Whatever Happened to India's National Free Medicines Scheme?

Nearly 67% of India’s out-of-pocket expenditure on health is spent on medicines. However, despite promises, India does not yet have a scheme for free medicines.

The central government has for years been talking about a “free drugs initiative”. Operationally, this has remained a slogan. What India has is only a a central government initiative and guidelines for free drugs, but nothing as statutory as a “scheme”, which means that even the poorest in India do not have a right to free medicines.

Nearly 67% of India’s out-of-pocket expenditure on health is spent on medicines. Despite this, India has recently decided to push ahead with health insurance protection, which won’t actually help patients where they spend most of their money.

Earlier this year, the government spoke about “free drugs” several times. In March, the cabinet approved  an allocation for the National Health Mission (NHM) and said it would have a “special focus” with “intensification of initiatives such as National Health Mission Free Drugs and Diagnostics Services Initiatives”. This, because it is their “target” to reduce a patient’s out of pocket expenditure. But in the absence of an enforceable and accountable scheme, neither the central nor state governments are obligated to provide free drugs to citizens.

Successive governments have raised the issue of “free drugs” but to no avail. Former Prime Minister Manmohan Singh announced in his Independence Day speech in 2012 that the government would soon launch a national scheme for free medicines and diagnostics. When the Bharatiya Janata Party assumed power at the Centre in 2014, Arun Jaitley said in his 2014 budget speech that a free medicines and diagnostics scheme would be set up. However, no money was allocated for it.

Even the National Health Policy 2017 specifically emphasises provisions for free medicines and diagnostics at public hospitals. But there is still no national scheme guaranteeing free essential medicines to patients in the country.

In May 2011, the Planning Commission had constituted a working group on drugs to inform allocations in the 12th five year plan (2012-2017). The group had recommended a national program for free medicines and diagnostics, a move prompted by similar schemes successfully implemented in Tamil Nadu and Rajasthan. This recommendation was also echoed by the High Level Expert Group on universal health coverage constituted by the Planning Commission.

Need for a national free medicines scheme

According to the 71st National Sample Survey (NSS), about 63% of the national healthcare expenditure is borne by people out of their pockets. The Health and Morbidity in India 2004-2014 report by Brookings India, which compares NSSO data from 2004 and 2014, stated that 7% of Indians fall below the poverty line just because of indebtedness due to this expenditure, as well as that this figure hasn’t changed much in a decade. About 23% of the sick can’t afford healthcare because of these payments.

Much of this problem of debt can be solved if medicines are made available to people at affordable prices. However, what are the factors that keep the prices of medicines up?

India currently has a mechanism for price control but it is applicable only to a handful of commonly used drugs. Patients are also victims of rampant irrational prescription practises. The government has tried to respond to this by setting up ‘Jan Aushadhi’ shops that sell generic drugs. However, doctor lobbies like the Indian Medical Association have themselves been resisting the prescription of generic drugs. A recent government report said that, in some cases, patients paid a markup of as much as 1,737%.

In this setting, an effective way to bring medicines within the reach of all is by provisioning free quantities at public health facilities. As mentioned earlier, Tamil Nadu and Rajasthan have done it already, and the results have been remarkable. The schemes contributed to an increase in patient footfalls at the health facilities and helped rationalise prescription practices. However, apart from a few states like Kerala, Madhya Pradesh and Odisha, not many have come forward to replicate the initiative.

Lessons from Tamil Nadu and Rajasthan

Tamil Nadu introduced a free medicines model in 1995. It consisted of highly effective systems of drug procurement, quality checks and supply and distribution. Sixteen years later, in 2011, Rajasthan launched a similar but expanded scheme for free medicines called ‘Mukhya Mantri Nishulk Dawa Yojana’(MMNDY). Rajasthan is usually not seen as an exemplary state but in this aspect of healthcare, the scheme was widely praised, including by the WHO.

The MMNDY is a universal assurance scheme that provisions 606 essential and life saving medicines, 137 surgical items and 77 sutures at no cost for every patient seeking care from any government hospital. A government-owned special purpose vehicle, the Rajasthan Medical Services Corporation (RMSC), manages about 90% of the procurement and supply chain. The table below compares the MRP and RMSC tendered rates of medicines. The magnitude difference is obviously significant.

The data from the state’s health department shows that the scheme heralded a big jump in patient footfalls across public health institutions: from 4.4 million in 2012-13 to 8+ million in 2015-16. The state also recorded a 2.6x increase in OPD consultations and a 1.5x increase in the number of hospitalised patients in this period.

A 2013 study by the WHO, the Public Health Foundation of India and an NGO named Prayas found that, under the MMNDY scheme, district hospitals sported an 88% availability of the specified drugs and primary healthcare centres, about 71%. (Disclosure: The author works for Prayas.) Also, 98.3% of the medicines were found to have been prescribed using generic names while 89.02% were single formulation medicines (as opposed to fixed-dose combinations). The scheme thus also helped rationalise prescription practices.

No minimum standards

While there is no national scheme as of now, the central government offers an incentive for state governments to launch schemes for free drugs and diagnostics through the NHM. It has also published guidelines on the lines of Tamil Nadu and Rajasthan models for other states to adopt.

However, a majority of states still do not have provisions for free medicines. Some claim to provide medicines free of cost; however, in the absence of any scheme or state policies and systems to support drug procurement, supply and distribution, last-mile availability is poor and patients continue to be forced to spend on medicines. Also, among states that have a free medicines scheme, there are variations. For example, differences have been recorded in the number of medicines provisioned at no cost under the scheme, in the number of hospitals covered and the kind of support systems in place.

While some of these variations are to be expected, many of them emerge because of politicians’ reluctance to implement the scheme in its true spirit thanks to pressures from lobbies of medical care providers and pharmaceutical companies.

For the last few years, health insurance schemes have emerged as one of the key measures to improve access to healthcare. The recently announced National Health Protection Scheme (NHPS) assures a cover of up to Rs 5 lakh for secondary and tertiary healthcare services to 10 crore poor families across the country. This only establishes an increasing inclination towards health insurance schemes.

Almost all these schemes only cover expenses related to healthcare services that require hospitalisation. They conveniently overlook expenses incurred in out-patient care. About 64% of the total out-of-pocket expenses borne by patients in India are related to out-patient services.

Unfortunately, both central and state health insurance schemes have not acknowledged this reality even as they push for health insurance. This is one of the reasons why India has had no substantial reduction in the percentage of out-of-pocket spending in many years.

It must be recognised that for the poor, and for many rural and remote areas, public health systems remain the only way to access essential drugs. A national free medicines scheme would ensure that a range of life-saving medicines is guaranteed free of cost to everyone through public health facilities, regardless of whether a state implements a free medicines scheme or not. In turn, the states can have the flexibility to add medicines over and above those specified by the national scheme to be made available at no cost, especially to meet distinct epidemiological needs.

While the centre and the states will have to shell out very little extra funds for the scheme than what they are already spending on medicines, the returns can be high. Apart from reducing out-of-pocket expenses, the scheme could potentially regulate irrational prescription practice and help bring patients to healthcare facilities at the preliminary stages of their illnesses, so reducing the rate of hospitalisation.

Chhaya Pachauli is a public health activist based in Rajasthan, associated with Prayas and Jan Swasthya Abhiyan. She has been working on the campaigns for the right to free medicine and against the privatisation of public health institutions in Rajasthan.