Development and Assessment of a Decentralization Framework in Iran Pharmaceutical Regulatory Systems Based on Good Governance Indicators

Evaluating governmental policy-making organizations is essential for evidence-based policy development and effective planning in any nation (1). A primary approach to improving service delivery involves reforming administrative bureaucracies, particularly through decentralization policies that enhance the speed and quality of governance (2). Since World War II, decentralization has emerged as a management strategy, transferring authority to lower levels to improve citizen engagement, accountability, and responsiveness (3). Structural reforms in healthcare systems have gained importance due to their extensive global impact. Decentralization in healthcare can boost efficiency (4), provided appropriate decentralization levels are defined and monitored effectively (5). From 1972 to 2019, approximately half of public health services in 75 countries were decentralized, with local governments playing a significant role during the COVID-19 pandemic (6). The success of decentralization depends not only on its structural design but also on its ability to promote democracy and good governance in local sectors (7). Decentralization programs, as outlined by Faguet, aim to improve governance performance, responsiveness, service efficiency, equitable access, and resource distribution (8). The International Monetary Fund (IMF) notes that decentralization, when supported by strong governance infrastructure, leads to better social outcomes (9). However, inadequate infrastructure can hinder good governance, causing issues such as insufficient skilled personnel, low stakeholder involvement, and weak service delivery (10).

The pharmaceutical sector is a vital focus for policymakers worldwide (11). Its complexity and vulnerabilities require a robust policy framework to ensure public access (12). In the Islamic Republic of Iran, the Iran Food and Drug Administration (IFDA) oversees policymaking for the supply and procurement of medical products, serving as the primary regulator of product quality and guideline development. The General Department of Medicines and Controlled Substances (GDMCS) manages administrative and technical affairs in the pharmaceutical sector, while the vice-chancelleries of food and drug affairs (VCFDA), located within universities of medical sciences, acts as local governance bodies in provinces, supporting IFDA’s administrative and supervisory roles. Systematic evaluation of these activities can track progress toward pharmaceutical system goals, identify gaps, and support comprehensive policy assessment (13). Integrating decentralization with good governance principles can enable phased decision-making and policy development.

This study addresses how to implement a decentralized regulatory system in the pharmaceutical sector to achieve good governance based on performance standards. It contributes by proposing a framework for decentralization policies in the pharmaceutical sector, incorporating expert insights on decentralization levels, service processes, and relevant centers. Additionally, it establishes an evaluation framework for decentralized tasks based on good governance indicators.

This study was conducted in two phases: Qualitative and quantitative. The qualitative phase focused on developing a framework for decentralizing regulatory services in the pharmaceutical sector and creating a performance assessment tool to evaluate decentralization based on good governance indicators.

In this study, the decentralization framework within the IFDA, specifically focusing on the authority and responsibilities of the GDMCS, was examined through qualitative and quantitative phases. In the qualitative phase, FGDs with experts explored the decentralization framework, analyzing service types, decentralization levels, service-related processes, and targeted decentralization centers. Services were classified into four categories: The RS, IS, PSCS, and CSS. Participants included stakeholders with IFDA experience and members of non-governmental associations or syndicates.

In the quantitative phase, the effectiveness of decentralization policies was evaluated using good governance indicators: Transparency, rule of law, responsiveness and accountability, effectiveness and efficiency, and stakeholder participation. A key finding was the consensus among experts on the need to improve regulatory tools as a foundation for effective decentralization. They highlighted the importance of developing transparent algorithms for process decentralization, establishing a structured training framework for decentralized activities, and strengthening specialized human resources within the organization before implementing reforms. Continuous general and specialized training was also considered critical.

Furthermore, experts emphasized the need to develop and revise legal and regulatory frameworks within the IFDA. This includes updating laws related to decentralized tasks and creating legal mechanisms for service compensation to provide a clear structure for reform policies.

