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Oppose Corporate Health Care
Strengthening the Public Health System
Universalising Health Care for All
November, 2012
Published by Amit Sengupta, on behalf of Jan Swasthya Abhiyan, and
Printed at Progressive Printers, 21 Jhilmil Industrial Area, G.T. Road
Shahdara, Delhi-110095
Contributory Price: Rs.20.00
Jan Swasthya Abhiyan
National Secretariat:
email: jsasect.delhi@gmail.com
Sama - Resource Group for Women and Health
B-45 2nd Floor, Main Road Shivalik, Malviya Nagar„ New Delhi-110017
Phone : 011-65637632/26692730
Delhi Science Forum
D-1S8, LGF, Saket, New Delhi - 110 017
Phones: 011-26524323/ 26524324
Contents
Introduction
3
Public Health Systems:
What do we want?
4
Private Health Care providers
in the context of moving towards
Health Care for All in India
16
Health Insurance:
The Road to Health for All?
28
Ensuring Access to Medicines for All
35
Building a movement to mobilise
for Health and Health Care for All
49
Introduction
n this booklet we present a brief analysis of certain key
sectors and themes related to the Health system in India
today. This is not an exhaustive description of all aspects
of the Health system, but rather focuses on certain key
areas which are the subject of debate in the country. The
issues presented in the booklet are inter-related, and
integrating the analysis presented would help us to develop
our vision for transforming the health system in India.
T
This booklet may be viewed as a cross-cutting
analysis. The transformation of the Health system needs to
be carried out in a manner that prioritises the needs of
sections with special health needs and populations which
are vulnerable or marginalised in various ways. We know well
that women, children and elderly people suffer
disproportionately from denial of health rights due to
combination of special health needsand negative influence
of social hierarchies and power relationships. Persons living
with HIV/AIDS and people with mental health problems today
suffer serious discrimination, which compounds their health
problems and leads to their health rights being violated in
various ways. Dalit and Adivasi communities have historically
suffered from major social exclusion which reflects in
continued denial of their health rights. Migrants, unorganised
sector workers, people living in situations of displacement
and conflict, persons of different sexual orientation are often
placed in situations of extreme marginalisation and require
special measures to ensure protection of their health rights.
Our movements and programmes for Health system
change would place these populations at the centre, as
they are simultaneously oppressed by the present system,
and are major protagonists in the process of changing this
system.
3
Public Health Systems — What do we want?
oth national and international experience teaches us that
public health services will have to be the backbone of any
system that guarantees access to quality health care services
to all citizens of the country. But, for this to happen, public health
services need to be expanded and strengthened to ensure that
it becomes the principal provider of health care services the
country. At the same time public services have to be account
able to communities and people they serve.
B
Before we proceed to elaborate on what we want from the
public health system, it needs to be emphasized that health
care is only one determinant of health outcomes. Good health
is also a result of better nutrition, safe drinking water and sani
tation, universal access to education, gainful employment and
equitable and inclusive development, better working and living
conditions, control over addictions as well as environmental pol
lution (both material and cultural) and an end to various forms
of discrimination. Reduction in poverty itself contributes im
mensely to improved health outcomes. Changes in conditions
that contribute to good health require the action of many sec
tors - the health sector is only one of these. The health depart
ment must become an active player in all policy decisions that
have an impact on health. If development is to be inclusive,
equitable and especially sensitive to the needs of the most
marginalised, all programmes must have a health impact as
sessment - and every major policy initiative should be viewed
through a health lens.
The presence of a strong and reliable public health system
also serves to put a check on the unregulated growth of the
private sector and helps in preventing unethical practices in the
private sector. In the absence of a properly functioning public
health system, efforts at regulation of the private sector - both
for costs and quality — are likely to be much less successful as
people would continue to be driven to the private sector in the
absence of public alternatives.
Most importantly, provision of health care by the public sector
allows citizens to hold the Government accountable and to mean
ingfully demand for health as a fundamental right.
We are all aware of the problems associated with the exist
ing public health services in India - a limited range of services,
4
poor access and poor quality and management of services, in
fluence of powerful vested interests (international and national)
and bureaucracy driven reforms that do not allow for meaning
ful popular participation. Often due to unfilled vacancies or ab
senteeism or lack of medicines and equipment, even the ser
vices that are supposedly assured are not in practice available.
Funds meant to strengthen the public health system do not get
spent, or worse leak out as corruption. Public providers who
have private practices, undermine the public system for per
sonal profit. Given these persistent problems a situation has
been created where people are made to believe that the public
health system is doomed to fail. By an extension it is argued
that the only remedy is to hand over health care to private pro
viders and especially to the large corporatised private sector.
Such arguments do not take into account the fact that the suc
cess stories of health systems are all stories of success of the
public health system - in Cuba, Thailand, Costa Rica, Sri Lanka,
Brazil, as well as in a number of developed countries.. The sup
porters of privatisation base their positions not on facts but on
an ideological logic that public services are inherently ineffi
cient. This is a position that sections in the present government
would like to press for.
The Jan Swasthya Abhiyan's position, to the contrary, is that
corporatization and privatization is a remedy worse than the
disease. What is really needed is to pursue the goal of con
structing an effective, efficient and accountable public health
system. It needs to be remembered that in spite of the huge
expansion of the private sector and grossly inadequate reach
of public health services, an estimated 40-50% still rely on the
public sector for in-patient care. We identify below a few key
constraints facing public health systems and suggest alterna
tives through which the public health systems could be reformed
and strengthened.
Access to Health Care Facilities
The broad picture that we see is a serious shortfall of facilities
at all levels - from primary health centres to big hospitals (see
Tables 1 and 2). The shortfall is often due to lack of facilities
themselves, or a result of these facilities being unable to func
tion because of lack of doctors and health workers and inad
equate supplies of medicines and other consumables. The situ
ation is made worse as a result of mismatch between demand
5
and supply — some facilities are very crowded while others are
under utilized. Similarly human resources, equipment and funds
do not match requirements. Often the content of services does
not match the needs that people have. Thus in many facilities
only immunization and some minimal care in pregnancy may be
available, though the most common health problem may be in
juries and fevers.
The challenge is to make District Plans that are responsive to
the needs of the community as articulated by them in participa
tory processes and as measured by technical estimates of dis
ease burden and costs of health care and as reflected in cur
rent patterns on utilization of services.
Another limitation that governments need to overcome is the
institutional capacity to make and implement such plans. Yet
another related challenge is building the skills and the systems
needed to measure health outcomes and health processes in a
decentralized manner, identify communities and areas where
access is iniquitous and take affirmative action including addi
tional resource allocation to reduce inequity. Identification of
health care priorities and outcomes, requires consultations with
the community, as well as robust epidemiological information.
Human Resources for Health
One of the most important deficiencies in the public health sys
tem -- indeed often the main limiting factor -- is the lack of skilled
human resources, especially in rural and remote areas.
There are several important reasons for this crisis. Firstly the
deliberate choice made to halt government investment in
public sector medical colleges and encourage private medi
cal and nursing institutions. This shift has further skewed the
Table 1: Status of Health Infrastructure in India
Infrastructure March 2007
Sub-Centre
PHC
CHC
Dt. Hospital
145272
22370
4045
340
March 2011
148124
23887
4809
613
Percent
Increase
2
6
16
45
Source: RHS Bulletin 2007 and 2011. MOHFW
6
Required Percent
Gap
178267
29213
7294
640
17
18
34
4
Table 2: Human Resources In Public Facilities
Cadre
ANM
HW (Male)
Nurses
Doctors
Specialists
Pharmacists
Lab. Tech.
March 2007
147439
62881
29776
22608
5117
17919
12101
March 2011
Percent
Increase
Required Percent
Gap
187675
52215
65344
26329
6935
24671
16208
21
-20
54
14
26
27
25
393041
207480
138623
109484
58352
58389
80308
52
75
53
76
88
58
80
Source: RHS Bulletin 2007 and 2011, MOHFW
tendency of medical and nursing graduates to avoid serving in
rural and remote areas. The first corrective needed is therefore
for public investment in building medical, nursing and paramedi
cal educational institutions that are primarily located in regions
where the human resource gaps are worst.
The second corrective is to clearly identify skill requirements
at different levels of care and to deploy health personnel based
on such requirements. For example, a primary health care doc
tor, nurse or para-medic should have skills which are more com
prehensive and appropriate to the needs. Specialist skills needed
at a secondary hospital -- a CHC for example — are very differ
ent from what is needed in a medical college or tertiary care
hospitals. Effecting such a change, requires alterations in exist
ing curriculum, requires bridge courses and specially designed
supplementary packages and even requires the creation of new
professional categories.
Another important reason for the huge deficit in Public Health
services is the complete lack of regulation of the private sector
and promotion of the corporate sector. Doctors graduating from
the burgeoning, hugely costly private medical colleges need to
amass money by any means; something which has been made
possible by complete lack of regulation of the burgeoning pri
vate sector. Most doctors look for lucrative opportunities in this
unregulated market rather than consider a career in Public Health
Services. Effectively regulation would make it less lucrative for
medical professionals to gravitate towards the private sector.
Both of these measures while necessary are not sufficient.
National and international experience teaches us what more
7
needs to be done. First and foremost is preferential selection
for education and training from areas and communities which
are under-serviced, and then training them as close to their
areas as possible, in the state language preferably and deploy
ing them back in these same districts. This should be supple
mented with a package of financial and non-financial incentives
and the building of a positive workforce environment that would
retain the employees. It is not enough to berate doctors by
saying that they are unwilling to serve in rural areas. Condi
tions of work need to be vastly improved to retain them in such
areas. Minimum working conditions in terms of salaries, hous
ing, rotational postings and secure conditions of employment
are all necessary incentives.
Quality of Care
Government is now talking of providing universal access to health
care. This should clearly mean universal access to quality health
care, which in this context means not only achieving the de
sired clinical outcomes, but also assuring the users' safety, com
fort and satisfaction.
The 12th Five Year Plan claims that " a pure public sector deliv
ery system involves funding a large public sector health system,
with little incentive for the service providers to deliver a quality
product". What is implied is that a public health system has no
incentive to perform well unless it is forced to compete with
the private sector. This is a bogus argument, and is readily
disproved if one looks at functioning public health systems in
many parts of the world. The basic issue is that patients never
have enough information in order to make an informed deci
sion. So the path to reforming health services does not lie in
making more choice available in the form of a competing private
sector. There is a huge body of evidence - anecdotal and scien
tifically recorded - that shows how private providers entice pa
tients with false claims and promises, fleece poor patients, and
provide poor care. In practice, in the public sector, there are
fewer commercial pressures that lead to irrational use of drugs
and diagnostics and surgical procedures.
