MUMBAI, India — In what would be a landmark increase in the Indian government’s spending on public health, New Delhi is completing a proposal to provide hundreds of essential drugs free to patients in government-run hospitals and clinics at a cost of nearly $5 billion over five years, officials said Thursday.
Daniel Etter for The New York Times
Patients at state hospitals and clinics like this one in Uttar Pradesh must buy their own drugs.
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Times Topic: India
Prashanth Vishwanathan for The New York Times
Drug bills exceed 70 percent of Indians’ direct medical costs.
The proposal, which could receive government approval next month, would try to fill a gaping hole in the provision of health care at state-owned hospitals, many of which require patients to buy their own drugs, including substances as basic as intravenous fluids. Specialists say it could also be the first step toward a more comprehensive universal health care system in India, which, with 1.2 billion people, is the world’s most populous country after China.
Drugs account for more than 70 percent of out-of-pocket medical costs for Indians. Government hospitals and clinics provide free or low-cost care, but most of them struggle to keep up with demand, and the quality of care can be poor.
For Western drug makers, which have long chafed at India’s comparatively weak protection of their patents, the government’s plan could be another blow. Although they only have a tiny share of the Indian market, Western drug companies are looking at India and other emerging markets as a vital source of growth as sales flatten in the United States and Europe. Under the proposal, the government would only buy cheap generic versions of drugs, making it more difficult for brand-name drugs to be sold.
The policy move is part of India’s stated goal of increasing spending on health care to about 2.5 percent of its gross domestic product from about 1.4 percent. By contrast, the Chinese government spent about 2.3 percent of its G.D.P. on health care in 2009 and Sri Lanka spent about 1.8 percent.
An official in the India’s Ministry of Health and Family Welfare said the federal government would spend about 200 billion rupees ($3.6 billion) on the program over five years. State governments, which are being consulted on the proposal, would be asked to chip in another 66 billion rupees ($1.2 billion). The proposal is part of the country’s 12th five-year plan, which covers the government’s big spending programs from 2012 to 2017 and is expected to be approved in August.
“This new initiative, if approved as a part of the five-year proposal, would be a giant step in vastly expanding the access to medicines,” the official, Dr. Arun K. Panda, a joint secretary in the ministry, said in an e-mail message.
Dr. K. Srinath Reddy, who led a committee advising the government on health care for the five-year plan, said the distribution of free drugs could be the first step in a process of providing tax-supported universal health care in India, which he said could take 10 to 15 years.
Initially, India would probably provide 350 drugs that are on a government list of essential medicines, said Dr. Reddy, who has no connection to the Indian generic drug company Dr. Reddy’s Laboratories. Many of the drugs probably would be produced by India’s many generic drug companies, which include Cipla, Lupin and Ranbaxy. In February, Prime Minister Manmohan Singh announced that the Health Ministry had begun setting up an agency to buy drugs in bulk.
Big Western pharmaceutical companies like Abbott Laboratories that have acquired Indian generic drug makers could also supply the government, but the program would exclude more lucrative brand-name drugs like Lipitor and Plavix produced by those companies..
Spending on drugs in India was $14.3 billion in 2011, including $3.3 billion for brand-name drugs, according to the IMS Institute for Healthcare Informatics. Total drug spending is expected to more than double by 2016, to $29 billion.
For Western drug makers in India, the target is not the poor but the growing middle and upper-middle classes, many of whom use private clinics and doctors, which are excluded from the current subsidy proposal. Given questions about the quality and regulation of India’s generic-drug manufacturers, Western companies are hoping that Indians with money to spare will decide to opt for brand-name drugs or so-called branded generics, which carry the names of major drug makers.
Katie Thomas contributed reporting from New York.
(Page 2 of 2)
“We think that there is still a big opportunity in India,” said Mark Grayson, a spokesman for the Pharmaceutical Research and Manufacturers of America, the industry trade group. “We believe that the economic situation for many Indians is getting better, and we believe there will be a place for good, branded generics.”
Nevertheless, Western pharmaceutical companies face many challenges in India. In March, its patent regulator ordered Bayer to license a cancer drug to an Indian generic drug maker under a compulsory license. The move, a first for India, raised fears among foreign companies that they could be required to license more of their medicines to generic producers.
For about 35 years, India did not grant drug patents in an effort to provide cheap medicine to its people. That helped establish a thriving generic drug industry. In 2005, it started issuing patents for drugs created in or after 1995.
