Increasing the Availability of Medicines in Public

Health Facilities

-S.Srinivasan
LOCOST, Baroda, India
Email: locost@sify.com

National Bioethics Conference, New Delhi, Nov 18, 2010

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 Acknowledgments

• Dr Samit Sharma, Collector, Nagaur, and formerly of Chhitorgarh,

Rajasthan for inspiring work and liberty taken to quote from his slides
• Prayas Rajasthan and Dr Narendra Gupta, for study quoted
• Dr S.Sakthivel, PHFI, for slides 7-11 reproduced with thanks.

For further reading:

• The Layperson’s Guide to Medicines, LOCOST, 2006, at
http://www.scribd.com/document_collections/2474529
• Low Cost (Generic) Medicines Initiative, Nagaur/Chittorgarh at
http://nagaur.nic.in/GMP.htm and at
http://chittorgarh.nic.in/Generic_new/generic.htm
What can be done about providing medicines to
patients in a public system?

» Provide it
» Provide it free
» Do not get into user charges

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 If drugs are not made available free in public health
services?

• People seeking tt will decrease

• If at all, patients will end up going to go to pvt practitioners

and retail drug shops

• And get exploited

• With the usual result: indebtedness

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 Why should we do give medicines free? -1

• Healthcare expenditure is the second greatest cause of rural indebtedness in

India today.

• As of 2008, 72% of total healthcare expenditure was privately funded,

89.5% of which was paid out of pocket by patients.

• Between 1999-2000, 32.5 million patients fell below the poverty line after
just a single hospitalization.

• 40% of those hospitalized are forced to borrow money or sell assets to

meet costs, and 23% of ill patients simply never seek treatment because of
their inability to pay.

• WHO estimates that 65% of India’s population lacks regular access to

essential medicines.

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 Why should we do give medicines free? -2

•  Medicines account for 70% of out-of-pocket expenditure.

• Even if patients are able to receive a free check-up at a

government clinic, they are often forced to pay out-of-pocket
for the actual medicines prescribed for their illness.

• At the local chemist, patients often pay a price 2 to 40 times

higher than the bulk cost offered by pharmaceutical companies
to retailers, private hospitals, nursing homes and government
agencies.

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 Households’ Share of Drugs
in IP & OP Exp.

90
80
% Spent on Drugs

70
60
50
40
30
20
10
0
Drugs to IP Drugs to OP Drugs in OOP

Rural India Urban India

Source : NSS, 2004-05. IP-Inpatient; OP-Outpatient; OOP-Out-of-pocket

 Households’ OOP Expenditure by Components
Expenditure by Rural Urban Total
Care/Services

Outpatient 68.52 62.12 66.10

Inpatient 21.25 27.14 23.48

Delivery 3.11 3.96 3.43

Post-Natal 0.65 0.59 0.62

Ante-Natal 1.25 1.52 1.35

Immunization 0.30 0.88 0.52

Family Plg. 3.15 2.29 2.83

Med. Atn. At 1.76 1.49 1.65

Death

T.Exp. Health 100 100 100

 Trends in Catastrophic & Poverty Impact of
OOP Spending - India
OOP Related Parametres 1993-94 1999-00 2004-05

Avg. PC Monthly OOP 16.78 33.08 40.82

(Rs. At Current Prices)

% OOP to HH Exp. 5.12 5.78 6.61

% HH Reporting OOP 59.19 69.23 63.32

% HH >10% as OOP* 11.92 10.84 13.09

% BPL 36.00 26.10 27.50

% BPL after a/c for OOP 38.97 29.17 31.20

Rise in Poverty Ratio (%)

Note: * Denotes OOP as a Share of Household Exp.
2.91 3.07 3.55
Source: Authors’ Estimate, Selvaraj, S and Anup K. Karan (2009)
 Impoverishment Due to OOP Payments in India
(In Millions)

Source: Selvaraj and Karan (2009)

