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This article will cover both well-established law for trade in medicines and new developments opening Iraq’s healthcare sector to private investment. We will start with the trade aspect and cover the import process. Then we will move to the legal framework specific to investing in healthcare in Iraq.
Trade in medical products
Importation of medical products, which include medicines, cosmetics, and medical appliances, can follow different business models depending on who the buyer is. There are two broad possibilities in Iraq: the buyer can be the State company for marketing drugs and medical appliances (‘KIMADIA’) or it can be a buyer from the Iraqi private market. On the public procurement side, KIMADIA is the only governmental body authorised to import medical products on behalf of the Iraqi government, and it does so using the usual regulations for public tendering applicable in Iraq. When KIMADIA solicits bids for public tenders, it follows regulations no 1 and 2 of 2014 on implementing government contracts. This entails certain contracting requirements that must be followed by the bidder, such as submitting preliminary guarantees with bids and posting performance bonds from an acceptable local bank, prior to KIMADIA awarding a bid.
According to Iraq’s Pharmaceutical Law (Federal Law No. 40 of 1970) and accompanying instructions (Instructions No. 4 of 1998) regulating scientific offices in the business of marketing pharmaceutical products, importing medical products to Iraq must be done exclusively through Iraqi registered third parties ‘scientific offices’. The only exception is if KIMADIA deems it necessary to import products directly. While KIMADIA has the authority to deal directly with non-Iraqi manufacturers or marketers, it still prefers to deal through Iraqi registered scientific offices whenever possible. Where dealing with the Iraqi private sector, the only way to trade in medical products is through a scientific office.
There are two relevant regulators in the Iraqi healthcare sector, the Ministry of Health and Environment (‘Ministry of Health‘) and the Syndicate of Iraqi Pharmacists. Generally speaking the following should be kept in mind when importing medical products to Iraq,
Investing in Iraq’s healthcare sector
In 2015, the Iraqi parliament passed the Law on Establishing Private Healthcare Institutions (Federal Law No. 25 of 2015) (the ‘Private Healthcare Institutions Law’), which came into force on 29 June 2015. The new law repealed the old private hospitals law (Federal Law No. 25 of 1985) and some articles in the public health law (Federal Law No. 89 of 1981). The Private Healthcare Institutions Law included major developments and improved the legal framework for private investment in healthcare. The Ministry of Health will issue regulations detailing how it intends to implement the new law. In the meantime, we can point out the following incentives and changes introduced by the new law:
The Private Healthcare Institutions Law is not the only piece of applicable legislation with incentives. Depending on how the investment is structured, it can be a second, more specific, layer which operates on top of the Investment Law (Federal Law No. 13 of 2006), with its two amendments. Unlike the Investment Law, which requires holding a licence from the National Investment Commission (‘NIC’) to enjoy its benefits, the Private Healthcare Institutions Law does not require prior approval from the NIC. Since Iraqi corporate law allows foreign parties to own 100 per cent of Iraqi corporations, investors can choose to operate without an investment licence. Regardless of the path investors choose to follow, the Ministry of Health remains the relevant regulator for healthcare businesses.
Dealing with the Iraqi healthcare industry must be done through licensed Iraqi third parties; the only exception is public tenders from KIMADIA. Prior registration of products as well as manufacturers and vendors is required to grant import licences. As far as private investment is concerned, the new Private Healthcare Institutions Law marks a positive development for private investment in the healthcare industry, opening it to foreign capital and creating lucrative opportunities for investment in Iraq.
Al Tamimi & Company’s Iraq team regularly advises on healthcare law. For further information, please contact Ali Al Dabbagh (A.AlDabbagh@tamimi.com) or Jawad Khalaf (J.Khalaf@tamimi.com).