Why India Desperately Needs a Public Procurement Policy for Pharmaceutical Drugs

07 July 2016
India lacks a cohesive policy governing the procurement and recall of pharmaceutical drugs.
REUTERS/Fayaz Kabli
India lacks a cohesive policy governing the procurement and recall of pharmaceutical drugs.
REUTERS/Fayaz Kabli

India’s pharmaceutical drug regulation system is fractured. Drug monitoring in the country is sparse; it is split between far too many agencies—36 independent state regulators, and one central. Yet, the country lacks a cohesive policy governing the procurement and recall of drugs. The reasons behind this fragmented system are many. For one, under the seventh schedule of the constitution, public health, sanitation, hospitals and dispensaries are listed as matters on which state governments are allowed to legislate. This allows them to develop their own regulatory policy and to not be held accountable by any central body.

Additionally, India has never devoted sufficient resources to developing and implementing drug regulations standards. With no overarching laws protecting against the procurement or executing the recall of NSQ (or “not of standard quality”) drugs—those that fail to meet dosage and quality standards—substandard medication has flooded the market, and is more often than not, consumed by patients. At best, such drugs have no therapeutic effect. At worst, they contribute to a rise in anti-bacterial resistance, and reduce the potency of effective medicines. Year on year, the procurement of these drugs also causes a massive waste of public funds.

Without any cohesive policies governing them, pharmaceutical companies continue to mint money at the cost of patients’ health. And while the companies are to be blamed, the government is also complicit—successive administrations at the centre have failed to build a consensus between different states and central schemes in adopting a uniform procurement policy. The rising level of NSQ drugs in various government schemes and bodies—which, despite much evidence and admonition, the centre has been unable to control—makes the need for an umbrella procurement policy abundantly clear.

In 2007, in a performance audit it conducted of the Ministry of Health and Family Welfare, the Comptroller and Auditor General of India red-flagged irregularities in the drug procurement system of the Medical Stores Organisation—an office attached with the health ministry. The MSO is tasked with procuring drugs for healthcare and research in a government hospitals and dispensaries, as well as for a number of government health programs such as Reproductive and Child Heath, Tuberculosis and the Central Government Health Scheme, or CHGS, which provides medicines to retired and serving government employees. The CGHS serves about 30 lakh citizens, and operates through a network of 361 dispensaries, 19 polyclinics, 73 laboratories and 17 dental units. (It also includes 3 yoga centres.)

In the audit report, the CAG said that it had “serious suspicion about the quality of drugs” procured under the CGHS, and that it “suspected formation of a cartel of local chemists” that supplied drugs to the scheme. The report highlighted that, in the absence of a procurement policy delineated by the health ministry, schemes such as CGHS and bodies such as the railways and the armed forces—which have their own hospitals—had developed individual policies for buying medicines. For instance, at the time the CAG report was written, the CGHS was purchasing drugs based on the procedure laid down in a Medical Stores Depot Manual, a guideline that was written in 1970. This manual was revised in 2008, but the revision, even with measures marked out to control the influx of NSQ drugs, remained largely ineffective due to poor implementation.

Kaushal Shroff is a staff writer at The Caravan.

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