At the same time, in practice, the experience that patients
have with the public health system is dismal. A major reason for
this is because public care is seen as the last resort for those
who cannot afford to go to the private sector. Access to quality
care in the public system is not seen as a right, but as merely a
8
safety net for those who cannot afford 'better' care. This is not
the logic around which a public health system is built. Quality
health care, available through public facilities, should be the
norm and not the exception. Unfortunately, an entirely errone
ous understanding has been promoted that if people want qual
ity care they should go to a private facility. The introduction of
user fees in public facilities in the last two decades, further
pushed away middle class sections, reinforcing free care as care
for the BPL!
The National Rural Health Mission (NRHM), launched in 2005,
marked an attempt to remedy the situation as regards quality
of care in public facilities. The situation has started to change in
some public facilities, though the changes have been inadequate
and uneven. What is however significant is that we now have
fresh evidence in India that good quality care, as certified by
external assessors, can be provided by public hospitals. The
failure in the Planning Commission's reports to note this ad
vance is an ideological position against public services.
Quality Assurance Systems need to cover all public facilities
to ensure optimal use of resources and for ensuring that the
health outcomes are achieved. The core of all quality manage
ment systems is to define the outcomes and requirements of
quality in terms of a set of standards, and then map the pro
cesses within the facility to identify the reasons for gaps in qual
ity. Then different players are provided with training and sensi
tization inputs, management is strengthened and where needed
work-flows are reordered so that these gaps are closed. Invari
ably some gaps require more investments but usually about
70% of the gaps in quality of care can be closed with existing
resources.
Most important by making quality of health care measurable
and comparable, it is possible to counter the most common ar
gument advanced against a public health care system viz. that
it cannot assure quality of care.
Quality of care is also dependent on the infrastructure, equip
ment and supplies being available. The critical gap is not just in
resources — it also lies in the lack of transparent and efficient
systems by which these can be assured. Evidence from the work
done by the Tamilnadu Medical Services Corporation (TNMSC)
shows us how a public system can conduct procurements with
the highest standards of transparency, quality and efficiency,
and with equal efficiency allocate resources across facilities,
9
responsive to peoples needs. The TNMSC system can allow for
reservation for the small scale sector and for the public sector
in drug procurement. It is unfortunate that there has been lim
ited uptake of the TNMSC model in other states of the country.
Affordability and Social Protection
Care provided in the public health care facility must be seen as
a social protection measure, where the payment has been col
lected as part of general taxation and free service is provided
by public health facilities. Where public health care facilities are
unable to provide some service, these could be contracted in,
but the endeavor should be that over 80% of all in-patient and
out patient care needs are part of assured services available
within a publicly provisioned district health system.
While it is true that even before the advent of neoliberal re
forms resource allocation for building public health infrastruc
ture was grossly inadequate, there was an implied understanding
that public health services must progressively cover the entire
population and should be free. Even as late as in 2002 the Na
tional Health Policy stated: "The approach would be to increase
access to the decentralized public health system by establishing
new infrastructure in deficient areas, and by upgrading the infra
structure in the existing institutions". The introduction of user
fees as part of the neoliberal reforms in the early 1990s was
one of the factors that started changing the mind-set. Since
hospitals were asked to recover costs of services, the corol
lary was to stop the supply of free medicines and diagnos
tics. Only Tamilnadu resisted this ideology and hence became
the model public health system that it is today.
A start towards free services has been made with the JSSK
programme where pregnant women and newborn are to get
free and comprehensive services. We are nowhere near achiev
ing the desired goal of comprehensive and free services avail
able through the public sector. But, even the limited experience
under JSSK allows us to identify the bottlenecks, which include:
•
10
The notion that 'free services are not valued' has
become an internalized perception- and there is clear
resistance to changing over to free services. This
resistance is more pronounced in the case of tertiary
level services.
Table 3: Percent Public Health Expenditure by Region in the World
Country/Region
India
Average of High income countries
Average of Low income countries
Average of Middle income countries
World
Public Expenditure
on Health as percent
of total health expenditure
29.20
65.10
38.78
52.04
62.76
Source: World Bank Database (http://data.worldbank.org/)
o
Drug supplies neither cover all requirements nor are
they uninterrupted, making outside drug prescriptions
with out of pocket expenditures common.
•
Diagnostics are the main source of user fee collections
across the nation, and hospitals are loathe to let this
avenue go.
o
The practice of free diet was given up in the nineties
and is being revived with some difficulty.
Informal charges (read demanding payments by
corrupt means) remain and are highest in states where
salaries are very low or not paid on time.
e
o
Travel to the facility is a huge cost, though a number of
assured patient transport services have somewhat
reduced these costs.
a
Where referrals to private sector become necessary because of a lack of services in the public sector, the
government does not accept the costs of care incurred
in such referrals.
The constraints enumerated must be systematically addressed
while expanding the scope of free and comprehensive services
to include all disease categories.
One other important challenge relates to inefficiencies in public
financial flows. Facilities with high patient loads run out of funds
in weeks, whereas facilities with poor patient loads do not ex
pend their money. Since the latter are numerically larger, a lot of
funds are locked in the pipeline, while the quality of care in high
11
volume facilities remains very poor. Thus, while increasing in
vestment is urgently needed, districts should have the capacity
to deploy financial and money responsive to peoples require
ments rather than mechanically distribute these based on cen
trally decided norms.
Finally, JSA has been advocating a major increase in finan
cial allocation by central and state governments to the health
sector - at least to 5% of GDP as recommended by the WHO.
India has for too long had among the lowest levels of public
expenditure on healthcare in the world (see Table). One of the
declared goals of National Health Policy and the National Rural
Health Mission has therefore been to increase public health ex
penditure to 2 to 3 percent of GDP. However, current public
health expenditure in the country stands at 1.06% of the GDP.
Over the years states have been starved of funds through a
variety of fiscal mechanisms, but even during the ll,h Plan pe
riod the states actually performed better than the centre in alloca
tion of funds for health care. The Eleventh Plan had projected an
allocation of 0.87% of GDP by the Centre and 1.13% by States
by 2011-12. At the end of the Plan period the allocation stood
at 0.32% of GDP by the centre and 0.68% of GDP by states. The
major shortfall was a consequence of the meagre Central allo
cation.
Community Processes and Accountability
Recognizing that health is a product of processes, which are
largely located at the level of the family and community, any
programme for universal health care must aim to involve com
munities as active participants rather than merely as passive
beneficiaries.
Community processes are largely mediated through
organisations- elected local bodies, self help groups and other
community based organisations, and official committees set up
by the health department where public participation is provided
for. In addition non-government organisations can play a major
role in articulating and sometimes acting on some specific con
cerns of the community. NGOs also can play a major role in add
ing technical capacity.
One major development under the NRHM has been the ap
pointment of ASHAs. There is a need to find a balance between
safeguarding her rights as a women worker -- whose work has
12
to be valued and adequately remunerated - and the need to
envision her as a community based worker with the spirit of
voluntarism and activism. Despite poor status and remunera
tion, in many areas, ASHAs have begun to play a crucial role in
strengthening demand for health care services. The time is ripe
to overcome the current limitations and deficiencies of the ASHA
programme and to begin considering the nature and needs of a
second community health worker, while securing the working
conditions and performance of the first.
One of the central issues in many discourses about strength
ening public health care systems is accountability and transpar
ency. One set of measures attempted is to create participatory
structures — where there is both civil society and multi-stake
holder participation and a degree of transparency. Such struc
tures include state and district health societies, rogi kalyan
samities (RKS) and village health and sanitation committees
(VHSC). Experience shows that these forums can be used by a
dynamic leadership to improve the quality of inter-sectoral par
ticipation and the social support needed for the health sector.
However, functional mechanisms of accountability remain the
chain of command leading to the elected minister, legislature
and judiciary at the top.
Community based monitoring processes, integrated in the
NRHM, have shown to be capable of improving performances
of public facilities when there is a direct dialogue with the
community. In addition, larger systemic problems need to be
raised and these need to be addressed through appropriate
broader policy decisions and actions.
One also needs to keep in mind that public systems are
plagued by a high degree of internal inertia, negativity and loss
of morale. Many systems of monitoring and penalties work to
harass the honest health care provider- and the innovative and
dynamic manager. It is a well known axiom that those who take
less initiative and do less are also much less vulnerable to criti
cism, while those who are active and contributing in a major
way could get victimized more often. The challenge is therefore
to build a positive work environment and also support for the
honest service providers -- who are more often than not victims
of poor working conditions and corrupt leaderships.
Corruption is not an aberration in the system - it is one di
mension of power relationships within the system that promotes
rent seeking at all levels. A fight against corruption is possible if
13
we understand the dynamics of the system. In many states,
the single biggest source of corruption is the appointment of
the chief medical officers, district medical officers and of direc
tors of health services. In some states which are most notori
ous for corruption, almost all CMHOs are holding their posts on
an ad hoc basis. They pay a 'rent' for securing their job, and
then a regular rent thereafter to keep the job. To pay this rent,
they must demand the same from both junior officers and ven
dors- making cuts into legitimate payments. Vendors often ad
vance the money used to buy the job.
Another major source of corruption is in procurement of
consumables and equipment. The TNMSC example has been
discussed earlier. We only add another benefit: in TN, by remov
ing drug procurement from the functions of the directorate it
reduced the pressures for corrupt appointments of directors of
health services.
A third major source of corruption is infrastructure creation,
leading to poor performance, slow utilization of resources and
a failure to meet targets. A further source of corruption is trans
fers and postings. In many states once transfer season comes,
a large number of providers have to pay to keep their positions.
An emerging avenue of corruption is kick backs in public pri
vate partnerships and in contracting out programmes to non
governmental agencies. Over a period of time providers with
integrity and efficiency do no survive, and the market becomes
dominated by unethical players. We see this problem in the NGO
sector in many states.
It follows there that the main demands of peoples movements
should be for :
•
A transparent appointment of chief medical officers of
the district and directors at the state level.
•
Robust and transparent institutional mechanisms for
infrastructure and procurement with every process
benchmarked to TNMSC as a standard.
