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BW Businessworld

A Sweet Pill

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The recently-announced "free drugs for all" initiative by the Centre could lead to the long-pending national pharmaceutical policy getting cleared. In 2002, the Supreme Court had struck down the policy saying it did not specify how essential medicines would be made affordable and available to the masses.

To start with, the government plans to make generic versions of 348 medicines covered in the National List of Essential Medicines (NLEM) free of cost against prescriptions generated from all government hospitals and public health centres. With this, the government has not only made essential medicines affordable as the apex court had sought, but gone beyond to provide them free to anyone who accesses a public healthcare facility.
 
In the absence of such a scheme, the government was compelled to expand the scope of drug price control to cover all NLEM medicines; but the pharmaceutical industry feared that it would bring 60 per cent of the medicines sold in India under price control and hence seriously affect their domestic revenues. Today, less than 20 per cent of the Rs 65,000-crore medicines sold in the domestic market annually come under direct price control.

On the other hand, the free-for-all drug scheme is not expected to hit the industry significantly as only 25 per cent of patients in India are dependent on public healthcare facilities today. While the government estimates this percentage will go up by 40 per cent after the introduction of the scheme, the additional numbers are expected to come from the people who do not access treatment at all currently. Of the total patient population, 20 per cent are expected to be in this missing category.

Pharma players feel supply of lowcost generic medicines to the government channel for free distribution could result in an incremental increase in their sales. "We welcome all such (free drug distribution) initiatives of the government to provide medicines to the poor. We support all such endeavours," says D.G. Shah, secretary-general of leading industry association, Indian Pharmaceutical Alliance.

As the first step towards the roll-out of the scheme, the Planning Commission has allotted Rs 100 crore for the initial phase of the programme this year. The scheme is expected to cost central and state governments about Rs 29,000 crore in the next five years. While the central government will spend 75 per cent of the funds required, the rest will be the contribution of respective states.

According to L.C. Goyal, former additional secretary (health), who was instrumental in designing the programme, the pilot project should begin in chosen districts by October.

The Centre has asked state governments to prepare their own list of essential drugs that should be covered under the free scheme. The model NLEM list includes over a dozen cancer drugs and therapeutic drugs  against AIDS, ulcers, analgesics, anti-psychotics, sedatives, anaesthetic agents, lipid-lowering agents, steroids, among others.

The government will set up a central procurement agency soon to purchase the generic drugs directly from the manufacturer through a tender-based system.

A pan-India roll-out would see free medicines being given against prescriptions by government doctors from dispensaries attached to 640 district hospitals, 5,000 community centres, 23,000 primary health centres and over 100,000 sub-centres. The scheme will run parallel to the government's flagship programmes — National Rural Health Mission and National Urban Health Mission.

(This story was published in Businessworld Issue Dated 23-07-2012)