 Drug Expenditure by Govt.
States Drugs & Med.* ( Mln) Health Exp. (Rs. Mln) % of Drugs to Health
Andhra Pradesh 1270.45 13142.40 9.67
Assam 153.01 3269.08 4.68
Bihar 220.31 7134.84 3.09
Chattisgarh 250.26 2258.71 11.08
Gujarat 269.38 7154.79 3.77
Haryana 309.61 3147.09 9.84
Karnataka 778.39 9863.31 7.89
Kerala 1242.06 7293.15 17.03
Maharastra 2030.59 17837.95 11.38
Madhya Pradesh 792.19 6668.93 11.88
Orissa 213.02 4213.57 5.06
Punjab 91.63 6182.64 1.48
Rajasthan 904.50 9731.16 9.29
Tamil Nadu 1809.72 11843.28 15.28
Uttar Pradesh 710.42 13557.88 5.24
West Bengal 579.84 13194.83 4.39
Central Govt.* 7264.92 59770.00 12.15

All-India*
Source : Budget Documents, Respective States & Central Govt.
18890.38 1962636.86
* Many states report drug expenditure under the category of Materials and Supplies.
9.63
 Are India’s “low-priced” drugs affordable in India?

• Affordable for whom?

• Cost of drugs for multi-drug resistant TB (maintenance phase) is

equivalent to 737 days of daily wage of a wage laborer in India

• Daily wages is Rs 60/- average (One Euro = Indian Rupees 70)

• Coronary heart disease: 209 days of wage labor

• Prevention of Hepatitis A: 30 days of wage labor

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 Are India’s “low-priced” drugs affordable in India?

• An unskilled worker in US or UK needs to work

for 10 minutes to buy 10 tablets of Paracetamol

• In India a daily wage worker will have to work

atleast one hour.

• And our Paracetamol is one of the cheapest in

the world!
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 Pricing Anomalies of India’s Drugs

 
• Overpricing

• Profit margins can be up to

4000 percent

• Different brands of same

drug sell at vastly different
prices

• Most drugs out of Govt

price regulation

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 Cost of Treatment with Biotechnology-based Drugs
• Abciximab (antianginal, Eli Lily): Rs. 39,480 for a 60 kg man per day

• Epoeitin alfa (Wepox/Wockhardt, Treatment of anemia of chronic

renal failure): Rs. 10,200 for 8 weeks for a 60 kg man AND

• Rs. 1912 to 11475 per week for a 60 kg man thereafter

• Interferon alpha-2a (Roferan-A/Nicholas Piramal)used in types of leukemia:

Initial therapy costs of Rs. 43,552- Rs 1,30,656 then maintenance therapy
costs of Rs. 1,06,158- Rs.3,18,474 (6-18 months tt cost)

• Etanercept (Enbrel/Wyeth) –in severe arthiritis: Rs. 18,131 per week of

therapy which has to be taken long term.

Thanks to Dr Anurag Bhargava of JSS Bilaspur for these data, Sep 2007.

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 Tender Prices a Fraction of Retail Prices!

• Govt tender prices fraction of retail prices

• For example: Albendazole 1.89 percent of market price!

• Amylodipine: 6.13 percent of market price!

• See www.tnmsc.com for tender prices of a good,

transparent govt procurement agency

[See also: Srinivasan, S. “How Many Aspirins to the Rupee? Runaway Drug Prices”, Economic and
Political Weekly, February 27-March 5, 1999]

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 Comparison of Retail MRPs and LOCOST prices
Name of Drug Use LOCOST selling prices Market selling prices per tab
per tab (Rs) (Rs)

Albendazole 400 mg For worms Rs 1.10 Rs 9 to 12

Amlodipine 5 mg In high blood pressure and as Re 0.25 Rs 1.40 to 5.00

antianginal

Atenolol 50 mg In high blood pressure and as Re 0.20 Rs 4 to 22

antianginal

Enalapril 5 mg In high blood pressure mild to Re 0.30 Rs 1.60 to Rs 2.30

moderate

Fluconazole 150 mg Fungal Infections in AIDs and Rs 3.50 Rs 28 to Rs 32

other conditions

Cetrizine Anitallergic Re 0.20 Re 0.50 to Rs 3.00 17

 Difference in a vaccine’s MRP and the price at which it is offered to physicians

Vaccine Constituent vaccines MRP, in Price Discount Percentage

Rs offered in Margin of
2008 to Rs profit
physicians, for the
(A) in Rs (A-B) physician
(B)
(A-B)*100/ B

