Finally, the United Progressive Alliance (UPA) gov¬ernment has taken note of woeful healthcare policy and performance on the healthcare indicator.
In the era of state-sponsored subsidies in food, fuel and fertilisers, medicine was never discussed. Now, the UPA government will sponsor a $5.4-billion policy to pro¬vide free generic drugs - a decision that could change the healthcare woes in India for millions of poor people. The Central government adopted this policy without much fanfare last year, and the first tranche of funds has been released recently.
The policy will be implemented by December 2012, and will be rolled out nationwide in two years. The gov¬ernment is planning to cover 52 percent of the popula¬tion by April 2017, as per health ministry officials. The cost incurred by the government will be a whopping $5.8 billion (`30,000 crore).
As per the new policy, states have to cough up 25 per¬cent of the cost, and the rest will be taken care of by the Centre. Under the policy, doctors will have to prescribe only generic drugs; any instance of prescribing branded medicine will be a punishable offence.
In a recent report by the Organisation for Economic Cooperation and Devel¬opment (oecd), Indian government spends 1.2 percent of its gdp on healthcare.
Compare this to the 9 percent of gdp that our country spends on subsi¬dies that range from food to fuel to fertilisers and several other items.
Only seven governments in the world today spend less than India on their healthcare systems. India is falling woefully behind on the United Nations Millennium De¬velopment Goals, to be counted in 2015.
In the third largest economy in the world - after the US and China - public expenditure on health is around $4.50 per person! Then again, after the National Rural Health Mission, the Prime Minister recently has an¬nounced a National Urban Health Mission to take care of the poor.
However, our government’s decision to give free ge¬neric drugs will adversely hit the pharmaceuticals in¬dustry. Today, India is one of the fastest growing phar¬maceutical markets in the world. Annually, drugs worth $11 billion (`60,000 crore) are sold here. With the new policy, free generic drugs will account for 60 percent of existing sales.
Indian generic drug makers like Cipla and Dr Red¬dy’s do stand to benefit from this government policy, whereas foreign drug makers like Pfizer, Glaxo Smith Kline and Merck will be adversely affected. They have been the chief catalysts for selling branded medicines in developing world economies like India.
However, officials in the Ministry of Health claim that these foreign drug makers too will stand to gain from this policy in long run. The government will be benefited as it will purchase the medicine in bulk, and the patients at private hospitals across the country will pay less for the drugs they purchase.
The upa government will be seeking its third straight victory in the 2014 general election. With less than two years left, it seems the government has started taking slew of pro-poor policy measures which will get it a fresh mandate in 2014.
In recent times, it has faced criticism on several fronts, ranging from price hike to charges of corruption and stagnation in policy measure to high subsidy for fuel, food, fertilisers, etc. But, going by the quite but steady pro-poor policy decisions, it seems that the government is back on track.
In 2004 and 2009, the upa government came to power riding on pro-poor policies like the Mahatma Gandhi Na¬tional Rural Employment Guarantee Scheme. They are apparently looking to replicate that in 2014 too.
(The author is an Associate Fellow at Observer Research Foundation, New Delhi)
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