•
Transparent and fair postings and transfers.
•
Transparent grant-in-aid mechanisms for NGOs and
fresh procurement rules for academic and not for profit
partnerships.
14
•
Transparent and appropriate procurement of commer
cial service providers, so that neither leakage nor
monopoly results.
A grey area in this scenario is the issue of private practice by
public providers. First, where such practice is allowed, they must
work under clear rules that prevent conflict of interest situa
tions - viz. no kick backs for diagnostics and no referrals to a
facility where the public provider or his or her near family are on
the board. Also one could experiment with progressive with
drawals of private practice- like first withdrawing it from medical
educational institutions accompanied by better conditions of
professional work and pay packages.
In conclusion, greater investment and addition of human re
sources will be needed, but in addition the strengthening of
public health systems requires major institutional innovation and
capacity building at all levels of the system. Secondly regulation
of the private sector is urgently needed to reduce the corrupt
ing influence of a lucrative, unregulated private sector which
acts as a powerful force to attract doctors away from Public
Health System , One of the philosophical foundations of this
approach is that healthcare is not seen as a commodity that
lends itself to packaging and purchase mechanisms but rather
as a relationship of trust that has to be established between a
health team and the community it serves. The role of the gov
ernment is to build systems that establish and protect such a
relationship.
15
Private Health Care providers in the context of
movingtowards Health Care for All
Private health care in India: massive but unregulated,
often irrational and sub-standard
India's Health Care System is one of the most privatized in the
world. Thanks to the policy of the government to encourage the
growth of the private sector, especially since the 1990s, the
share of private sector in various components of health care in
India today is approximately as follows:
Medical graduates
90%
Post-graduate doctors
95%
Outpatient care
80%
Indoor patients
60%
Medical colleges
30%
Manufacture of medicines
99%
Manufacture of medical instruments
100%
After Independence, there has been tremendous growth and
development of the private medical sector. Due to insufficient
expansion of the public health system and overall private sec
tor friendly policies of the state, the vast majority of doctors
passing out from medical colleges have joined the private sec
tor. This trend has accelerated with production of higher pro
portion of postgraduate doctors since the 1970s. lin 1950 there
were 60,000 MBBS doctors, now there are 7.5 lakh MBBS, equal
number of AYUSH doctors and most of them are private provid
ers. Added to this is the tremendous growth of corporate hos
pitals, starting with the Apollo Hospital in Chennai in 1983. The
neoliberal policy has fuelled the growth of corporate health care
from 1990s. As per Centre for Monitoring Indian Economy, dur
ing 2003-2008, sales of 30 companies in healthcare sector have
galloped. For example that of Apollo Hospitals Enterprise Lim
ited increased from Rs 500 crores to Rs 1458 crores in this pe
riod. In 2008, the income of Apollo Hospital alone was of Rs.
1150 crores, 28% more than previous year's and profit was
102 crores, 51% more than previous year.
16
Despite it's rapid growth and large size, the private medical
sector in India suffers from a wide range of serious problems
and it is widely acknowledged that these arise due it's profi
teering linked with complete lack of regulation This has led to
huge urban-rural divide, massive wastage, exploitation due to
excessive/irrational medications, frequent exploitation of patients
by overcharging and unnecessary interventions, major varia
tions in quality and overall substandard care, violation of pa
tients' rights. This is compounded by the exploitation by pharma
industry through manufacturing and sale of irrational medicines
and irrational drug combinations, costly brands, overpricing.
Added to it during the last 20 years there has been prolifera
tion of private medical colleges and proliferation of unregulated
medical equipment industry. Thus overall barring some centres
of excellence, private medical care in India is substandard and
unnecessarily costly. There has been complete failure of regu
latory agencies like the Drugs Controller, the Medical Council of
India not to speak of complete lack of self-regulation by the
professional bodies like the Indian Medical Association (IMA).
Starting from this background of present overwhelming pres
ence of private health care in India, it would be quite a task to
reach the goal of health care for all. Today most people have to
pay to access health services and still have no assurance of
quality and rationality of care. Moving ahead from this situation,
we have to envision a process through which we can achieve
the goal of Health Care for All, located within the broader vision
of Health for all. While this would involve massively expanding,
strengthening and reorienting the public health system, given
the majority of health care resources today under sway of the
private sector, this sector cannot be ignored or wished away. In
fact even expansion and improvement of the public health sys
tem is in some ways linked with reshaping the private medical
sector, since key aspects such as availability of doctors, legal or
illegal private practice by public doctors, referral patterns etc.
are linked with current dominance of the private sector. In con
text of such a broader framework, we will need to think about
how to deal with the massive private medical sector, keeping in
mind its current serious problems, as well as the large scale
health care resources that are currently under its sway.
17
Two approaches to dealing with the private medical
sector while moving towards Health care for all
Naturally, if the public health system expands substantially and
begins to provide quality care to a large portion of the popula
tion, the private sector would be put in a situation where it
must either function in a more responsive manner or become
progressively irrelevant. However, since such major expansion
of the public health system would take some period of time,
and even to enable such expansion in the near future, resources
such as specialist doctors have to be reclaimed and the influ
ence of the private sector has to be rolled back, we need to
decide how to deal with the existing private medical sector while
moving towards HCA. In this context, two diametrically oppos
ing approaches are available to us today. Either public resources
would be made to serve private benefit, OR private resources
would be made to serve public benefit.
The choice between these two approaches is one of the core
contentious issues that lies at the base of current debates about
UHC / HCA in India. Today a dominant strand in the establish
ment is advocating the former approach under the rubric of pub
licly funded health insurance schemes and certain variety of'Pub
lic-Private partnerships', where with amplification of certain ex
isting models, large scale public funds would be handed over to
the private medical sector without any effective regulation, ac
countability or rationalisation of this sector, and in a manner
that would further weaken the public health system.
In Jan Swasthya Abhiyan, as we strongly oppose this domi
nant approach of using public resources for private benefit, which
has.been articulated most coherently in the Planning
commission's 'July draft' Health chapter, we need to start dis
cussing how to develop the alternative approach of using sec
tions of private resources for public benefit. This would involve
in-sourcing of certain kinds of private providers (including not
for profit providers) in a manner that would strengthen and
complement the public health system instead of weakening it,
using such providers where and if necessary and under certain
terms, conditions.
In this context, we might learn from certain other countries
which have achieved the goal of Health Care for All, where there
has been a departure from the domination of the logic of the
market in health care. The decisions about health care are based
more and more on the logic of social medicine, and less and less
18
from the consideration of health care as just one more arena of
profitable business. For this to happen in India, there is no doubt
that the Public Health Services would be the backbone of HCA,
and only an expanded and strengthened Public Health System
can lead such a process of taming private providers and leading
sections of such providers along a path towards socialization of
health care. While the aspect of strengthening and expansion
of the Public Health System has been covered in another sec
tion, here let us discuss how sections of private providers might
be reshaped in the process of moving towards Health care for
all.
A key question is - would we really need to insource sections
of private providers to achieve 'Health Care for All' in India in
the near future? If yes, what would be the approximate scale
and nature of this insourcing? To take the example of urban
areas, in India in coming 5 to 10 years, about 5 lakh doctors
would be needed in cities to achieve the goal of one doctor per
thousand population. Currently only about 60,000 doctors are
employed in urban PHFs in India. It is quite unlikely that all the
requirement of remaining nearly 4.5 lakh doctors can be met by
recruitment into the public health system (which would involve
a nearly ten-fold increase in the public health system in urban
areas in next 5-10 years). During the next 5-10 years, even if
special efforts are made to recruit doctors in urban PHFs and
new medical colleges are opened, most doctors in urban areas
are likely to continue in various forms of private practice or pri
vate facilities. A section of such providers will have to be con
tracted into Public Health Systems in significant numbers, at
least for urban areas, regulated by certain terms and condi
tions, and in a manner that strengthens or complements efforts
to expand the public health system. This is especially valid while
we consider how to make rational specialist care available to all
those who genuinely require such care, since today 95% of
medical specialists are in the private sector.
Such contracting-in of a section of private providers would
have to be based on appropriate regulations and guidelines,
due to which these contracted doctors would act more as an
extension of the Public Health System. They would be so regu
lated that they conform to scientific, ethical medicine in tune
with the logic of social medicine. Under this contract, it should
be mandated that while they have a decent and secure income,
contracted private providers too would have to practice ratio
nal care, and that they will have to tune their clinical practice
19
with the goal and logic of Public Health. We need to see that in
the 21s' century, if there is sufficient public mobilization and po
litical will, 'private interests' will have to progressively lose ground
in this field, because of the nature of modern clinical and social
medicine which works best when there is public ownership and
control over the means of health care delivery. In a socially regu
lated system, the scope for commercial cheating and exploita
tion by individual practitioners would be eliminated, and in fact,
as in case of the original NHS model in Britain, insourced private
practitioners would then remain private only for the name's sake.
Whatever model of moving towards health care for all is
adopted, adequate laws, policies, regulatory structure will be
required to ensure effective regulation. We also need to recog
nize that the private medical sector is not a monolithic entity,
and the strategy we adopt for different layers amongst private
providers would have to be quite different. Let us look at these
aspects in some more detail.
An essential and overdue step: comprehensive legal
regulation of private providers with a participatory
framework
As argued above, comprehensive regulation of the private medi
cal sector in India is absolutely essential. Certain regulations
would be applicable across the board for all health care provid
ers (related to physical and humanpower standards, patient
rights, equity in distribution, guidelines and protocols for ratio
nal care, broad norms on costs of care) while some further regu
lations would be enforced regarding providers involved which
are contracted into public health systems (systematic auditing
of rationality of care and control on costs of care) although even
the latter regulations would be expected to have a progres
sive, system-wide effect. Key areas requiring regulation would
essentially include the following:
a)
b)
c)
d)
e)
20
Standardization of structures and human-power of
facilities to ensure quality of care
Protecting patients rights
Equalizing accessibility / distribution of establishments
Standardization and rationalisation of process of care
based on standard protocols
Rationalizing and containing costs of care
To achieve such appropriate regulation of Private Medical Care
in a public systems led move towards health for all would re
quire the following kinds of measures:
1. Formulation of adequate law / reformulation of existing
law through multi- stakeholder (including citizens')
participation
The current Clinical establishments registration and regula
tion act lays down certain very broad guidelines for regulation,
and it has currently been adopted by only a few states. On one
hand, the act needs to be broadened since it does not mention
the principles of patients rights or ensuring public health obli
gations of private providers. Such reformulation should be based
on a consultative process, to take into account the concerns of
various stakeholders including health rights organisations and
patients groups, so that no serious lacunae remain. At the same
time the act needs to be made universally applicable in all states.