Pentaxim Diphtheria, Tetanus, acellular 2066 1446 620 42.9

pertusis,
inactivated poliomyelitis
vaccine,
Haemophilus influenzae b
conjugate vaccine
Imovax Inactivated Poliomelitis 365 280 85 30.4%
Polio vaccine

Tripacel Component pertusis, 1211 762 449 58.9%

Diphtheria and tetanus
toxoids 18
Okavax Varicella vaccine 1468 986 482 48.9%

Avaxim Hepatitis A Vaccine 952 665 287 43.2%

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TetractHi Diphtheria, Tetanus, 504 305 199 65.2%

b pertusis, Haemophilus
influenzae b conjugate
vaccine

ActHib Haemophilus influenzae b 426 251 175 69.7%

conjugate vaccine

Source: Rakesh Lodha , Anurag Bhargava . “Financial incentives and the prescription of newer
vaccines by doctors in India.” Indian Journal of Medical Ethics Vol VII No 1 January - March
2010 19
Case Study: District Level Intervention

The
Chittorgarh/Nagaur Model
Of
Low Price
Govt. Cooperative Medical Store
 Step 1 : Doctors prescribe drugs by generic
(salt) name,
as directed by the state govt.

Issues raised

• Quality ?

• Combination preparations ?

• Chemists will give brand of his choice ?

• Govt. can put a ceiling on MRP ?

 Step 2 : Govt. Cooperative Medical
Stores provide low cost medicines
of well reputed companies

• Medicines to be procured were listed by generic name

• To ensure purchase of quality medicines a committee of doctors was

constituted.

• The committee recommended that drugs of reputed companies like Cipla,

Cadila, Ranbaxy, German Remedies, Alembic, etc. can be purchased .
(Initially 22 and now 57 companies are approved)

• Open tender by cooperative department.

• 800 medicines and 200 surgical items & I.V. fluids were procured at L1.

• The medicines are then sold at 20% profit margin to the patients.

• Price lists were displayed outside the coop. stores

 Step 3 : Awareness Generation

• Counseling of Doctors
• Training of pharmacists
• Patient education
• Use of press
THE BEGINNING
THE IMPACT: many human lives saved
THE IMPACT: many human lives saved
A positive side effect!
 Necessities For
MAKING MEDICINES AFFORDABLE

• Generic prescribing
Step 1 • Adoption of essential drugs list Rational Use Of Drugs

• Standard Treatment Guidelines

• Centralized drug procurement : open tender system

Step 2
• Distribution of Low cost drugs through Govt. drug counters
– Life-line drug stores (run by RMRS)
– Co-operative Medical Stores
Step 3 • Public awareness and demand generation
 How much does it cost?

• If medicines are acquired at the bulk prices (mentioned above

in this chapter), it should only require around Rs. 6000 crores
to provide free treatment for all diseases not requiring
hospitalization.

• Not only will this allow universal access to medicines for

India’s citizens, but it will place significantly less burden on
the healthcare system, as medicine costs will be reduced to
the bulk prices paid by the government.

• On the other hand, if each patient continues to buy

individually, the total cost for the same amount of medication
would be Rs. 25000 crores.

Source: Prayas Study, 2010

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 How much is Rs 6000 crores?
• The sum of Rs. 6000 crores is only one‐tenth the annual
budget of the National Rural Employment Guarantee Scheme.

• As of 2008, the Indian government spent 1.12% of the

country’s GDP on healthcare, which is extremely low
compared to most countries of the world, including several
poorer countries in Sub‐Saharan Africa.

• When the UPA government came to power in 2004, it

promised to increase the health budget from 0.9% to 2‐3% of
GDP annually.

• The additional sum of Rs. 6000 crores would not push the
health budget to even 2% of GDP. It is therefore affordable,
and the right thing to do.
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 It is indeed possible
• The experiences of TN, Delhi State, Chittorgarh District shows
low priced good quality medicines can be available in the
public sector.

• There has been no shortage

• Not only that it makes sense to set up shops at retail level to

make available at these prices!

• Nothing is stopping us except political will!!

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