Morocco’s Court of Audits Calls on Government to Adress Overpriced Medication

Morocco’s Court of Audits called on the government to intervene and address the issue of elevated medication prices. In its annual report at the end of 2022, the court raised concerns over certain medications that are overpriced partly due to outrageously high-profit margins that reach as much as 57%.

Rabat – Morocco’s Court of Audits called on the government to intervene and address the issue of elevated medication prices. In its annual report at the end of 2022, the court raised concerns over certain medications that are overpriced partly due to outrageously high-profit margins that reach as much as 57%.

On a long list of inconsistencies in Morocco’s medication market, the court of audits argues that high-profit margins are among the prime factor contributing to the elevated prices of medication.

In Morocco, the profit margin on medication ranges between 47% and 57% for medications that cost MAD 588 ($57) before tax. This rate is by far the highest compared to a list of benchmark countries that includes Turkiye, Denmark, France, and Portugal where profit margins on the same types of medication do not exceed 25%.

For medication with a production cost exceeding MAD 588 ($57) in Morocco, pharmacies’ profit ranges between MAD 300 ($29) to MAD 400 ($39) per pack, a far cry from the 2% in Turkiye for medication exceeding MAD 222.46 ($21.47).

Adding to the disproportionately high-profit margins, the court of audits indicates that Value Added Tax (VAT) is another prime factor driving the cost of medication up in the country. Compared to other benchmark countries, Morocco has the highest government-imposed tax on medication.

In Morocco VAT on medication is set at 7%, higher than 2.1% in France, 4% in Spain, and 5% in Portugal.

According to the report, the government has implemented a number of policies to reduce the prices of medication between 2014 and 2021. However, these efforts had little to no effect on the final price of some medications.

While the policies lowered the prices of 43% of medications on the market, 44 types of medication saw a price increase, and 61% remained unaffected.

The price reductions were minimal at best, with the cost of 760 types of medications dropping by MAD 2 ($0.1) or less, and the price of 1,450 other types experiencing a price decrease of less than MAD 10 ($0.9).

To address these pressing issues, the court presented a number of recommendations that include directly regulating prices on the market and supporting the creation of a domestic industry for medications to lower prices.