A Desi Model for Affordable Healthcare?

In few posts earlier, SpicyIP has dealt with the issue of affordable healthcare without taking sides (neither pro-big pharma nor pro-generics). Continuing in the same vein, in this post we shall consider alternative effective and cost-effective indigenous models for providing affordable and accessible healthcare to Indian consumers. In an interesting article in the Outlook, a model adopted by authorities in Chittorgarh (this hallowed town in Rajasthan needs no introduction) has been lauded.

According to the article, prices of essential medicines in 16 stores run by the Central Cooperative Bank have come down by 40-50% or even 90%. How did this happen? ‘Generic Drugs Initiative’, the brainchild of Dr.Samit Sharma, the district collector of Chittorgarh is credited with this healthcare micro-revolution (if it’s white revolution for milk and green revolution for crops, what would it be for drug revolution?). The first step towards achieving the stated objective of affordable healthcare was to require doctors in government-run hospitals to prescribe only the salt name of the drug and leave the choice of purchasing either the generic version or the branded version to the patient.

To back this step, the 16 stores were looped in which agreed to sell generic versions of 564 drugs, following which an aggressive promotional campaign was launched to educate and inform patients. Signboards on streets, and doctors’ prescriptions encouraged patients to purchase generic medicines and ask their doctors to prescribe them. Naturally this has forced other drug stores to follow suit or stand to lose their business. The end result? A drug which used to cost Rs.21 is now sold at Rs.2.48 and a drug which was sold at Rs.120 now comes at Rs.35 with the administration daring to think of further price cuts.

In a town which ranks abysmally low on human development index, this is a real boon to the patients. Not just that, as Nandan Nilekani rightly observed on the general state of affairs in India, in a country where articulation is wrongly equated with accomplishment, this turnaround achieved by Dr.Samit Sharma is no mean feat. One of the spin-offs of this mini-revolution, besides reduced expenditure on medicines by patients, is the increased confidence in the effectiveness of generic drugs, which thus far, according to doctors, were not reliable for the fear of being fake.

So can and should this desi model be replicated across the country? Before we give an answer in a yes or a no, a couple of questions come to my mind which may sound naive to some of our better informed readers. Given that a good number of patients in India live in rural areas and depend on government hospitals, how do generic manufacturers make profits if this fear of fake drugs is real and wide-spread?

Also, the Chittorgarh model could provide quite a bit of empirical evidence to answer long-standing questions about the importance of the physician’s prescription in a patient’s choice of drug. There is a lot of literature which focuses solely on this aspect of the debate; according to a few, more often than not, promotion of drugs does not limit itself to providing information about the products or promoting competition, but takes the form of persuasion by creating an artificial product differentiation. In simple words, higher cost of the drug may be projected as better quality/efficacy which works to the detriment of generic manufacturers. But this presumes sufficient knowledge of cost of the drug on the part of the physician prescribing it, which may not be the case.

In an earlier post, I had discussed in some detail the presence of a grey market in drug prescription by physicians, but also added that cost is not the sole factor driving prescriptions. In her highly informative article, “The Importance of the Physician in the Generic Versus Trade-Name Prescription Decision”, Judith Hellerstein concludes that though physicians play an undeniably important role in the choice of medicines, one cannot read too much into such decisions. Further, increased levels of patient awareness might counter such interests, not to mention erosion of the physician’s reputation. This view finds support in Anna Merino-Castello’s paper “Demand for Pharmaceutical Drugs: A Choice Modelling Experiment”.

But are these views of relevance in a remote under-developed part of India where patient awareness isn’t expected to be high and where the physician’s word is a gospel truth? Not just that, can state authorities actively promote a particular group of players instead of using mechanisms like NPPA, if possible, to bring down the prices of both generics and branded drugs and leave the final choice of drug to be dictated by efficacy rather than cost? Or should we make an exception in critical areas such as primary health care where the physician ought to consider ground economic realities without compromising on efficacy of the drug?

SpicyIP would like to hear from its readers on this.