The national rules under the current act have now been for
mulated, hence corresponding rules need to be adopted by
states. Detailed framework of patients' rights must be included
in such rules. Further the rules should include specifying a
decentralised framework of implementation by an autonomous
regulatory authority guided by multi stakeholder bodies (includ
ing civil society organizations working on Health Rights) to pro
mote and monitor the regulatory work.
The govt, claims that the Clinical Establishment Act 2010 would
serve this purpose of regulation of private providers. Unless an
effective, adequate regulatory authority is put in place, with
the structure to implement the regulations, the talk of regula
tion would mean only empty words. It is the ministry that would
have to set up the authority, but with sufficient, autonomy and
governance for it to be effective. Further it has to be set up at
both national and state levels with clear roles for each.
2. Policy and regulatory structures to implement the law
Appropriate agencies/structures would be required, which
must be adequately supported by resources, to operationalise
regulation and standardisation. These bodies would be in two
parallel streams:
a)
Health care authorities at various levels, which would
be offices with full time, professional staff entrusted
with direct implementation of regulation
21
b)
Health boards or councils at various levels, which
would be multi-stakeholder bodies with variety of
representatives, meeting periodically and carrying out
broader planning, decision making, standard setting
and monitoring of regulation.
There will be need for binding norms like setting of standards
and protocols which will restrict the scope of irrational, insensi
tive care. Combined with montoring by relevant authorities, there
is need for participatory monitoring (on the lines of Community
Based Monitoring) by multi-stakeholder bodies that may be simi
lar Health Councils in Brazil. Further a user friendly, indepen
dent, redressal mechanism at local level would be needed which
will have to be widely publicized.
The overall objective of such a regulatory system would be to
move towards a more socialised, equitable and accessible
health care system providing quality care with participatory gov
ernance (not confined to top-down, bureaucratic regulation)
including elements of self and social regulation.
Principles to guide interaction of private providers with
the public health system, while moving towards Health
Care for All
We are arguing that certain contracted private doctors and
facilities should act as an extension of the Public Health sys
tem by following appropriate guidelines. However we need to
keep in mind that so far in India, much of the interaction be
tween the public health system and private providers (often
labeled as 'Public-private partnerships') has been deeply prob
lematic, since in most of these models, while public funds are
handed over to private providers, their mode of functioning has
not been brought in line with public health logic, and they may
even tend to replace or weaken public systems. We are envis
aging a qualitatively different form of interaction, where certain
private facilities are contracted and given a more public charac
ter to fill gaps and complement and strengthen the public sys
tem. But for this to occur, the terms of engagement with the
private providers should be clearly formulated. Towards this
end, guidelines formulated by in the ISA's draft booklet 'Towards
People's Health Plan' prepared during the National Health As
sembly II in Bhopal, 2007 should be considered. We can build
on some of these guidelines and modify them as follows:
22
•
Clearly demarcate the private commercial sector from
the not-for profit and voluntary sector in health care
provision and treat them differentially.
o
Quality and Cost Regulation of service delivery and a
transparent system of monitoring would have to be in
place.
•
The objective would be to fill key gaps in the public
system while ensuring essential services to people.
Hence such interactions should supplement and
strengthen the public sector but not substitute or
weaken existing public health care services in any
situation.
•
Expanding/bringing in investment working for public
health goals, which would mean no transfer of assets
and resources from public ownership into private
hands.
•
Prompt payment with dignity for the private sector
partners so that ethical low budget proprietary
services in smaller towns are favoured.
•
Ensuring that efficiency is based on better
' management practices and not based on unfair wage
structures and compromised social security benefits,
especially for women health care providers like ANMs
and nurses.
•
Putting in place kick back statutes, that ensure there
are no referrals with conflict of interests, especially
where the same providers is working in both public
and private facility.
It may be reiterated that establishment of a strong regula
tory structure with oversight by bodies including community and
civil society representatives should be a pre-condition for any
interaction between the Public health system and private pro
viders. The regulatory framework should be participatory and
would encourage self-regulation. Secondly all such providers
will have to respect, observe patients' human rights and
should have adequate, just grievance redressal system. Fur
ther all publicly funded services should be regarded as a form of
public service in terms of their accountability obligations - such as
respecting Right to information, allowing Community based
monitoring, and regular reporting to various public bodies.
23
Development of any such framework is -critically dependent
on three key elements. These are significantly enhanced public
regulatory capacity (which is presently weak and prone to cor
ruption), systematic participatory accountability processes (which
can keep the regulators on track and could strongly present
community feedback to ensure appropriate provision of services)
and development of pro-people, rational technical norms, guide
lines and protocols which would be essential to operationalise
such regulation.
Taking a differential approach to various sections
of the private / non-public medical sector
To move towards engaging the private sector in a much larger
scale, we need to win over a section of private (including not for
profit) health care providers around the need to move towards
health care for all, , and to neutralize other sections of these
providers who would for reasons of vested interests would
otherwise have opposed it. The range of private and non-public
providers in our country is extremely diverse and even bewil
dering, and we cannot paint all of them with the same brush, in
either black or white. Keeping this in mind, although regulation
is a comprehensive, universal non-negotiable process, regard
ing further insourcing of certain sections of the private sector,
we. would need to take a differential approach based on how much
amenable each section is to some degree of socialisation.
First of all we may keep in mind that historically we have a
significant section of charitable, mission and not-for profit
health care facilities, many of whom are working in less devel
oped, rural and remote parts of the country. Many of the hospi
tals and smaller facilities involved with networks like CHAI and
CMAI as well as many NGO-run health facilities would fall in this
category. Such facilities today face their own share of problems
due to the larger pressure of market-driven health care, espe
cially its negative influence on doctors. Such facilities should be
identified based on sturdy criteria (including proportion of pa
tients treated free and range of rates charged for standard
services) and prioritized for inclusion in the HCA system. With
provision of certain level of public funds, they would be able to
function much more effectively and could fill certain critical gaps
as well as provide a model for other private providers.
Next we should keep in mind that beyond the more or less
genuine not-for-profit providers, there are large numbers of hos
24
pitals which have been registered as trusts to gain public
subsidies and income tax exemptions, however they may not
necessarily function in a charitable manner as per their declara
tions. While massive public subsidies,including cheap land in
prime urban areas, have been availed of these facilities, they
often do not provide the mandatory 20% free / subsidized beds
to poor patients, and this has been an issue of court orders
and social demands. This can be done by pinning them down to
their declared objectives in the Trust Deed through participa
tory monitoring and effective redressal mechanisms. Sec
ondly more stringent laws, rules will have to be formed so
that all the aspects of their functioning follow the overall the
logic of the HCA system. The current practice of indulgence in
money-making and yet showing no profits in the balance sheet
can not be continued!
Since leaving provision of these free beds to the hospitals
themselves is open to manipulation, these 20% free / low cost
beds (these number in tens of thousands of prime hospital beds
across the country) should be mandated to be insourced into
the public system, and managed as public resources in conjunc
tion with the public health system. Any 'trust' hospital refusing
to fulfill this obligation should be required to pay compensation
not only for massive subsidies availed, but also retrospectively
for all the free care that has been denied by them to poor pa
tients since years and even decades. This measure would make
available significant additional resources to the public health
system which could fill gaps especially related to secondary and
tertiary care in urban areas.
Further, we may keep in mind that in India we have a very
large, numerically predominant section of general practi
tioners running their small individual clinics. In this 'unorganised'
sector, the private practitioners are like other middle class pro
fessionals who sell their services to people. We need a strat
egy about these clinics in our conceptualization of move to
wards health care for all. . Their practice should be regulated as
regards their location, quality and pricing. Secondly, the regu
lated doctors required for UHC could be contracted in sufficient
numbers into the publicly managed Health Care for All system
by the state (for example, as in case of the original NHS in UK)
especially in urban areas. Currently they are subsumed under
the logic of market, being sucked in as agents of the medico
industrial complex and indulge in commercial exploitation of
patients.
25
With proper contracting and regulation, the scope for indi
vidual practitioners for commercial cheating and exploitation
would be progressively eliminated.. In fact the private clinics
would then remain 'private' more or less nominally; in effect
they would primarily serve social purposes as they would be
indistiguisable from public ownership. Here too, the basis for
involving such practitioners would be to fill existing gaps in the
public system (which are major for example related to outpa
tient care in urban areas, where the private sector largely domi
nates) and to involve doctors willing to work in a regulated sys
tem, which may include younger doctors and those not inter
ested in continuing in the commercial rat-race. Insourcing of in
dividual specialists to public hospitals which have major vacan
cies of specialists also needs to be pursued much more system
atically with elimination of bureaucratic obstacles and corrup
tion in such insourcing, which can significantly strengthen the
services of public hospitals. It may even be envisaged that over
a period of time, some of such publicly insourced doctors might
opt for joining the public health system and such options could
be consciously promoted.
Next, the position of small and medium sized private hos
pitals is contradictory, since on one hand they tend to function
more in an 'investment-profit making' mode, but on the other
hand, with expansion of corporate and large hospital dominated
chains, they are feeling the pressure of being pushed out of the
market. Discussions with small hospital owning doctors espe
cially in some cities shows that they are beginning to seriously
feel the compulsion of having to compete with the big corporate
I private hospitals (which often offer more 'amenities' and have
glamour value for patients, and offer higher 'cuts' to referring
doctors). Further removal of user fees, free drugs and improved
quality of care in public hospitals would undermine their posi
tion in the market. Keeping this in mind, their involvement
should be actively undertaken through clear contracts which
specify the package of services they would provide- but ensur
ing proper regulatory and monitoring systems in place.
Finally, corporate and large private hospitals are because of
their very nature, least likely to positively respond to any genu
ine health care system where the leadership is with the public
health systems. Most of the members of this section would be
least amenable to serve social goals and are least likely to be
part of a genuinely regulated UHC system. The strategy towards
this sector would depend upon balance of socio-political
26
forces. In any case all corporate hospitals will have to be regu
lated even if all of them remain outside the UHC system. An
unregulated corporate sector would adversely affect the
overall culture in the health care even if it serves only the
rich. Progressive social control over the medico-industrial com
plex with internal democratization should be the direction we
should advocate. Actual progress in this direction depends upon
level of political pressure that can be generated towards this
end.
