Modern medicine has strengthened its hold as the preferred choice of treatment across the globe. Even in China, India, Latin America, and other countries that have a strong lineage of practicing traditional medicine, for the common man, modern medicine triumphs. Pharmaceuticals and diagnostics play a key role in such treatment and contribute to most health expenses. In case a family member is diagnosed with a non-communicable or chronic disease, such expenses burden the household economy. In India, of the country’s health expenditures in 2018-19 about 34% was on medicines alone. A common feature in India and many low- and middle-income countries, most of this is borne by the household from their income, savings, or borrowings as out-of-pocket expenses (OOPE). Though the share of OOPE has reduced between 2013-14 and 2018-19 in India, medicines still account for 29% of inpatient care expenses and 60% of outpatient care expenses. And 67% of all instances leading to catastrophic health expenditures (CHE) are due to medicine expenses.
Several factors influence such high spending, the most important being prescription practices by health professionals and only partial coverage of medicine costs by the public health system, government, and/or private health insurance. India’s three-tier public health system does promise free medicines as part of treatment but seldom does the supply match demand. Centralized procurement of medicines and distribution under the National Health Mission and several state initiatives have been partially successful. Challenges exist in inventory management and contracting practices that lead to stockouts, especially at peripheral health facilities.
The Government also launched the Jan-Aushadhi (JA) Scheme in 2008, which ensures generic medicines are available at the JA stores at 50%- 90% of price in comparison to the open market. Jan Aushadhi stores have penetrated all districts with about 8000 stores across the country. Similarly, AMRIT retail pharmacy, another government initiative has the same intent but has less than 200 stores across India. While the demand for medicines from such initiatives has been rising, manufacturing and distribution challenges are leading to shortages. Over the years, we also observed households’ preference for treatments shifting towards the private sector and retail pharmaceutical sales rising, which led the regulator to use price control as a measure.
In addition to these instruments which have had a partial impact, if India must accelerate progress towards reducing OOPE on medicines and stop households from foregoing medicines as coping strategies, Pradhan Mantri Jan Aarogya Yojana (PMJAY) could be an appropriate vehicle. PMAJY is a government health assurance/ insurance program that aims to cover 107 million families that are poor, vulnerable, or in the unorganized sector (approximately 500 million people) with an annual inpatient family coverage of Rs.500,000. There is emerging evidence that health insurance could be an instrument to reduce OOPE on medicines. Especially when coverage is offered to low-income households and the benefit package is generous enough to cover medicines for all episodes of treatment including outpatient care, the relationship between insurance coverage and OOPE on medicines is strong. PMJAY benefit package currently covers inpatient care and includes 3 days pre- and 15 days post-hospitalization expenses for diagnostics and medicines. We can expect lower OOPE on medicines among the insured, but the gap between policy and practice, especially with regards to monitoring mechanisms, citizens’ awareness about the benefits, and provider moral hazard proves otherwise. PMJAY just completed four years of implementation and is on a journey to strengthen its key operational process. In the coming years, we may observe its impact on OOPE for hospitalization. However, PMJAY, as is observed to be contemplating, should move quickly towards (1) establishing linkages to the Health and Wellness Centres program to ensure the provision of pre- and post-hospitalization care (2) expanding benefits package to include outpatient care or at least long-term follow-up care and packages for chronic or non-communicable diseases that include periodic check-ups with the means of providing medicines regularly. This may involve contracting primary healthcare providers (public and the private sector) and pharmacies directly or through pharmacy benefit managers to dispense medicines regularly to the insured people. These ideas could be implemented on an experimental basis, where the operational process is fine-tuned, and validated using implementation research methods before they are scaled up. Especially in India, context-specific attributes of these models will have to be identified as local health systems differ widely and each state/ district could then make necessary context-specific adjustments to ensure successful implementation. While several instruments mentioned here could help contain OOPE for medicines, efficiencies, and values generated will be discounted or unsustainable unless prescription practices and patient adherence are aligned with the intended objective.