Implementing these recommendations — such as enhancing infrastructure, refining legal frameworks, and coordinating efforts among relevant departments — is expected to support effective decentralization within the IFDA. These steps will clarify governance responsibilities and establish transparent decentralization patterns, ultimately strengthening the IFDA’s regulatory capacity as the central authority for policy execution. Najafikhah’s 2017 study underscored the importance of distinguishing between privatization and decentralization when determining private sector involvement in outsourcing programs, based on ownership, control requirements, and specific duties (29).

Another essential factor for successful decentralization is the development or amendment of relevant laws and regulations in the pharmaceutical sector. Specific regulatory measures have been designed to protect stakeholders’ confidential information, fostering trust and encouraging their participation in policymaking reforms. Financial considerations, including costs associated with various centers and their allocation, require legal pathways to establish appropriate tariffs for each activity within the financial decentralization framework. Several studies highlight the critical role of governments in enacting laws to support effective decentralization, identifying it as a key indicator of good governance. Mohammed’s 2016 study identified the facilitation of governance-related laws as a core strategy for decentralization implementation (30).

Experts also stressed the importance of creating a clear policy framework for successful decentralization by reviewing past efforts and learning from their shortcomings to inform future policies. They noted inefficiencies in decentralization at the local government level, particularly where the IFDA deconcentrated services to the VCFDA without ensuring adequate infrastructure, resulting in challenges being shifted between governance structures. Trimurni and Mansor’s 2020 study emphasized that administrative decentralization (deconcentration) is closely tied to improving technical capacities, including hardware and software skills, at the provincial level to build infrastructure for deconcentrating responsibilities and empowering local authorities to design health policies, plan, and innovate healthcare programs tailored to community needs (31).

Viphonephom et al. in 2024 noted that without a balanced distribution of power across governance levels and improvements in infrastructure — such as trained human resources and communication technologies — decentralization can lead to inequities and uneven structural development (32). Based on expert consensus, the next steps involve inter-agency negotiations to strengthen regulatory infrastructure and develop relevant regulations within the Iran IFDA. Prioritization is essential to determine decentralization levels and transferable centers, taking into account stakeholder confidentiality, service types, legal obligations, and the capacities of specialized scientific centers willing to provide services. These efforts aim to reinforce the central government’s role in guiding effective decentralization policies by optimizing infrastructural capabilities, ensuring reform success. Kyriacou’s 2015 study highlights that fiscal decentralization can reduce regional inequalities in countries with strong governance quality (33).

In the context of pharmaceutical regulatory decentralization, the IFDA, as the primary regulator, must develop a targeted plan to minimize implementation challenges and maximize decentralization benefits. Over 50% of experts emphasized benefits such as updating standards through decentralized administrative affairs in the private sector, focusing on long-term goals like standards improvement and export growth, and accelerating tasks through decentralization. Sumah and Baatiema’s 2018 study stresses the need for careful planning to anticipate decentralization requirements and outcomes, noting that effective decentralized policymaking can support centralized financial policies, fair wage setting, and balanced workforce distribution (34).

In the RS sector, experts underscored the importance of delegation and deconcentration for service decentralization. Given that RS processes involve sensitive documents and confidential information related to pharmaceutical company development, over 70% of experts opposed full devolution of authority. They supported decentralizing processes like license issuance to relevant departments, with final evaluation and issuance remaining under central government control. Concerns were raised about inadequate infrastructure in the VCFDA, including shortages of specialized human resources and limitations in hardware and software.

In the IS sector, experts agreed on an appropriate level of deconcentration for these government services. Given the critical supervisory role in IS, stakeholders emphasized VCFDA involvement at this decentralization level. Key recommendations included improving infrastructure and empowering VCFDA decision-making to deliver effective services. Experts also noted recent advancements in IFDA’s information systems and dashboards, which have enhanced information transfer between government departments. Jongudomsuk and Srisasalux’s 2012 study on Thailand’s health system decentralization highlights the importance of central government support in strengthening local government capacities to assume new responsibilities (35).

