Introduction

The approval of the 2026 budget of the Mandatory Health Insurance (MHI) Fund of the Republic of Azerbaijan represents one of the most significant developments in the healthcare and pharmaceutical financing system in recent years. For the first time, ambulatory (outpatient) medicines dispensed through pharmacy organizations have received a clearly defined and substantially increased funding allocation within the MHI framework.

A comparison between 2025 and 2026 demonstrates not merely a budgetary adjustment, but a systemic transition from a pilot initiative to a sustainable ambulatory drug reimbursement mechanism.

Reform Background: Limitations of the Previous Model

Until recently, public pharmaceutical financing in Azerbaijan was primarily focused on:

• inpatient care;

• centralized procurement mechanisms;

• vertical state programs targeting specific diseases.

As a result, outpatient pharmacotherapy—particularly for chronic conditions—remained associated with high out-of-pocket expenditures for patients, negatively affecting treatment adherence and long-term clinical outcomes.

The inclusion of ambulatory medicines in the MHI system represents a logical and necessary evolution toward comprehensive health coverage.

2025: Pilot Phase and System Testing

In 2025, ambulatory drug reimbursement was introduced for the first time, with an allocation of approximately 20 million AZN.

Key characteristics of this phase included:

• limited budgetary scope;

• a narrow range of reimbursed medicines;

• restricted pharmacy participation;

• testing of electronic prescription, reimbursement, and control mechanisms.

The primary objective of 2025 was operational validation, rather than large-scale implementation.

2026: Transition to an Institutional Model

In the 2026 MHI budget, funding for ambulatory drug reimbursement has been increased to 40 million AZN, representing a 100% year-on-year increase.

For the first time, this expenditure category is clearly defined at the regulatory level as:

insurance payments to pharmacy organizations for medicines used in ambulatory conditions.

This formalizes the role of pharmacies as full participants in the public health insurance system, rather than purely commercial dispensers.

Position of Ambulatory Reimbursement Within the MHI Budget

Ambulatory drug reimbursement complements—rather than replaces—state disease-specific programs.

In 2026, approximately 150 million AZN is allocated to state programs covering:

• diabetes mellitus;

• chronic kidney disease and kidney transplantation;

• hemophilia;

• multiple sclerosis;

• tuberculosis;

• rare and genetic diseases.

While disease programs remain centralized and vertical, ambulatory reimbursement introduces a horizontal, scalable mechanism focused on routine outpatient care.

A New Financing Logic

A fundamentally new financial flow is being established:

Mandatory Health Insurance Fund → Pharmacy → Patient

This model supports:

• improved access to outpatient medicines;

• reduced financial burden on patients;

• enhanced continuity of care outside hospital settings;

• stronger prescription-based treatment control.

Regulatory Framework: Next Steps

While the 2026 budget provides the financial foundation, key operational elements will be defined through secondary legislation and regulatory acts, including:

• lists of reimbursed INNs and branded products;

• reference pricing and reimbursement limits;

• co-payment policies;

• pharmacy selection and contracting criteria;

• digital monitoring and audit mechanisms.

A phased regulatory approach reduces systemic risk and allows for controlled expansion.

Market Implications

For Patients

• improved access to essential outpatient therapies;

• reduced out-of-pocket expenses;

• better adherence in chronic disease management.

For Pharmacy Organizations

• creation of a stable reimbursement-driven revenue stream;

• deeper integration into the public healthcare system;

• increased importance of IT infrastructure and compliance capabilities.

For Pharmaceutical Companies

• emergence of a new public reimbursement access pathway via pharmacies;

• reduced dependence on hospital procurement channels;

• increased strategic importance of chronic and primary care portfolios;

• need for revised market access and pricing strategies.

Outlook

Although 40 million AZN remains a relatively modest figure compared to total pharmaceutical consumption, its strategic importance is substantial. International experience demonstrates that once ambulatory reimbursement mechanisms are institutionalized, budget growth and therapeutic coverage tend to accelerate.

The year 2026 should be viewed as a foundation year, setting the stage for broader expansion in 2027–2028.

Conclusion

A comparison of 2025 and 2026 confirms a clear policy direction:

from pilot implementation to a sustainable ambulatory reimbursement model.

For the healthcare system, this represents a shift toward greater sustainability and patient-centered care.
For the pharmaceutical market, it marks the beginning of a new development phase in which ambulatory treatment and pharmacy-based reimbursement will play an increasingly important role.

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