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Increasing the Availability of Medicines in Public

Health Facilities

National Bioethics Conference, New Delhi, Nov 18, 2010

1

-S.Srinivasan

LOCOST, Baroda, India

Email: locost@sify.com

Acknowledgments

• Dr Samit Sharma, Collector, Nagaur, and formerly of Chhitorgarh,

Rajasthan for inspiring work and liberty taken to quote from his slides

• Prayas Rajasthan and Dr Narendra Gupta, for study quoted

• Dr S.Sakthivel, PHFI, for slides 7-11 reproduced with thanks.

For further reading:

• The Layperson’s Guide to Medicines, LOCOST, 2006, at

http://www.scribd.com/document_collections/2474529

• Low Cost (Generic) Medicines Initiative, Nagaur/Chittorgarh at

http://nagaur.nic.in/GMP.htm and at

http://chittorgarh.nic.in/Generic_new/generic.htm

What can be done about providing medicines to

patients in a public system?

3

» Provide it

» Provide it free

» Do not get into user charges

If drugs are not made available free in public health

services?

4

• People seeking tt will decrease

• If at all, patients will end up going to go to pvt practitioners and retail drug shops

• And get exploited

• With the usual result: indebtedness

Why should we do give medicines free? -1

5

• Healthcare expenditure is the second greatest cause of rural indebtedness in India today.

• As of 2008, 72% of total healthcare expenditure was privately funded, 89.5% of which was paid out of pocket by patients.

• Between 1999-2000, 32.5 million patients fell below the poverty line after just a single hospitalization.

• 40% of those hospitalized are forced to borrow money or sell assets to meet costs, and 23% of ill patients simply never seek treatment because of their inability to pay.

• WHO estimates that 65% of India’s population lacks regular access to essential medicines.

Why should we do give medicines free? -2

6

• Medicines account for 70% of out-of-pocket expenditure.

• Even if patients are able to receive a free check-up at a government clinic, they are often forced to pay out-of-pocket for the actual medicines prescribed for their illness.

• At the local chemist, patients often pay a price 2 to 40 times higher than the bulk cost offered by pharmaceutical companies to retailers, private hospitals, nursing homes and governmentagencies.

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Households’ Share of Drugs

in IP & OP Exp.

0

10

20

30

40

50

60

70

80

90

Drugs to IP Drugs to OP Drugs in OOP

% Spent on Drugs

Rural India Urban India

Source : NSS, 2004-05. IP-Inpatient; OP-Outpatient; OOP-Out-of-pocket

Households’ OOP Expenditure by Components

Expenditure by

Care/Services

Rural Urban Total

Outpatient 68.52 62.12 66.10

Inpatient 21.25 27.14 23.48

Delivery 3.11 3.96 3.43

Post-Natal 0.65 0.59 0.62

Ante-Natal 1.25 1.52 1.35

Immunization 0.30 0.88 0.52

Family Plg. 3.15 2.29 2.83

Med. Atn. At

Death

1.76 1.49 1.65

T.Exp. Health 100 100 100

Trends in Catastrophic & Poverty Impact of OOP Spending - India

OOP Related Parametres 1993-94 1999-00 2004-05

Avg. PC Monthly OOP

(Rs. At Current Prices)

16.78 33.08 40.82

% OOP to HH Exp. 5.12 5.78 6.61

% HH Reporting OOP 59.19 69.23 63.32

% HH >10% as OOP* 11.92 10.84 13.09

% BPL 36.00 26.10 27.50

% BPL after a/c for OOP 38.97 29.17 31.20

Rise in Poverty Ratio (%) 2.91 3.07 3.55Note: * Denotes OOP as a Share of Household Exp.

Source: Authors’ Estimate, Selvaraj, S and Anup K. Karan (2009)

Impoverishment Due to OOP Payments in India

(In Millions)

Source: Selvaraj and Karan (2009)

Drug Expenditure by Govt. States Drugs & Med.* ( Mln) Health Exp. (Rs. Mln) % of Drugs to Health

Andhra PradeshAndhra PradeshAndhra PradeshAndhra Pradesh 1270.45 13142.40 9.679.679.679.67