In the PSCS sector, experts stressed the importance of ensuring patient access to necessary medications. For policymaking in this sector, most experts supported delegation at appropriate levels but emphasized that PSCS activities, closely tied to drug procurement and provisioning, should remain under IFDA control to maintain centralized decision-making and planning. By enhancing data and information networks, the IFDA can effectively plan decentralization efforts, leveraging the capacities of relevant departments to boost competitiveness, safeguard stakeholder confidentiality, ensure a timely supply of quality drugs, and improve their distribution and dispensing.

Lima’s 2013 study suggests that a hybrid system can enhance drug procurement performance and responsiveness to patient needs by decentralizing administrative and financial tasks, such as planning, procurement, and budgeting, while maintaining centralized control over procurement, provisioning, and policymaking (12). Similarly, Chen et al.’s 2021 research indicates that managers of larger facilities and high-level centers have greater decision-making authority in providing essential drugs compared to those in smaller centers (36).

In the decentralization of sampling for both domestically produced and imported drugs, a deconcentration approach was applied. Feedback from pharmaceutical companies revealed that transparency scored above average, while the rule of law scored below average. Companies raised concerns about inadequate anti-corruption measures, insufficient mechanisms for handling stakeholder objections, and inconsistent enforcement of laws and regulations by the IFDA and the VCFDA. Positive aspects included employee commitment and confidentiality within governmental organizations, as well as written result notifications, which bolstered the Transparency Index. However, issues persisted with the irregular issuance and updating of circulars, and stakeholders noted that IFDA guidelines lacked the quality and accessibility needed for effective supervision.

Regarding efficiency and effectiveness, pharmaceutical companies expressed dissatisfaction with the limited reduction in IFDA visits and improvements in review procedures following central government feedback. They emphasized the need for extensive training and experience in sampling and related tasks, which were often lacking in deconcentration processes outside the IFDA. This underscores the importance of robust support and capacity-building for local entities to participate effectively in decentralized service delivery. Another study on healthcare decentralization in Portugal, Brazil, and Pakistan highlights the need to strengthen implementation strategies, improve equity in service access, and develop robust measurement and monitoring mechanisms (37).

Responses from IFDA and VCFDA employees showed that responsiveness and accountability scored highest (2.90), while stakeholder participation scored lowest (2.20). Analytical tests identified significant differences among pharmaceutical company representatives, IFDA employees, and VCFDA employees. Notably, IFDA employees reported lower satisfaction than VCFDA employees across all dimensions except responsiveness and accountability. However, a limitation of the study is the potential for bias, as respondents in both groups reported on their own performance.

In summary, decentralization in the pharmaceutical regulatory sector has encountered challenges, resulting in suboptimal outcomes. These challenges include:

1. Unclear separation of duties and authorities: The decentralization process suffered from an ambiguous division of responsibilities and authorities among agencies involved in deconcentrated activities. This lack of clarity caused inefficiencies, wasted governmental time and resources, including human resources, and shifted problems from the central government to other sectors without addressing underlying infrastructure deficiencies.

2. Infrastructure and resource constraints: Responsibilities were transferred to local government entities without sufficient infrastructure improvements or capacity-building measures. Consequently, this led to inconsistent service quality and heightened uncertainties regarding responsiveness in service delivery.

3. Deficiencies in regulatory and legal frameworks: Decentralization to local governments proceeded without developing necessary regulations or amending existing laws. This absence of administrative safeguards hinders evidence-based policymaking and weakens governance structures intended to achieve good governance indicators.

Research by Jebessa emphasizes that decentralizing authority and resources can create governance challenges, requiring a clear separation of powers and responsibilities, along with effective oversight and balance among agencies (7). Similarly, Dagneh’s 2022 study in Ethiopia highlights that local governments often lack full decision-making authority, resulting in issues such as shortages of skilled personnel, uncommitted political leadership, low stakeholder participation, and inadequate service delivery (10).