India’s ambitious plan to provide free medicines to its people has received worldwide attention. For details see here. It’s no secret that the world’s largest democracy also spends an abysmally low percentage of GDP on healthcare. This is a belated attempt to correct that. In theory, this is a welcome move. In an earlier post, I had spoken of how India should not limit itself to tools such as compulsory licensing to improve drug access and affordability.
But having taken the call to make amends, what’s extremely hazy is how this scheme is to work in practice. Here are five questions to ask about India’s proposed free drugs programme.
1. How will drugs be procured?
Reports suggest that the government is working on setting up a central procurement agency. However, it is unclear what shape this agency will take. Will it be a new public sector company incorporated through an Act of Parliament? Or will this be an adjunct of Jan Aushadhi, a similarly-ambitious government scheme to retail generic medicines, that is currently languishing for want of a champion. Or is there a third possibility?
2. Are the states on board?
Of the Rs 29,000 crore that is envisaged to be spent in the next five years, 25 per cent or Rs 7250 crore is to be spent by states. But that, by itself, does not bind the states to an agreement. Not too long ago, the central government was reportedly struggling to get states, even those run by Prime Minister Manmohan Singh’s Congress party, to join the Rashtriya Swasthya Bima Yojana (RSBY), a similarly-ambitious health insurance scheme. See here.
3. What about manpower and systems?
A system of procurement requires processes – and manpower – to evaluate tenders, determine pre-qualification, visit manufacturing sites. Ideally the procurement agency should be empowered to negotiate pricing in exchange for guaranteed off-take. As an example, consider the Clinton Foundation’s Clinton Health Access Initiative (CHAI) which has been running a large scale procurement programme for anti-HIV medicines since 2002. In 2007, when the CHAI announced price reductions on 16 second-line anti-HIV meds for 27 developing countries it also circulated an FAQ on how that was achieved.
Here I quote, “Acting on behalf of UNITAID, CHAI issued a formal expression of interest to all manufacturers producing the relevant ARVs (HIV drugs), requesting that they indicate the regulatory status of each product they wished to supply… Suppliers were also asked to either indicate the price at which they would provide the product or indicate their willingness to engage in transparent “cost-plus” price negotiations with CHAI. CHAI then began in-depth conversations with those suppliers willing to engage in these negotiations, reviewing their production cost structures and identifying potential cost reduction opportunities. The prices generated through these negotiations were then compared to those submitted by other suppliers to determine the pool of manufacturers eligible for the UNITAID program. ” Obviously, this did not happen overnight.
4. What about quality?
This is vital. Going back to the Clinton Foundation example, the CHAI looked for either World Health Organisation (WHO) or US Food and Drug Administration (FDA) approvals and submissions for products. What will the Indian government require? India has hundreds of companies at a national and regional level capable of manufacturing generics. However, an entire “branded” generics industry has come up thanks to the government’s inability to guarantee quality. Add to this, the drug regulatory regime is under-staffed as pointed out in a recent report that was critical about its functioning. See here. Clearly, a procurement programme has to be accompanied by a strengthening of the regulatory system to ensure that quality generics are distributed.
5. What about distribution?
The National Essential List of Medicines or NLEM (2011) will be used to decide on the drugs for procurement. The NLEM recommends the tiers of distribution (primary or P, secondary or S, tertiary or T) that each drug should be targeted at. So 181 drugs are designated P,S,T. 106 are designated S,T. And 61 are designated T. This means that each drug has to be procured in different volumes depending on the number of primary, secondary, and tertiary centres that are to be serviced. There also has to be a system to prevent leakages and pilferages from each of these centres.
While the government says it will kickstart the scheme in October, it has also added the word “pilot” to this timeline. That is a good thing . A programme that is as ambitious and promising as this should not be rolled out in a hurry. Even if general elections are just two years away.