Further it may be kept in mind that the internal functioning
of all private facilities would have to be democratized - the
doctors including duty/resident doctors, nurses and other staff
working in these hospitals should have adequate say in the
functioning of these hospitals and their democratic rights should
be respected. Trade unions or associations of employees of such
staff, wherever they exist, could be an ally in demanding regu
lation of private medical facilities.
27
Health Insurance: The Road to Health for All?
n 2007 the Government of Andhra Pradesh launched an in
surance scheme that was designed to protect patients from
the 'catastrophic' impact of out of pocket expenses incurred on
hospital care. Termed as the 'Rajiv Arogyasri' scheme, it soon
became a flagship programme of the Andhra Pradesh govern
ment and came to be held out as an example of the state
Government's commitment to providing affordable health care
to the poor. The scheme was a major election plank of the ruling
Congress party in the 2009 elections, and many commentators
later suggested that Arogyasri's success was a major factor in
the sweeping mandate that the Congress received.
I
Arogyasri's apparent utility was quickly picked up by the Cen
tral Government and a nationwide scheme modeled on Arogyasri
was launched in 2009 - called the Rashtriya Swasthya Bima
Yojana (RSBY). In the UPA-II's rather bare cupboard of
programmes for social welfare, the RSBY scheme has been held
out as a major achievement.
Similar state level schemes have also been launched or are
in the process of being launched in Kerala, Tamil Nadu (origi
nally called the Kalaignar Scheme, since renamed by the new
state government), Delhi (Apka Swasthya Bima Yojana),
Karnataka and Maharashtra (Rajiv Gandhi Jeevandayee Arogya
Yojana). The roll out of these schemes have been impressive by the end of 2010 an estimated 247 million people (25% of the
country's population) were covered by one or more of these
schemes. Coverage has, since, expanded even further. This is a
huge jump from the pre-2007 situation when the two social
insurance schemes in existence were the Employees State In
surance Scheme (ESIS) launched in 1952 and the Central Gov
ernment Health Scheme (CGHS) launched in 1954. The former
covers employees in the organised sector (about 7 percent of
the country's work force) while the latter covers employees work
ing for the government. Both are funded through co-payments
made by employees and employer.
As plans are now being readied to launch the present
government's vision of a reformed health system, through the
lens of the Twelfth Five Year Plan, insurance schemes such as
the RSBY are poised to get even larger attention and support.
It thus becomes necessary to critically assess the underlying
28
elements of these insurance schemes. Particularly so as it is
being claimed that these initiatives will protect people from the
impact of catastrophic expenses on medical care, because of
which an estimated 6 crore people are driven below the pov
erty line every year.
Content of the Health Insurance Schemes
Let us step back to understand the content of these schemes
and their underpinning logic. All these schemes are meant for
hospital care only. All of them have a list of procedures which
are covered - which means that reimbursements are limited to
this list. A fundamental innovation that has been introduced in
these insurance schemes is that patients are provided a 'choice'
of accredited institutions where they can receive treatment.
These institutions can be in the public or the private sector. Like
any insurance package these schemes have a ceiling for reim
bursement. This ceiling varies - it is set at Rs.30,000 per family
of five in the RSBY schemes, while some state schemes such as
the Arogyasri reimburse up to Rs. 1,50,000 or more. While the
RSBY scheme started off by being restricted to BPL families, many
state schemes now cover non-BPL families as well. All these
schemes are publicly funded - i.e. the annual premiums for ben
eficiary families are paid by the Government. In the case of the
RSBY scheme the central the cost of the premiums is shared by
the Centre (75%) and state (25%). The state schemes are
funded by the state budgets.
A fair question to ask is, given the outline of the insurance
schemes like RSBY, shouldn't such schemes be supported? After
all they are paid for entirely by the government and they reim
burse expenses incurred - often very steep - to access care
that involves hospitalization. The schemes have the added ad
vantage of being cashless, i.e. payments are made directly to
the provider and the patients do not have to pay themselves.
The RSBY has also introduced 'portability', i.e. those registered
in one place can avail of the scheme when they move to an
other location.
To arrive at a reasoned answer to this question we need to
examine this scheme in the context of the entire health system.
There are two fundamental pillars of insurance schemes of this
kind. First, they operate on the logic of what is called 'spilt be
tween financing and provisioning'. What this means is that there
is a clear separation between the financing of services provided,
29
and the facilities where these services are provided. Thus, in
the case of all these schemes, while the financing is through
public resources (central or state government funds) the treat
ment can be provided by any accredited facility. Such facilities
can be either public (i.e. government hospitals) or private. In
practice, a large majority of accredited institutions are in the
private sector. The second pillar of all these insurance schemes
is that beneficiaries are insured against a set of ailments that
require hospitalization (unlike the old ESIS and CGHS schemes
which are supposed to cover all forms of care). So beneficiaries
are not guaranteed care for all ailments - in other words it is
not a promise to provide comprehensive health care, but to pro
vide care for a pre-defined package of procedures.
These basic tenets of the insurance schemes have to be un
derstood in the context of the country's health system. The public
system is under resourced and access to it is difficult for a very
large number of patients. Over 70% of health care costs are
borne by patients themselves as they are forced to look for
care in the private sector. The private sector is almost entirely
unregulated and is a mix that ranges from primarily unqualified
practitioners in rural areas, charitable institutions, small private
nursing homes and hospitals, and large chains of corporate
hospitals. Over the past decade there has been a huge expan
sion in the last category - of chains of corporate hospitals. These
have expanded to fill in the void left by an inadequate public
system and operate almost entirely in towns and cities. The
public system still caters to almost 40-45% of hospitalized pa
tients, while over 80% of out-patient care is accessed through
the private sector. Thus, a majority of expenses incurred by
patients is in out-patient care.
Impact on the Health System
Let us now examine the effect that the insurance schemes
have on the existing health system. The split between financ
ing and provisioning explicitly opens the door for participation
by the private sector. In most situation a large majority of ac
credited providers are in the private sector. Supporters of insur
ance argue that it shouldn't matter where people get medical
care, as long as they are assured good care. They also argue
that 'competition' between different providers will improve the
quality of care. Unfortunately evidence available suggests some
thing totally different.
30
A recent analysis of the Arogyasri scheme in the Economic and
Political Weekly (N.Purendra Prasad, P.Raghavendra, Healthcare
Models in the Era of Medical Neo-liberalism: A Study of Aarogyasri
in Andhra Pradesh, Economic and Political Weekly, October 27,
2012) provides very interesting data. The analysis notes that
"The Aarogyasri Trust has empanelled 491 hospitals in the state,
of which nearly 80% are in the private sector while the remaining
20% are government hospitals. Although the Aarogyasri scheme
is meant for poor villagers, there is not even one private hospital in
the rural areas, while the distribution of empanelled government
hospitals in rural and urban areas is almost even".
Competition and False Choice
Unfortunately the choice provided by such a model is a false
choice. For people to exercise their choice information is crucial.
In the case of medical care patients, especially poor and vulner
able patients, have little or no information. Patients (now called
consumers!) are ideal candidates for being enticed by the pri
vate sector, especially the well resourced corporate hospital
chains. They are enticed by fraudulent claims hidden in the garb
of technical jargon. In the past few months there have been
several stories in the media regarding the sharp rise in hyster
ectomies (operations involving removal of the uterus) since the
introduction of the RSBY scheme.
In Chhattisgarh, the director of health services, under public
pressure, appointed a fact-finding team and suspended doc
tors involved in 22 cases, where it could be proved that the
operations for hysterectomy were conducted without medical
reasons. Dainik Bhaskar reported that just one private hospital
(Gupta Hospital in Dhamtari) conducted 604 hysterectomies in
900 days. In comparison, the government-run Ambedkar Hos
pital in Raipur conducted just seven such operations in the same
period. Other media reports indicated that in Bihar an estimated
16,000 hysterectomies, most of them deemed unnecessary,
have been conducted. Everybody in the know acknowledges
that these reports are just the tip of the iceberg. Unethical prac
tices have become the cornerstone of the RSBY scheme in many
parts of the country - leading to unnecessary investigations,
medication and surgeries that only help the profit hungry pro
viders.
The EPW analysis reports how 'Arogyamitras' are appointed
by private hospitals to scout around for patients who can be
pw-ISO
31
Pg'')
enticed to get operated upon in private hospitals. The private
hospitals also 'cherry pick’, i.e. they pick and choose those pa
tients that provide the highest returns and refer others to gov
ernment hospitals. The refuse patients who are likely to have
poor outcomes or are not likely to provide good returns. Gov
ernment facilities are not structured to compete in the 'market'
for health care, and gain little even if they are empanelled. This
is thus the kind of choice that the poor and vulnerable are pro
vided - a choice based on false motivations and enticements by
profit hungry private hospitals.
Limited Package and Skewed Priorities
We now turn to the other pillar of the insurance model - only
a pre-approved package of procedures are covered, and only
applicable if they require hospitalization. This leaves out not
just important conditions that require hospitalization, but the
entire range of ailments that are treated through out-patient
care. There is clear evidence that the major burden of diseases
lie outside the packages covered by the insurance schemes.
These include almost all infectious diseases that are treated in
out-patient settings - including those that require prolonged
treatment such as tuberculosis. Most chronic diseases like dia
betes, hypertension and heart diseases also get left out of
the package. A cancer patient who needs to take expensive
treatment for months would not be included unless hospital
ized! Rough calculations indicate that the packages cover 2-3%
of the actual burden of disease that exists in a community.
Such skewed priorities end up by distorting the existing health
system. In AP the Arogyasri scheme draws 25% of the state's
health budget while covering for 2% of the burden of disease1.
Insurance schemes, thus, draw away resources from the al
ready resource-starved public health system and fattens the
coffers of corporate hospitals. In other words public money is
being squandered to strengthen the already dominant corpo
rate private health sector. The same resources, if used to
strengthen the public health system, would leave the nation
with assets that are under public control and can be used for
public good. A study done by the Public Health Resource Net
work (PHRN) and the Centre for Social Medicine and Community
1A Study of Aarogyasri in Andhra Pradesh, Economic and Political Weekly,
October 27, 2012
32
Health (CSMCH), JNU, in Chhattisgarh showed that the revenues
of Govt, institutions empanelled under RSBY have not increased,
while at the same time previously available maintenance funds
have been withdrawn.