Given the pervasive corruption in India and the poor state of the medical system, it is unclear how effectively the government could carry out the new drug program.
Yusuf K. Hamied, the chairman and managing director of Cipla, a Mumbai-based company that is one of the largest producers of generic medicines in India and the world, expressed skepticism.
Mr. Hamied, a proponent of generic drugs, said Thursday that he had only read news reports about the proposal and was unsure the government could put it into effect.
“Not easy and does not appear workable except if they give free medicines made by the public sector drug companies,” he wrote in an e-mail message. “They don’t make a full range, so it will be difficult for them. The government should consult us for practical solutions to their policy implementation.”
Dr. Reddy said that to be successful, officials will have to put in place an efficient procurement, distribution and tracking system to ensure that drugs get to the people who need them and are not stolen by officials involved in distribution, as happens to much of the wheat and rice distributed by Indian states to poor families.
Government hospitals are often run very poorly, and many Indians, including the poor, prefer to pay for care in private institutions at great personal cost. About 71 percent of spending on health in India comes directly from people’s pockets, compared with 61 percent in China and 54 percent in Sri Lanka.
Corruption and mismanagement are endemic, especially in the health systems of India’s poorest states. Last year, three doctors in charge of a large federally financed health initiative in Uttar Pradesh, India’s most populous state, were brutally killed amid widespread irregularities in how the program was managed.
“Unfortunately, in the Indian system, anything can be subverted if you allow it to be subverted,” said Dr. Reddy, who is the president of the Public Health Foundation of India, a group that is financed by the government and nonprofit organizations like the Bill and Melinda Gates Foundation.
But two Indian states, Tamil Nadu and Rajasthan, already distribute free drugs, and have attracted more people to government hospitals as a result. Last year, the National Rural Health Mission began dispensing free drugs to pregnant women to encourage them to deliver their babies at medical institutions, said Dr. Panda, the health ministry official.
Still, Dr. Reddy said that the provision of free medicines in government hospitals and clinics has declined sharply in recent decades. In 2004, just 9 percent of drugs prescribed to patients admitted to government institutions were free, down from 31 percent in 1987. For outpatients, the share was even lower at 5 percent in 2004, down from 18 percent.
“As a result of high health care costs, 40 million Indians are pushed into poverty each year,” Dr. Reddy said.
Katie Thomas contributed reporting from New York.
Daniel Etter for The New York Times
Patients at state hospitals and clinics like this one in Uttar Pradesh must buy their own drugs.
Related
Times Topic: India
Prashanth Vishwanathan for The New York Times
Drug bills exceed 70 percent of Indians’ direct medical costs.
The proposal, which could receive government approval next month, would try to fill a gaping hole in the provision of health care at state-owned hospitals, many of which require patients to buy their own drugs, including substances as basic as intravenous fluids. Specialists say it could also be the first step toward a more comprehensive universal health care system in India, which, with 1.2 billion people, is the world’s most populous country after China.
Drugs account for more than 70 percent of out-of-pocket medical costs for Indians. Government hospitals and clinics provide free or low-cost care, but most of them struggle to keep up with demand, and the quality of care can be poor.
For Western drug makers, which have long chafed at India’s comparatively weak protection of their patents, the government’s plan could be another blow. Although they only have a tiny share of the Indian market, Western drug companies are looking at India and other emerging markets as a vital source of growth as sales flatten in the United States and Europe. Under the proposal, the government would only buy cheap generic versions of drugs, making it more difficult for brand-name drugs to be sold.
The policy move is part of India’s stated goal of increasing spending on health care to about 2.5 percent of its gross domestic product from about 1.4 percent. By contrast, the Chinese government spent about 2.3 percent of its G.D.P. on health care in 2009 and Sri Lanka spent about 1.8 percent.
An official in the India’s Ministry of Health and Family Welfare said the federal government would spend about 200 billion rupees ($3.6 billion) on the program over five years. State governments, which are being consulted on the proposal, would be asked to chip in another 66 billion rupees ($1.2 billion). The proposal is part of the country’s 12th five-year plan, which covers the government’s big spending programs from 2012 to 2017 and is expected to be approved in August.
“This new initiative, if approved as a part of the five-year proposal, would be a giant step in vastly expanding the access to medicines,” the official, Dr. Arun K. Panda, a joint secretary in the ministry, said in an e-mail message.
