India's policy to provide free medicines to all patients visiting a government health facility will be rolled out from October. The policy has received its first financial allocation of INR 1 billion from the Planning Commission for 2012 – 13. In entirety, the program is estimated to cost INR 285.60 billion over the Twelfth Five Year Plan. The policy has the full support of the Prime Minister’s Office (PMO) and the Planning Commission of India1.
The vast majority of the Indian population has no access to healthcare due to poor service at public healthcare centers. Private healthcare is unaffordable for most, and it is estimated that annually, 39 million Indians are pushed to poverty as a result of ill health2. Public spending on health in the country totalled a meagre USD 4.5 per person in 2011 - this move highlights the government's growing interest in the health and welfare of the public3.
How will this work?
According to the plan, doctors will be limited to a generics-only drug list. The ministry has shared the National List of Essential Medicines, 2011, (comprising 348 drugs that include anti-AIDS, analgesic, anti-ulcer, and anti psychotic drugs, sedatives, anesthetic agents, lipid-lowering agents, steroids and anti-platelet medicines) for all states to use as a reference1.
The states will create their own Essential Drugs Lists (EDLs) based on the disease profile of its population. The Centre will be responsible for 75 percent of the funds under the scheme, while the states will have to bear the remaining fraction of the cost. Five percent of the district funds have been allocated to the purchase of drugs outside the EDL. A Central Procurement Agency (CPA) has been set up for the bulk procurement of drugs1.
Sustainability: In effect, this policy is expected to benefit millions of economically challenged people and raise the standard of healthcare in the country. However, whether the Indian Government can bear this expense remains to be seen. The cost incurred is estimated at around INR 300 billion and with the centre bearing 75 percent of this amount, the sustainability of this ambitious plan is a matter of debate4.
Managing Big Pharma: The ban on branded drugs, which is integral to this policy, stands to affect Big Pharma significantly. Both MNCs and domestic companies are likely to face tremendous margin pressure and consequently a decline in revenues. As such, the policy may face resistance from big pharmaceutical manufacturers.
Insufficient manpower: A major challenge for the industry is its lack of skilled physicians and nurses. With more people having access to healthcare in accordance with the new policy, this trend may be further aggravated.
Misuse of the policy: Despite the government’s various guidelines, the policy may be misused by middlemen. In India, corruption tends to shroud the positive effects of social initiatives. Thus, the onus of the policy’s success and effectiveness lies in the hands of the Indian Government as well as other relevant stakeholders.
From a pharmaceutical perspective, the policy stands to benefit generic manufacturers in the country. Several industrialized countries (Spain and the US, for instance) are moving toward generic substitution. Spain is expected to save about USD 1 billion through generic substitution, while the US has saved about USD 1 trillion in the last 10 years via the same route5. Thus, the move may benefit the domestic industry and help the country achieve universal health coverage.
Policy implementation is likely to face roadblocks in terms of logistics, and allocation. It is imperative that an ethical and transparent framework is put in place to govern the distribution of drugs. The policy can also be expected to lead to a reallocation of the budget to meet financial requirements.
The policy is expected to advocate strengthening of the public health system to ensure the availability of healthcare personnel. The government has mentioned that private facilities will be contracted to fill the gaps in the public health system; however, a concrete solution may be to work toward closing the supply and demand gap between healthcare personnel and infrastructure. So far, both generic manufacturers and the public have received the policy positively. This may be seen as a step in the right direction, toward achieving universal healthcare coverage (UHC) 6.
1. “Free medicines for all from October” – Times of India – 23 June 2012
2. Lancet Report – November 2011
3. EIU – Healthcare in India – November 2011
4. “USD 5.4 billion policy unveiled to give free generic drugs to hundreds of millions” - Economic Times – 24 June 2012
5. InPharm News – August 2011
6. KPMG in India analysis