Mudhalvar Marunthagam to cut back on soaring medical bills

CHENNAI: A network of subsidised pharmacies is not a unique measure, since the Union government has been providing low cost generics through 12,616 Jan Aushadhi Kendra outlets across the country, while a dozen States have some form of subsidised drugs programme operating through public hospitals.

Yet, the provision of free medicine declined overall in the country since the 1980s, down from 31.2% in 1986-87 to about 9% in 2004 for in-patients and 17.98% to 5.34% for out-patients. For in-patients, it moved up slightly to 13.8% for rural and 14.4% for urban residents in 2018 (National Sample Survey data).

Tamil Nadu has demonstrated the efficacy of pooled procurement and distribution of essential drugs through the TN Medical Services Corporation (TNMSC), with reductions in out-of-pocket expenditure (OOP). There are 349 drugs and formulations listed on the TNMSC website with government cost prices often a fraction of the retail price for branded drugs.

One of the most common, paracetamol, is procured by TNMSC at Rs 37 for 100 tablets, against a sale price of Re 1 each in the market. On the other hand, a vial of streptokinase, which is used to break down blood clots, costs Rs 649 in the pooled system against Rs 1,330 in an online pharmacy.

Within monthly budget

Medicine purchases heavily impact household budgets. Urban Indians devoted 7.13% of their monthly consumption expenditure per capita for medical requirements and their rural counterparts 5.91%, according to the National Sample Survey Office data (Survey on Household Consumption Expenditure, 2022-23). This is only slightly less than expenditure on conveyance, a statistic that shows the cost imposed on citizens by weak public transport policies.

Evidently, a network of decentralised Mudhalvar Marunthagam units can make a difference to health spending if the system makes access to drugs its goal: incorporating all the drugs that are part of the National List of Essential Medicines (NLEM, currently 384 items), and applying rigorous drug testing standards that ensure pooled procurement from units meeting Good Manufacturing Practice (GMP) standards, and independently ensuring their quality through sustained drug testing.

Just before COVID-19 struck, there was a call from the Competition Commission of India (CCI) for such interventions by governments to cut the cost of access to drugs. The CCI’s 2018 policy note on ‘Making Markets Work for Affordable Healthcare’ recommended government procurement of drugs specifically using the TNMSC model, active testing to ensure uniform drug quality whether generic or branded, and greater coordination between drug regulators at the Union government and State level.

In a market with sharp price skews created by high retail margins, it is natural to expect potential diversion of drugs if the same formulations are obtained at a fraction of the price compared with retail pharmacies. If the experience of the Public Distribution System is any indication, the subsidised drugs could theoretically be redistributed through private entities after being billed to genuine customers who may or may not avail of regular supply for their own use.

The answer to this would be to strengthen the primary care system where a registered medical practitioner would issue a prescription based on a Universal Health ID system, and the patient could collect the medicines at the designated outlet with optional confirmation via a mobile phone text message. Unlike other free articles distributed as welfare, people who actually receive life-saving free or subsidised medicines may not sell them for petty cash and only use them as intended.

As the CCI policy document noted, public procurement and distribution of medicines could reduce overall OOP expenditure if private hospitals were also mandated to accept these drugs for their in-patients, rather than force them to purchase them from their in-house for-profit pharmacies at the maximum retail price, a common practice.

‘Enter drug manufacture’

Tamil Nadu’s own Planning Commission in its Right to Health policy document submitted to the State government in 2022, advocated State-run diagnostic units and pharmacies as a means of promoting employment and expanding public good. A State-led manufacture of generic drugs and framing of guidelines to prescribe generics to patients were among other recommendations.

Healthcare providers and patients should be sensitised to the benefits of quality generic drugs. Medicines represent 60% OOP expenditure in government hospitals, and 25% in private sector, (where other hospitalisation costs are much higher), a TN report notes.