Importantly, perhaps the worst harm that such insurance
schemes cause is to distort the entire structure of the health
system. Good health systems are like pyramids - the largest
numbers can be treated at the primary level where people live
and work, some of these need to be referred to a higher level
of care (secondary level like community health centres), and a
few would need specialized care in specialty hospitals (the ter
tiary level). An insurance system that sits on top of the health
system overturns the pyramid and starves the primary care
facilities. In 2009-10, direct government expenditure on ter
tiary care was a little over 20 per cent of total expenditure.
However, if this were added to the expenditure on the insur
ance schemes that focus entirely on hospital based care, the
total public expenditure on tertiary care would be about 37 per
cent of the total expenditure.
As noted earlier, the current insurance schemes (RSBY at the
national level and state level schemes such as the Arogyashri
in AP) cover for secondary and tertiary level health care for in
patients - largely provided in private facilities. The High Level
Expert Group (HLEG) — set up by the Planning Commission as a
preparation for the 12th Five Year Plan — had said that use of
independent agencies in the private sector and insurance com
panies under schemes such as the Rashtriya Swasthya Bima
Yojana (RSBY) "fragments the nature of care being provided, and
over time, leads to high healthcare cost inflation and lower levels
of wellness. ... since there is virtually no focus on primary level
curative, preventive, and promotive services and on long
term wellness outcomes, these traditional insurance schemes of
ten lead to inferior health outcomes and high healthcare cost infla
tion."
Patients are pushed from more rational primary and second
ary level care into often less rational and expensive tertiary
care. It is no wonder that in Andhra Pradesh, due to the
Aarogyasri scheme, the proportion of funds allocated for ter
tiary services increased from 16% to 39%, whereas proportion
of funds allocated for primary care reduced from 69% to 46%.
This fragmentation of health care is also associated with 'cherrypicking', i.e. illnesses which bring more revenue to the provider,
are selectively preferred by the provider.
33
Further in both the RSBY and the Arogyashri schemes,, there
are prescribed clinical protocols or Standard Treatment Guide
lines. In their absence profit motives continue to guide clinical
practice, leading to unnecessary interventions, wastage of
resources and poorer health outcomes.
There are other major deficits in the structure of the insur
ance schemes. Enrolment is patchy and the claims of being cash
less and portable are not universally true. The PHRN-CSMCH
study in Chhattisgarh shows that enrolment among entitled ben
eficiaries continues to be low (30 to 50 %) and no enrolment
has been done in remote and inaccessible villages. It also showed
that claims could take 6 months to 2 years to be settled in some
cases.
Conclusion
The health insurance model was introduced to protect people
from the catastrophic impact of health care expenditure, espe
cially among the poor and the vulnerable. While such benefits
would have accrued to a small number of beneficiaries genu
inely requiring hospital care, by and large the schemes are in
imical to the development and sustenance of a robust public
health system. The Ministry of Labour, which administers the
RSBY scheme, would like to promote the scheme as pro-worker
and pro-poor. This is a gross travesty of the actual situation.
The only guarantor of secure access to quality health care is a
well resourced and accountable public health system.
The working of the insurance schemes should be compre
hensively enquired into, especially the very serious charges
against private hospitals that they are attempting to 'milk' the
scheme by resorting to a range of unethical practices. The work
ing people of this country deserve much better, and trade unions
and peoples organisations need to be involved in a thorough
scrutiny of the RSBY and other like schemes.
Attention also needs to be directed at the gross neglect of
the Employees State Insurance Scheme (ESIS). Though a large
infrastructure has been created under the scheme, it is poorly
resourced and poorly managed. As a result its benefits are
grossly underutilized. Wage earners beyond the Rs.15,000 limit
do not have access to any social protection measures for health
care. The poor coverage and utilization of the ESIS forces a
majority of workers to pay for health care.
34
Ensuring Access to Medicines for All
I■
ccess to essential medicines is a major determinant of health
outcomes and an integral, and often crucial, component of
health care. It has been estimated by different sources that
50% to 80% of the Indian population are not able to access all
the medicines that they need. The World Medicine Report of the
World Health Organization finds that India is the country with
largest number of people (649 million) without having access to
essential medicines. Given that India today is the 3rd largest
producer of drugs (by volume) in the world and exports medi
cines to over 200 countries, this is clearly an unacceptable situ
ation.
A
In an ideal situation all medicines that are researched and
marketed should enhance therapeutic goals and should be avail
able to all those who require these medicines. Unfortunately
the actual situation in the medicines market is much more com
plex. There are several issues that need to be addressed in
order to ensure access to all medicines that people need.
Essential Drugs Concept and Free Medicines Initiative
An approach to ensuring access to medicines has been pro
moted by the World Health Organisation since 1978. It is called
the "Essential Drugs" Policy. The policy starts from an under
standing that it is necessary for countries to prioritise which
medicines should be made available to all its population. Each
country would need to develop its priorities based on the
country's existing demographic profile and disease prevalence
rates. The WHO, periodically, publishes a "Model" list of essen
tial drugs (the first model list was published in 1978), but coun
tries are encouraged to develop their own model lists, based
on local conditions.
An Essential Drugs List also needs to be dynamic, that is it
needs to be updated periodically (every 2-3 years) in order to
be able to capture recent advances in therapeutics and changes
in disease prevalence scenarios.
It is only recently that India has tried to implement an essen
tial drugs policy. While India has periodically revised its national
essential drug list, the list has not been used to ensure access.
In the past few years national and state lists have been up35
dated and most states have a graded list. The goal under the
NRHM has been to make available all essential drugs at appro
priate levels of the public health system. However progress has
been slow in ensuring access and in many states medicines are
not available through the public health system when they are
required. There are several reasons why this is the case. The
first reason is lack of adequate supplies due to constraints of
funding and of procurement policies. The second reason is the
poor functioning and outreach of public facilities (which we have
discussed in earlier chapters).
Prime Minister Manmohan Singh, a few months back, had
announced a "free medicines" scheme, under which all essential
medicines would be available free of cost in all public facilities.
JSA welcomes this scheme but is also concerned that there have
been mixed signals from the Government since then. While
initially the Government had said that the 'free medicines' scheme
would be a central scheme with support from central funds,
subsequently there appears to be a shift to saying that the
health ministry will encourage state governments to launch such
schemes. JSA considers this a betrayal of the earlier promise
and strongly recommends that the central government allocate
5,000-6,000 crores every year, which it had earlier proposed, to
make this scheme operational in all parts of the country. It may
be noted that such a scheme (free medicines for all) has been
operational in some states for a long time (viz. Tamilnadu). These
experiences need to be adopted in others states, especially
that of the Tamilnadu Medical Services Corporation (TNMSC) in
developing transparent norms for drug procurement and
distribution for public sector facilities. TNMSC procures only
essential medicines in generic names, directly from
manufacturers. This practice reduces waste of resources on
procurement of costly branded drugs and on irrational
formulations. TNMSC has also developed a computerized net
work for distribution and has developed a mechanism for quality
testing.
Also important to note is the recent initiative in Rajasthan to
implement a free drug scheme (now one year old). Early re
ports regarding this scheme are very encouraging and there is
evidence that utilization of public facilities have increased sig
nificantly since the launch of the scheme. There are very recent
disturbing reports that there are attempts to dilure the initia
tive, at the behest of a section of the medical establishment.
36
Features of theTNMSC model
It should be noted that success of TNMSC is due to
seceral crucial features, such as:
•
Full autonomy - Once broader policy has been
decided, no reference is made to the government;
all decisions are taken by the board.
°
Transparency- Name of medicine, price of
purchase, name of manufacturer and report of
quality testing etc. are posted'on website to bring
transparency in the system.
o
•
Demand responsive system- Each PHC can choose
the medicines and their quantity as per need within
the budget of Rs. 1.2 lac by using a 'passbook'
(instead of conventional indenting).
Updated and limited list of essential medicine-
TNMSC procures medicines from a limited list of
medicines (260 Essential Medicines and 200 other
'Speciality Medicine' (compared to a big list of 1800
medicines in Maharashtra).
Source: Drug procurement policy and procedure, TNMSC,
Tamil Nadu Medical Services Corporation Limited.
A hallmark of free drug availability in public facilities has to be
procurement and prescription in generic names. As we shall see
later, drug companies are able to charge very high costs by pro
moting their Brands, while generic drugs sold in generic and not
brand names are much cheaper - at times they may cost 10%
or less of the cost of branded drugs. ISA strongly supports the
move to ensure that all doctors in all public facilities prescribe
drugs in generic names only. This will have to be accompanied
by matching measures that ensure availability of all essential
drugs in generic names in public facilities.
Rational Use of Medicines
An Essential Drugs Policy is a prerequisite for ensuring that
physicians prescribe medicines based on sound scientific evi
dence. An ideal situation would be one where the only medi
cines that are available for prescribing, are those that are sci
entifically validated and are recommended in standard text books
that students read in medical college. Unfortunately the real
37
situation is very different, and students fresh out of college are
suddenly confronted with a plethora of medicines that they have
read little or nothing about. This happens because of the mis
match between rational treatment goals and the goals of com
merce that are pursued by drug manufacturers. Drug manufac
turers are driven by the need to maximise profits, not by the
need to optimise therapeutic goals.
In India, an average family spends Rs.3,000 every year- in
buying medicines and on diagnostic investigations. It has been
estimated that at least 50% of this expenditure is incurred
on irrational or unnecessary drugs and diagnostic tests. This
adds up to a colossal waste of Rs.30,000 - 40,000 crores every
year, and amounts to an average unnecessary drain of Rs. 1,500
per year for every family. The first, and best known, part of irra
tional practices in health care is related to irrational prescrip
tion of drugs. WHO has defined irrational prescribing as use of
a therapeutic agent when the expected benefit is negligible or
nil or when its usage is not worth the potential harm or the
cost.
Irrational drug prescribing can occur when the medication pre
scribed is incorrect, inappropriate, excessive, unnecessary or
inadequate. All these irrational practices are rampant in India.
