions.
In Turkey, direct price control is applied to all drugs, with the foreign and domestic reference pricing system, coupled with negotiations with manufacturers, are the main drug pricing strategies. To identify drugs eligible for reimbursement, a list called “positive list” is used. In Turkey, the lowest price available among the reference countries, including Spain, France, Portugal, Greece and Italy, is considered the reference price. The retail price is determined after applying the fixed Euro rate to the ex-factory price, along with the profit margins of wholesalers, pharmacies, and taxes [8].
In Spain, direct price control is applied only to drugs included in the reimbursement list, while drugs outside this list are priced by the market. The pricing system in Spain is a combination of a mark-up system, negotiated pricing, reference pricing and value-based pricing. Additionally, in Spain, when determining the price based on cost, production costs, research and development, marketing and other commercial and administrative costs are taken into account. In Spain, different strategies are employed depending on whether the drugs are innovative and under patent or if generics have been introduced. In this country, there is a list to identify drugs eligible for reimbursement (similar to Turkey). In Spain, 14 countries are considered for foreign reference pricing, and the price should not exceed the lowest price of that drug in these countries [9].
In France, as in Spain, direct price control is applied only to drugs included in the reimbursement list, while drugs outside this list are priced by the market. The pricing of specific drugs is semi-controlled and determined through negotiation. In France, the negotiated and value-based pricing system is the main strategy, with reference pricing also being used. The cost-based pricing system is not used in France. In this country, four countries, Germany, Italy, Spain, and the United Kingdom, are considered reference countries. France also have a positive list, in which drugs covered by reimbursement are specified [10].
In Iran, as in France and Spain, direct price control is applied to drugs, but over-the-counter drugs are exempt from this regulation. Like all the studied countries, Iran also has a list of drugs covered by insurance, called the “positive list”. Currently, in Iran, foreign reference pricing systems (similar to the three other countries) are the basis for pricing, along with manufacturer proposals. However, for some drug categories, pricing is still based on cost and mark-up, whereas previously all drugs in Iran were priced this way. The pricing of patented drugs, original brands, generics, and others follows specific and different processes. Reference countries considered in Iran include Greece, Hungary, Turkey, Spain, and South Africa. The reference price in Iran is the lowest wholesale price among the reference countries or the manufacturer's factory price.
Conclusion
According to the results, one of the recent changes in the drug pricing process has been the abandonment of the inflexible and outdated mark-up method. Instead, prices are now determined through the decision of the pricing committee, consultations with manufacturers, and the use of the reference pricing method, which has led to a major improvement in drug pricing. The combined negotiated and reference pricing method is among the primary methods used by leading countries in the world. Another important finding is the recent effort by the pricing commission to identify and publish the variables and regulations influencing drug pricing in Iran. These variables include exchange rate fluctuations, customs tariffs, company financial costs, and general inflation rates; however, they have not been fully considered in the pricing process, resulting in limited transparency. On the other hand, pharmaceutical market stakeholders face difficulties in accurately predicting the price of their products.
Limitations
This study has mainly addressed drug pricing laws and regulations from the prespectives of pharmaceutical science and drug economics and management. Given the interdisciplinary nature of this issue and its connection with both law and pharmacy, future research by legal scholars is recommended to explore legal dimensions of this topic. Due to the competitive complexities and regulatory restrictions within the pharmaceutical industry, manufacturers are usually under more pressure than other actors in this chain. Since pressure on one sector can affect the entire performance of the pharmaceutical industry, greater care and balance are required when determining the key indicators of drug pricing to enhance quality and productivity for both manufacturers and consumers.
Declarations
Ethical considerations: Not applicable.
Funding: This research has no financial support and all costs of its implementation were paid by the authors.
Conflict of interest: The authors declare that there are no conflicts of interest.
Author contributions: A.DTP: Conceptualization, study design, data analysis, writing– original draft; S.ET: Study design, writing–review & editing, validation; SA.S: Study design, data analysis, supervision , validation.
Consent for publication: Not applicable.
Data availability: The data used in this study are available via the email of the corresponding author.
AI declareation: The Grammarly was used to edit the English part of this article. All content edited with this program has been reviewed and approved by the authors.
Acknowledgements: This research is derived from the PhD thesis in General Pharmacy at the Faculty of Pharmacy, Islamic Azad University of Medical Sciences, Tehran, which was approved on 30/03/1401 and with the code 13632327526190226018162586655. All respected colleagues who participated in this research are hereby thanked and acknowledged
Type of Study: Short Communication |
Subject:
Health Services Management
Received: 2025/07/20 | Accepted: 2025/08/27 | Published: 2025/10/11
Received: 2025/07/20 | Accepted: 2025/08/27 | Published: 2025/10/11
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