The price of free medicine in India

By Kaustubh Kulkarni, Reuters

CHENNAI, India — For Ramaiyah Venkat, a retired Indian schoolteacher, the two-hour bus journey every three months to get free insulin is worth it even if he has to queue for hours at the dispensary and sometimes gets less than he needs. Thousands of people like Venkat flock to the huge Rajiv Gandhi General Hospital in Chennai city every day. Chennai is the capital of Tamil Nadu, one of two Indian states offering free medicine for all. The state provides a glimpse of the hurdles India faces as it embarks on a program to extend free drug coverage nationwide. The Rajiv Gandhi hospital is the most convenient for Venkat. He says he is willing to brave the crowds of patients and their families, many sitting on the hospital floor and some eating food, to see a doctor and then queue to collect his medicine. “If I have to buy insulin at a chemist’s shop, I will have to spend hundreds of rupees. Instead, I prefer to spend a few on my visits,” said Venkat after receiving the regular supply of medicine that is essential to treat his diabetes. This time, he said, he got the full three-month dose, but often he has to do with six weeks because of short supplies. A key challenge to expanding the program is that India’s public health system is already underfunded and struggles to meet the needs of 1.2 billion people, 40 percent of whom live below the poverty line of US$1.25 a day. The Tamil Nadu program is popular with poor and working class patients and was opened to all last year after an income eligibility cap was removed, but those seeking treatment often endure lengthy waits and occasional shortages. To keep costs down, the price the state government pays to pharmaceutical makers is low — between one-sixth and one-tenth of retail in a country with already rock-bottom prices thanks to a big generic drugs industry.

That means bigger drug firms tend to supply just a few of the higher-priced medicines, while bulk items like paracetamol are supplied by small firms, a state official said. As a result, stocks can sometimes run out. India’s planned nationwide program has many of the same features, including centralized procurement, an emphasis on cheap generics, a specific list of permitted drugs and distribution limited to government hospitals and clinics. “The intention seems to be very good but I have my reservations on the implementation part,” said Ajay Kumar Sharma, who heads the pharmaceutical and healthcare practice for South Asia and the Middle East at Frost & Sullivan.