The reasons are manifold. One is to do with the proliferation of
a large number of drugs in the Indian market that are either
irrational or useless. With rapid developments in Science and
Technology there has been an explosion in the number of drugs
which are available in the market. Unfortunately only a small
minority of drugs entering the market offer an advantage over
existing drugs. A study by the French journal, Prescrire Interna
tional, estimated that out of 2257 medicines introduced in the
global market between 1981 and 2000, 0.31% were a major
therapeutic innovation and 2.96% were an "important" thera
peutic innovation, while 63.23% "does not add to existing clini
cal possibilities". The situation in India is no different and prob
ably worse, given the fact that our Drug Control mechanisms
are much more lax than in developed countries. The only rea
son why Indian studies are not available is because there is
virtually no mechanism in India to monitor the use of irrational
and hazardous drugs.
There are an estimated 60,000 to 80,000 brands of various
drugs available in the Indian market. On the other hand the
essential drug list in India contains just 348 drugs. In this situ
ation of extreme anarchy the task of an already overstretched
38
Drug Control Authority becomes almost impossible to cope with.
A majority of the estimated 80,000 products in the market are
either hazardous, or irrational or useless.
The pharmaceutical companies and the government regula
tory bodies - prominently the Central Drug Standards Control
Organisation (CDSCO) — need to share the blame for allowing
such a situation to develop. The 59>h Report of the Parliamen
tary Standing Committee of Health and Family Welfare has
extensively documented the fraudulent role of the CDSCO.
The Committee examined approval of 42 new medicines and
found that, in the case of 33 of these medicines, there existed
no scientific evidence to show that these are really effective
and safe in Indian patients. No trial was conducted for 11 medi
cines. When trials were conducted, they were of dubious na
ture. The report documents clear evidence of doctors providing
'expert' opinion of a dubious nature in collusion with medicine
companies. Evidence was found that in the case of two medi
cines approval was granted by non medical staff. It may be noted
that the Committee studies only a small sample of the total
number of drug approvals. It is evident that the practices docu
mented in the committee's report pervade the entire drug ap
proval process in the country.
All this would not be possible without the active involve
ment of the medical profession, who contribute by prescrib
ing such irrational and useless drugs. One reason for this is
the fact that there is almost no source of regular unbiased, au
thentic information on drugs available in the country. Given the
rapid changes in treatment procedures and introduction of a
large array of new drugs, medical practitioners need to update
their knowledge regularly. Such a system of continuing medical
education is largely absent in this country, and most doctors do
not find the need to take time out from their busy practice to
update their knowledge by reading the most recent books and
journals. Thus we have the sad practice of a bulk of medical
practitioners depending on promotional material supplied by
Pharmaceutical companies. Obviously such promotional mate
rial only provides information to doctors, with a view to
maximising the sale of the products being promoted. There is
documented evidence that many of the claims in the promo
tional material are false or exaggerated. It thus makes it pos
sible to sell a large number of useless and irrational drugs.
The problem is not limited to just a question of irrational or
useless or harmful drugs. Rational, or even life saving drugs
39
can be used in an irrational manner. The commonest problem is
the unnecessary use of drugs. Thus, often we see expensive
antibiotics being used for trivial infections. Moreover this is of
ten accompanied by wrong dosage schedules. Another prob
lem is the prescription of a large number of drugs for a simple
ailment, when one or few drugs would have sufficed. Doctors,
in many cases, when they are not sure of the diagnosis pre
scribe a large no. of drugs to cover for all the possibilities. Thus
a patient coming with fever may be given some antibiotic, a
drug to treat malaria, a drug to treat typhoid, etc. It may turn
out that the patient was just suffering from a viral fever, which
could have been treated with a few paracetamol tablets, only.
Such prescription practices increase the cost to the patient, un
necessarily exposes the patient to potential side effects, and in
the case of antibiotics leads to drug resistance, i.e. a situation
when these antibiotics become useless when they are really
required. Resistance to commonly prescribed antibiotics is be
coming a major problem in India. In the case of Tuberculosis
and malaria, it has led to emergence of strains that are resis
tant to the cheaper drugs that were earlier used. Drug resis
tant to first line TB drugs has lead to India having the larg
est number of MDR (multi drug resistant) TB cases in the
world. MDR cases need treatment with second line drugs that
can be 10 times more expensive than first line drugs. MDR TB
cases also have a much higher rate of death even when treated.
While the costs of individual drugs is very important, what
affects patients is the total cost of treatment. Irrational drug
use increases treatment costs, at times enormously, by pro
moting use of drugs when they are not indicated. At the heart
of the problem is the license provided by drug regulatory agen
cies to produce hundreds of combination products (which com
bine two or more drugs). As a first step, the JSA recommends,
all except a few scientifically valid (20 or less) combina
tion drugs be banned.
Promotion of Medicines by Companies
Companies spend large amounts to promote medicines, and
this is particularly so when they need to promote medicines
that are irrational and their use is contrary to scientific evidence.
Effective medicines have an obvious marketability and demands
are self-generating. But any drug that is therapeutically not valid
needs artificial generation of demands and contributes to un40
Table 4: Change in Overall Price Control Parameters
DPCO
Year
No. of Drugs
under
Price Control
Percent of
market under
Price control
(approx.)
Mark-up
(profitbility
(allowed)
1979
347
80-90%
40%, 50% and
100% in three
categories termed
“life saving”,
‘'essential” and
“non essential”
1987
142
60-70%
75% and 100% in
two categories
1995
74
25-30%
100%
(one category)
ethical marketing practices. Irrational prescribing practices are
often initiated and maintained by marketing techniques of the
drug industry. The industry spends 20% of its annual sale or
about Rs. 3,000 crores in advertising; this works out to about
Rs. 50,000 per doctor per annum and each doctor prescribes
drugs worth Rs. 250,000 per annum.
Drug companies have been known to use incomplete or
misleading evidence to promote irrational medicines. Physi
cians are sought to be influenced by a variety of inducements
and sponsorships. Such a practice gets perpetuated also be
cause prescribers depend on information provided by drug com
panies, as there is scant availability of unbiased information on
the rational use of medicines.
There is no effective law that prevents drug companies from
bribing doctors to prescribe their medicines. In the face of
sustained criticism regarding the massive amounts of money
spent by companies to induce doctors, the Govt, came out with
a draft code of ethics for marketing of medicines in June, 2011.
The code is supposed to be voluntary, which means that a
violation of the code does not warrant any punishment. The
Government's failure to bring in a code of marketing that is
effective and enforceable can only be viewed as a deliberate
ploy to allowing drug companies to continue to influence doctors
through unethical means.
41
Pricing of Medicines
There is also evidence that costs of medicines constitute a
major proportion of total health care costs. The NSS (National
Sample Survey) 55th round (2000) on consumer expenditure
shows that 77% of health expenses in rural areas and 70% in
urban areas is on medicines alone. The NSS morbidity survey of
2004 (Report no 507), showed that medicines account for 81%
of health care expenditure in rural areas and 75% in urban ar
eas (all India 79%).
A prominent feature of the medicines market in India is that a
very large proportion of drugs consumed in India are procured
through retail sales - an estimated 80-85%. Institutional sales
which account for 15% of the market include consumption
through the public sector as well as through private hospitals
and other institutions. This is very different from what is seen in
developed country markets, where a bulk of drug consumption
is through supplies from large institutional mechanisms (hospi
tals, health insurance, etc. both in the public
and private
sector).
Since 1970, the Government has endeavoured to regulate
the prices of some drugs through successive Drug Price Control
Orders (DPCO). It must be understood that the DPCO regulates
the prices of only a fraction of the drugs in the market, and
those drugs whose prices are controlled are notified in the rel
evant DPCO. In the case of all other drugs, the prices are not
controlled and companies are at a liberty to charge whatever
they wish.
Over the last three decades, successive Drug Policies have
specified different norms to exercise control on drug prices.
The number of drugs under Price Control have come down
from 342 in the DPCO Of 1979 to 74 drugs in the DPCO of
1995 (which is still under operation).
Due to the almost total decontrol of drug prices, over-pricing
is rampant in the country. A study commissioned by the Na
tional Commission on Macroeconomics and Health showed that
there is a very wide variation in the prices of drugs sold in retail
and those sold in bulk through tenders to institutions. The price
differences ranged from around 100% to 5600%.
There is also a wide variance in prices of the same medicine
sold under different brands by different companies Moreover,
the more expensive brands sell much more than the less
expensive ones because companies are able to promote their
42
expensive brands by offering incentives to doctors and chemists.
Recently the Group of Ministers (headed by Sri Sharad Pawar),
tasked to decide on the modalities of drug price control, has
recommend a 'market based' mechanism to control drug prices
of all essential drugs. This goes entirely against the grain of the
Supreme Court's directive to the Government to expeditiously
put in place a mechanism to control the prices of all essential
drugs so that prices of medicines can become affordable. The
Supreme Court had responded to a PIL filed by the All India
Drug Action Network (AIDAN) which had argues that drug prices
in India are a major cause for catastrophic medical expenses and
that they need to be brought under control.
The Government is now set to introduce the concept of
'Weighted Average Price' (WAP) as the method for fixing the
ceiling price of drugs. In such a system the present prices of
existing brands and their respective share in the entire market
of a particular drug will be taken into account to compute the
ceiling price. Such a method is entirely skewed, as the ceiling
price fixed would largely reflect the price of the brand leaders.
Generally 2-3 top selling brands - usually the most expensive
or some of the more expensive brands — control a bulk of the
market. So price control will do nothing to bring down drug prices,
and in fact will encourage cheaper brands to start charging more
and approach the high ceiling price. This would only legitimize
the rampant over-pricing of drugs by companies, prevalent today.
Since the prices of medicines in the bulk market and the costs
for manufacturing formulations are widely known there is no dif
ficulty in fixing prices based on a cost based formula. Currently as
per the 1995 Drug Price Control Order, the post manufacturing
expense (MAPE) allowed is 100% and includes the profit for the
company. The ISA demands that the Government should heed
the Supreme Court's directive and control the prices of all 348
essential drugs by continuing to use the cost plus formula of
price fixation - where the price of a drug is calculated based on
the raw material and manufacturing costs, after allowing for a
fair profit margin.
Even if the 'Free Medicines' scheme, which is meant to provide
essential medicines free of cost to all those who visit public
health facilities, is expeditiously implemented in the country, the
need to regulate medicine prices would continue. Currently even
in a more developed state like Maharashtra only 12 -15 percent
of patients visit PHFs. In Tamil Nadu, which provides free medi43
cines in the public sector from 1995, not more than 40% of pa
tients visit the public sector.