Dr. K. Srinath Reddy, who led a committee advising the government on health care for the five-year plan, said the distribution of free drugs could be the first step in a process of providing tax-supported universal health care in India, which he said could take 10 to 15 years.
Initially, India would probably provide 350 drugs that are on a government list of essential medicines, said Dr. Reddy, who has no connection to the Indian generic drug company Dr. Reddy’s Laboratories. Many of the drugs probably would be produced by India’s many generic drug companies, which include Cipla, Lupin and Ranbaxy. In February, Prime Minister Manmohan Singh announced that the Health Ministry had begun setting up an agency to buy drugs in bulk.
Big Western pharmaceutical companies like Abbott Laboratories that have acquired Indian generic drug makers could also supply the government, but the program would exclude more lucrative brand-name drugs like Lipitor and Plavix produced by those companies..
Spending on drugs in India was $14.3 billion in 2011, including $3.3 billion for brand-name drugs, according to the IMS Institute for Healthcare Informatics. Total drug spending is expected to more than double by 2016, to $29 billion.
For Western drug makers in India, the target is not the poor but the growing middle and upper-middle classes, many of whom use private clinics and doctors, which are excluded from the current subsidy proposal. Given questions about the quality and regulation of India’s generic-drug manufacturers, Western companies are hoping that Indians with money to spare will decide to opt for brand-name drugs or so-called branded generics, which carry the names of major drug makers.
Katie Thomas contributed reporting from New York.
(Page 2 of 2)
“We think that there is still a big opportunity in India,” said Mark Grayson, a spokesman for the Pharmaceutical Research and Manufacturers of America, the industry trade group. “We believe that the economic situation for many Indians is getting better, and we believe there will be a place for good, branded generics.”
Nevertheless, Western pharmaceutical companies face many challenges in India. In March, its patent regulator ordered Bayer to license a cancer drug to an Indian generic drug maker under a compulsory license. The move, a first for India, raised fears among foreign companies that they could be required to license more of their medicines to generic producers.
For about 35 years, India did not grant drug patents in an effort to provide cheap medicine to its people. That helped establish a thriving generic drug industry. In 2005, it started issuing patents for drugs created in or after 1995.
Given the pervasive corruption in India and the poor state of the medical system, it is unclear how effectively the government could carry out the new drug program.
Yusuf K. Hamied, the chairman and managing director of Cipla, a Mumbai-based company that is one of the largest producers of generic medicines in India and the world, expressed skepticism.
Mr. Hamied, a proponent of generic drugs, said Thursday that he had only read news reports about the proposal and was unsure the government could put it into effect.
“Not easy and does not appear workable except if they give free medicines made by the public sector drug companies,” he wrote in an e-mail message. “They don’t make a full range, so it will be difficult for them. The government should consult us for practical solutions to their policy implementation.”
Dr. Reddy said that to be successful, officials will have to put in place an efficient procurement, distribution and tracking system to ensure that drugs get to the people who need them and are not stolen by officials involved in distribution, as happens to much of the wheat and rice distributed by Indian states to poor families.
Government hospitals are often run very poorly, and many Indians, including the poor, prefer to pay for care in private institutions at great personal cost. About 71 percent of spending on health in India comes directly from people’s pockets, compared with 61 percent in China and 54 percent in Sri Lanka.
Corruption and mismanagement are endemic, especially in the health systems of India’s poorest states. Last year, three doctors in charge of a large federally financed health initiative in Uttar Pradesh, India’s most populous state, were brutally killed amid widespread irregularities in how the program was managed.
“Unfortunately, in the Indian system, anything can be subverted if you allow it to be subverted,” said Dr. Reddy, who is the president of the Public Health Foundation of India, a group that is financed by the government and nonprofit organizations like the Bill and Melinda Gates Foundation.
But two Indian states, Tamil Nadu and Rajasthan, already distribute free drugs, and have attracted more people to government hospitals as a result. Last year, the National Rural Health Mission began dispensing free drugs to pregnant women to encourage them to deliver their babies at medical institutions, said Dr. Panda, the health ministry official.
Still, Dr. Reddy said that the provision of free medicines in government hospitals and clinics has declined sharply in recent decades. In 2004, just 9 percent of drugs prescribed to patients admitted to government institutions were free, down from 31 percent in 1987. For outpatients, the share was even lower at 5 percent in 2004, down from 18 percent.
“As a result of high health care costs, 40 million Indians are pushed into poverty each year,” Dr. Reddy said.
Katie Thomas contributed reporting from New York.