While the government operationalises the Mudhalvar Marunthagam scheme, it could consider the efficiency of its first flagship scheme, the Makkalai Thedi Maruthuvam (MTM, or medicine at the doorstep), which too offers free care at the doorstep for a set of conditions including diabetes and hypertension.

It has been demonstrated, in the past, that access to basic testing for kidney health, provision of low cost medicines to treat hypertension and diabetes and dietary advice along with supervision by health workers, reduced the rate of loss of kidney function among patients in a Tamil Nadu taluk. The now-proposed subsidised medicine outlets could build on such findings and on the MTM experience, to expand access to medicines for a larger population. Also, low cost drugs have to be augmented with subsidised diagnostics too, in order to monitor the progress of patients.

‘No stock’ phenomenon

One of the common issues encountered in schemes involving subsidies is the scarcity of the good or service offered. A decade ago, a Right to Information (RTI) response from the State government showed that psychiatric drugs that are low cost and not scarce in the market were unavailable in many district hospital psychiatric units, and patients had to get them with a prescription in the open market or travel to Chennai’s Institute of Mental Health. The situation eased later, but the effect of a procurement deficit was all too visible.

Making the TNMSC central to the new system of subsidised drug distribution would make shortages less likely, and the public could be encouraged to report shortages through the Chief Minister’s Cell mobile application.

Prescription of generics also remains key. A recent study conducted in Chhattisgarh’s public health facilities showed that for official prescriptions to avail free medicines, only 58% of the drugs were available. On the other hand, 69% of the prescribed drugs were generics. So, there is a need to scale up the manufacturing of generics and distribute these free, or nearly free.

Subsidy to free

TN is in a leadership position to move from subsidised medicines to universal free essential medicine supply. All that it needs is the administrative framework.

As the erstwhile Union Planning Commission panel on UHC (the Srinath Reddy committee) said in its 2011 report, the availability of free or partially free drugs for out-patients in India was extremely low. But the TNMSC had remedied the situation in great measure for out-patients (visiting government facilities), the panel noted.

By endorsing essential drugs based on WHO and the Union government lists, and keeping out irrational drugs pushed by manufacturers, it would be feasible to provide those drugs free. Such a policy would make the State well-placed to achieve the UN-mandated Universal Health Coverage Sustainable Development Goal 3.8 for 2030 (financial risk protection, access to quality essential health care services and access to safe, effective, and affordable essential medicines).

The Tamil Nadu Planning Commission, in its report, favoured the enactment of a Right to Healthcare law, incorporating an entitlement to free or subsidised drugs, besides diagnostics. Entitlements could be framed, the report said, in terms of physical access to facilities (based on distance) and equity (as guaranteed affirmative action). Such considerations must guide the choice of locations for the Mudhalvar Marunthagam units to benefit remote populations. The Srinath Reddy panel estimated that, in 2011, an extra expenditure of half-a-per cent of GDP was enough to provide free essential medicines to all Indians.

To avoid bottle-necks

TN could cross-subsidise medicines using general and civic taxes that would extend free medicines to all residents, using the twin tools of pooled procurement and distribution via public and private pharmacies where entrepreneurs could become remunerated partners. This would avoid making 1,000 shops a bottleneck. Branded drugs could continue for those who prefer them.

The CM’s pharmacy network also has the potential to provide at low cost to all, many expensive medicines such as those for cancer, which TNMSC has been purchasing for government hospitals on rate-contracts. Among the 25 cancer drugs in the 2022 TNMSC list, the costliest is Leuprolide Depot injection 11.25 mg at Rs 4,908, used in prostate cancer treatment, which sells in the market for just over Rs 8,000 and the cheapest is Letrozole, procured at Rs 14 a strip against a market price of about Rs 135.

Patients admitted to any hospital should have the freedom to purchase such rate-contracted drugs from a Mudhalvar Marunthagam, and private hospitals mandated to help them do so. This would reduce the pay-outs for social and private health insurance.

(The writer is a Chennai-based journalist)