Government to roll out Rs 20,000 cr generic drug scheme

As the Centre plans to roll out an ambitious Rs 20,000-crore scheme to provide high-quality generic drugs to poor patients attending public healthcare units, pharmaceutical companies are lobbying hard with the government to snatch a large share in the drug purchase order from the government kitty.

In next five years, the scheme targets to cover all those who have no means for treatment.

This will reduce the burden on the common man in India, where 2 per cent of the population is pushed into poverty every year due to the costs of healthcare.

India has one of the world’s highest out-of-pocket expenditure on healthcare, bulk of which is spent on the cost of drugs and diagnostics.

The scheme, yet to be formally approved by the Planning Commission, revolves around the central idea that every state government should purchase high-quality generic medicine through a transparent process, and distribute them to hospitals and public health units in accordance with their demand.

Doctors will be asked to prescribe only generic names of the medicines, sources said.This is where the companies are pursuing the government to include “branded generics” in the proposed scheme so that a large market opens up for them. As the scheme allows buying a small amount of branded medicine as well, corporates hope to expand the list of branded medicines as well.

Though officials are tight-lipped, sources said drug companies were meeting decision makers in the department of pharmaceuticals, commerce, health and Prime Minister's Office in their effort to change the contour of the new initiative benefiting them.

The scheme will be rolled out in phases after the Centre signs an MoU with states to set up an autonomous agency for the procurement of medicines.

The states should also have adequate warehousing capacities and IT-enabled supply chain management for the distribution of medicine.

“State governments have to meet one-third of the budget as their share. The new initiative will vastly expand the access to medicine,” said a Health Ministry official.The proposed system follows the Tamil Nadu procurement model, which is running successfully for many years.

As per the government’s own calculation, the ambitious scheme will come under the National Rural Health Mission (NRHM) and its upcoming city counterpart, National Urban Health Mission (NUHM).

The total programme cost would be Rs 29,968 crore, comprising Rs 28,675 crore as running costs and an additional Rs 1,293 crore as one-time capital cost.

Since the Health Ministry sought an allocation of Rs 20,000 crore under NRHM scheme, it may be assumed that the rest would be a part of NUHM budget when the scheme is launched.