AssamAssamAssamAssam 153.01 3269.08 4.684.684.684.68

BiharBiharBiharBihar 220.31 7134.84 3.093.093.093.09

ChattisgarhChattisgarhChattisgarhChattisgarh 250.26 2258.71 11.0811.0811.0811.08

GujaratGujaratGujaratGujarat 269.38 7154.79 3.773.773.773.77

HaryanaHaryanaHaryanaHaryana 309.61 3147.09 9.849.849.849.84

KarnatakaKarnatakaKarnatakaKarnataka 778.39 9863.31 7.897.897.897.89

KeralaKeralaKeralaKerala 1242.06 7293.15 17.0317.0317.0317.03

MaharastraMaharastraMaharastraMaharastra 2030.59 17837.95 11.3811.3811.3811.38

Madhya PradeshMadhya PradeshMadhya PradeshMadhya Pradesh 792.19 6668.93 11.8811.8811.8811.88

OrissaOrissaOrissaOrissa 213.02 4213.57 5.065.065.065.06

PunjabPunjabPunjabPunjab 91.63 6182.64 1.481.481.481.48

RajasthanRajasthanRajasthanRajasthan 904.50 9731.16 9.299.299.299.29

Tamil NaduTamil NaduTamil NaduTamil Nadu 1809.72 11843.28 15.2815.2815.2815.28

Uttar PradeshUttar PradeshUttar PradeshUttar Pradesh 710.42 13557.88 5.245.245.245.24

West BengalWest BengalWest BengalWest Bengal 579.84 13194.83 4.394.394.394.39

Central Govt.* Central Govt.* Central Govt.* Central Govt.* 7264.92 59770.00 12.15

AllAllAllAll----India* India* India* India* 18890.38 1962636.86 9.63Source : Budget Documents, Respective States & Central Govt.

* Many states report drug expenditure under the category of Materials and Supplies.

Are India’s “low-priced” drugs affordable in India?

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• Affordable for whom?

• Cost of drugs for multi-drug resistant TB (maintenance phase) isequivalent to 737 days of daily wage of a wage laborer in India

• Daily wages is Rs 60/- average (One Euro = Indian Rupees 70)

• Coronary heart disease: 209 days of wage labor

• Prevention of Hepatitis A: 30 days of wage labor

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Are India’s “low-priced” drugs affordable in India?

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• An unskilled worker in US or UK needs to work for10 minutes to buy 10 tablets of Paracetamol

• In India a daily wage worker will have to workatleast one hour.

• And our Paracetamol is one of the cheapest inthe world!

Pricing Anomalies of India’s Drugs

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• Overpricing

• Profit margins can be up to4000 percent

• Different brands of samedrug sell at vastly differentprices

• Most drugs out of Govt price regulation

Cost of Treatment with Biotechnology-based Drugs

• Abciximab (antianginal, Eli Lily): Rs. 39,480 for a 60 kg man per day

• Epoeitin alfa (Wepox/Wockhardt, Treatment of anemia of chronic

renal failure): Rs. 10,200 for 8 weeks for a 60 kg man AND

• Rs. 1912 to 11475 per week for a 60 kg man thereafter

• Interferon alpha-2a (Roferan-A/Nicholas Piramal)used in types of leukemia: Initial therapy costs of Rs. 43,552- Rs 1,30,656 then maintenance therapy costs of Rs. 1,06,158- Rs.3,18,474 (6-18 months tt cost)

• Etanercept (Enbrel/Wyeth) –in severe arthiritis: Rs. 18,131 per week of therapy which has to be taken long term.

Thanks to Dr Anurag Bhargava of JSS Bilaspur for these data, Sep 2007.

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Tender Prices a Fraction of Retail Prices!

• Govt tender prices fraction of retail prices

• For example: Albendazole 1.89 percent of market price!

• Amylodipine: 6.13 percent of market price!

• See www.tnmsc.com for tender prices of a good, transparent govt procurement agency

[See also: Srinivasan, S. “How Many Aspirins to the Rupee? Runaway Drug Prices”, Economic and Political Weekly, February 27-March 5, 1999]

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Comparison of Retail MRPs and LOCOST prices

Name of Drug Use LOCOST selling prices

per tab (Rs)

Market selling prices per tab

(Rs)

Albendazole 400 mg For worms Rs 1.10 Rs 9 to 12

Amlodipine 5 mg In high blood pressure and as

antianginal

Re 0.25 Rs 1.40 to 5.00

Atenolol 50 mg In high blood pressure and as

antianginal

Re 0.20 Rs 4 to 22

Enalapril 5 mg In high blood pressure mild to

moderate

Re 0.30 Rs 1.60 to Rs 2.30

Fluconazole 150 mg Fungal Infections in AIDs and

other conditions

Rs 3.50 Rs 28 to Rs 32

Cetrizine Anitallergic Re 0.20 Re 0.50 to Rs 3.00 17

Difference in a vaccine’s MRP and the price at which it is offered to physicians

Vaccine Constituent vaccines MRP, in

Rs

2008

(A)

Price

offered

to

physicians,

in Rs

(B)

Discount

in

Rs

(A-B)

Percentage

Margin of

profit

for the

physician

(A-B)*100/ B

Pentaxim Diphtheria, Tetanus, acellular

pertusis,

inactivated poliomyelitis

vaccine,

Haemophilus influenzae b

conjugate vaccine

2066 1446 620 42.9

Imovax

Polio

Inactivated Poliomelitis

vaccine

365 280 85 30.4%

Tripacel Component pertusis,

Diphtheria and tetanus

toxoids

1211 762 449 58.9%

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19

Okavax Varicella vaccine 1468 986 482 48.9%

Avaxim

80

Hepatitis A Vaccine 952 665 287 43.2%

TetractHi

b

Diphtheria, Tetanus, pertusis,

Haemophilus

influenzae b conjugate

vaccine

504 305 199 65.2%

ActHib Haemophilus influenzae b

conjugate vaccine

426 251 175 69.7%

Source: Rakesh Lodha , Anurag Bhargava . “Financial incentives and the prescription of newer

vaccines by doctors in India.” Indian Journal of Medical Ethics Vol VII No 1 January - March

2010

The

Chittorgarh/Nagaur Model

Of

Low Price

Govt. Cooperative Medical Store

Case Study: District Level Intervention

Issues raised

• Quality ?

• Combination preparations ?

• Chemists will give brand of his choice ?

• Govt. can put a ceiling on MRP ?

Step 1 : Doctors prescribe drugs by generic

(salt) name,

as directed by the state govt.

Step 2 : Govt. Cooperative Medical

Stores provide low cost medicines

of well reputed companies

• Medicines to be procured were listed by generic name

• To ensure purchase of quality medicines a committee of doctors was constituted.

• The committee recommended that drugs of reputed companies like Cipla, Cadila, Ranbaxy, German Remedies, Alembic, etc. can be purchased . (Initially 22 and now 57 companies are approved)

• Open tender by cooperative department.

• 800 medicines and 200 surgical items & I.V. fluids were procured at L1.

• The medicines are then sold at 20% profit margin to the patients.

• Price lists were displayed outside the coop. stores

Step 3 : Awareness Generation

• Counseling of Doctors

• Training of pharmacists

• Patient education

• Use of press

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THE BEGINNING

THE IMPACT: many human lives saved THE IMPACT: many human lives saved

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A positive side effect!

Generics advertised by pvt pharmacists! Necessities For

MAKING MEDICINES AFFORDABLE

• Generic prescribing

• Adoption of essential drugs list

• Standard Treatment Guidelines

• Centralized drug procurement : open tender system

• Distribution of Low cost drugs through Govt. drug counters

– Life-line drug stores (run by RMRS)

– Co-operative Medical Stores

• Public awareness and demand generation

= Rational Use Of

Drugs

Step 1

Step 2

Step 3

How much does it cost?

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• If medicines are acquired at the bulk prices (mentioned above in this chapter), it should only require around Rs. 6000 crores additionally to provide free treatment for all diseases not requiring hospitalization.

• Not only will this allow universal access to medicines for India’s citizens, but it will place significantly less burden on the healthcare system, as medicine costs will be reduced to the bulk prices paid by the government.

• On the other hand, if each patient continues to buy individually, the total cost for the same amount of medication would be Rs. 25000 crores.

Source: Prayas Study, 2010

How much is Rs 6000 crores?

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• The sum of Rs. 6000 crores is only one-tenth the annual budget of the National Rural Employment Guarantee Scheme.

• As of 2008, the Indian government spent 1.12% of the country’s GDP on healthcare, which is extremely low compared to most countries of the world, including several poorer countries in Sub-Saharan Africa.

• When the UPA government came to power in 2004, it promised to increase the health budget from 0.9% to 2-3% of GDP annually.

• The additional sum of Rs. 6000 crores would not push the health budget to even 2% of GDP. It is therefore affordable, and the right thing to do.

It is indeed possible

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• The experiences of TN, Delhi State, Chittorgarh District shows low priced good quality medicines can be available in the public sector.

• All these examples are of working within the ‘system’

• There has been no shortage

• Not only that it makes sense to set up shops at retail level to make available at these prices!

• Nothing is stopping us except political will!!