Drug Policy Formulation in India
Drug policies in India are formulated by the Ministry of Chemi
cals and Fertilizers. In addition, in 1997, the National Pharma
ceutical Pricing Authority (NPPA) was instituted as an indepen
dent body to monitor drug prices and to take decisions on pric
ing. The Ministry of Health and Family Welfare looks into the
issues of quality, manufacturing, sales and distribution of drugs.
These two functions are performed in isolation and there is mini
mal co-ordination between the two major areas of policy mak
ing in the pharmaceutical sector.
As a result the drug policy focuses only in the areas of pro
duction and pricing. Drug policies, thus formulated, have not
incorporated a focus on health. In successive policies, the em
phasis has shifted to addressing the viability of the private phar
maceutical industry. In the absence of a coherent link between
health needs and the policies on drug pricing, issues of equity
have been generally ignored.
There is thus, the need to formulate a National Pharmaceuti
cal Policy that addresses the critical issue of universal access to
essential medicines. Such a policy needs also to harmonise laws
and regulations covering different aspects of the Drugs and
Cosmetics Act and the Magic Remedies Act.
The Govt, had prepared a draft 'Pharmaceutical Policy-2006
(Part-I)' which is yet to be finalized. The second part of the policy,
related to pricing, has been kept pending for over 6 years by
the Group of Ministers set up under the chairmanship of Sri
Sharad Pawar. We have discussed, above, the chaos such de
lay has created in the area of drug pricing. It is urgent and
necessary that a comprehensive policy be prepared by an in
ter-sectoral committee of the Ministry of Health & Family Wel
fare and Ministry of Chemicals & Fertilizers after discussions with
all sections that have a stake in the pharmaceutical sector. The
two should jointly constitute a National Drugs and Therapeutic
Authority, which should be a statutory body with powers to regu
late all aspects of the National Pharmaceutical Policy.
44
Changing Policy environment and Impact on Pharma
ceutical Industry
India can take credit for the first major initiative in a develop
ing country to attempt to achieve self reliance in the area of
medicines manufacture. It is possible to identify three major
reasons why this was made possible.
Table 5: Acquisition of Indian Drug Companies
Year
Indian Co.
2006
2008
Matrix Lab
Dabur*
2008
2008
2009
2010
Foreign Company
which took over
Mylan Inc. (USA)
Fresenius Kabi
(Singapore)
Ranbaxy
Daiichi Sankyo (Japan)
Shanta Biotech Sanofi Aventis (France)
Orchid
Hospira US
Piramal
Abbot (US)
Take-over
amount
(USS million)
736
219
4600
783
400
3720
* One Diivision
The first relates to the Indian Patents Act of 1970. The Act
superseded the colonial Act of 1911 and allowed Indian compa
nies to produce drugs in India that were patented by foreign
companies. In a decade the effects were clearly visible and In
dia came to be known as the "pharmacy of the South". Indian
companies were able to produce patented medicines, within 23 years of their being introduced into the global market, and
that too at one-tenth to one-hundredth of the price at which
the patented drugs were being marketed. Thus a huge dent
could be made in the monopoly enjoyed by European and Ameri
can pharmaceutical companies.
The second relates to initiation of manufacture of drugs from
the basic stage by Indian public sector companies. Hindustan
Antibiotics Limited (HAL) and Indian Drugs and Pharmaceuticals
Limited (IDPL) were responsible for starting drug production in
India in the late 1950s and early 1960s. It was the pioneering
effort by Indian scientists and technologists in these two public
sector companies that forced Foreign companies to also start
production in India and paved the way for a slew of private
Indian companies to follow suit.
45
The third reason was the implementation of the recommen
dations of the Parliamentary Committee on Drugs and Pharma
ceuticals (known as the Hathi Committee), through the Drug
Policy of 1978. The 1978 Drug Policy imposed several restric
tions on the operations of foreign companies and provided pref
erential treatment to Indian companies - both in the public sec
tor and the private sector. The result of these measures was
dramatic - the share of the Indian market enjoyed by Multina
tional Corporation fell from over 75% to less than 25% within a
span of a decade.
Unfortunately, all these three initiatives have been reversed
in the last two decades. HAL and IDPL were systematically un
dermined as a result of inept management and withdrawal of
preferential treatment. The 1978 policy's major thrusts were
diluted and reversed in successive policies in 1986, 1994 and
2002. And finally, the 1970 Patent Act was amended in 2005,
because of India's annexation to the World Trade Organisation
(WTO) in 1995 which compelled it to sign the Agreements on
Trade Related Intellectual Property Rights (TRIPS). As a result,
Indian companies have lost the right to produce medicines
whose patents are held by foreign multinationals.
The drug industry has seen a distortion in the pattern of drug
production. In the absence of a clear cut policy to ensure and
channelise production of essential drugs, a major share of the
production is being diverted into non essential areas. This has
led to a huge rise in production of irrational and useless medi
cines (estimated to be at least 50% of the total drug consump
tion in the country) - supported by unethical promotion by drug
companies and an unholy nexus between a section of the medi
cal profession, chemists and drug manufacturers.
Possibly the most disturbing trend in the drug industry is that
de-industrialisation has increased at a frightening pace and
many companies are dependant on imported bulk drugs. Over
the years many large companies have cut down Bulk Drug pro
duction (i.e. drugs produced from the basic stage) and are in
creasingly acting as mere traders. In many therapeutic groups,
major production is accounted for by the Small Scale sector.
The unraveling of the Indian industry in the post liberalisation
phase is now being played out. Many large Indian private sec
tor companies, having embraced the notion of a strong Patent
regime, see their future in tie-ups with MNCs. The ball was set
rolling by the Ranbaxy - Glaxo Smith Kline tie up. This was sub46
sequently followed by the takeover of Ranbaxy (then the larg
est Indian company) by a Japanese company - Daichi.
There is also a clear move towards acquisition of major In
dian companies by foreign multinationals (Table below).
Takeover by multinationals of Indian companies will further
orient them away from the Indian market, thus reducing do
mestic availability of the drugs being produced by them. The
reversal of trends in the drug market is evident from the fact
that of the 10 largest drug companies in India in 1998-99, only
one (Glaxo Smith Kline) was a foreign company. Today three of
the top ten companies are foreign owned (Ranbaxy, Glaxo Smith
Kline and Piramal).
It is unfortunate that based on a poorly researched report by
the Planning Commission the Indian Government has chosen
not to act on these concerns. JSA believes that it is necessary
to reverse the policy of allowing 100% FDI in the pharma sector
through an automatic route.
Patent Rights and access to medicines
The change in the Indian Patent Act in 2005 took away a
valuable tool available with Indian companies. It is worth not
ing that the health safeguards in the 2005 amendments to
India's patent laws are being used to an extent to ensure con
tinued access to new drugs. The JSA stands in solidarity with
several activist organizations - positive peoples networks, Law
yers' Collective, Medecins sans Frontieres, Cancer Patients As
sociation, and many others — that have fought legal battles
and mobilized on the streets to ensure use of the safeguards.
There have been several positive judgments pronounced re
cently that have made use of the health safeguards in the In
dian law. These include the issuing of the first compulsory li
cense (i.e. a license to an Indian company to produce a pat
ented drug manufactured by a foreign company) for an anti
cancer drug (sorafenib) and reversal of the first drug patent
since 2005 that had been issued for a drug for Hepatitis-C (peg
interferon).
In spite of these victories many new drugs are now being
granted patents and are way out of the reach of almost all Indi
ans. Multinational corporations continue to try to challenge the
positive parts of the Indian law - the Swiss company, Novartis,
is still continuing its challenge to a key portion of India's law in
the Supreme Court.
47
Several areas of concern remain and we underline some of
the key demands:
•
Public health safeguards such as the use of
compulsory license should be used liberally to
safeguard public health, instead of being considered
as the "last resort"
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No TRIPS Plus measures to further strengthen IP
protection, viz. in the form of data exclusivity, patent
linkage, patent extension etc. should be allowed either as autonomous measures or through Free Trade
Agreements
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The Government needs to defend its own Patent law
and resolutely fight the legal challenges being mounted
by MNCs
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The Drug Registration mechanism should not be
allowed to act as the Patent "police" safeguarding
interests of private companies
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The Government should establish an institutional
mechanism to monitor the impact of patented
medicine on access to medicine and recommend
suitable measures to ensure access.
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Patent office should take steps to ensure
transparency in its process of granting and
maintenance of patents. Further, the patent office
should impose strict guidelines on the patent
applicant to facilitate the disclosure of invention as well
as the international non-proprietary names (INN) of
the pharmaceutical substance.
Unethical Clinical Trials
India has become the preferred destination for conducting clini
cal trials, a large number of them by MNCs through Contract
Research organizations (CROs). The Government has encour
aged this by changing the Drugs and Cosmetics Act in 2005.
There is extensive evidence that regulatory measures are be
ing circumvented in the conduct of many such trials. Many of
these trials also target women, especially poor women who are
vulnerable. The ISA demands that the regulatory mechanism
on clinical trials be strengthened and all clinical trials be moni
tored by an authority with statutory powers.
48
Building a movement to mobilise for
Health and Health Care for All
he transformations that we seek, in order to ensure Health
and Health care for all, must be based on developing a broad
socio-political movement. As we seek to develop such a move
ment, we need to keep in mind certain major tasks and chal
lenges.
T
The dominant socio-political framework today is strongly
influenced by the neoliberal 'market friendly' ideology which
places growth of the corporate private sector — including the
corporate hospital sector, pharmaceutical and insurance indus
tries — above the real health needs of the people. This is exem
plified by the Planning Commission's chapter on Health (various
drafts have been in circulation) for the 12th Five year plan. We
will need to strongly challenge and oppose this dominant
framework, which manifests in various forms of privatisation
and corporate friendly programmes and schemes, some of
which have been described in this booklet. In the coming pe
riod, we are likely to see major struggles between 'profit logic'
and 'social logic' in the health sector. Defending and promoting
'social logic' and rolling back 'profit logic' in the health sector will
require building broad based alliances, not only of health activ
ists and health professionals, but also mass organisations, trade
unions, political parties and representatives, and various pro
gressive forces.
While this booklet has focussed on certain aspects of
Health care, it is obvious that moving towards 'Health for all'
requires major transformations not only in the area of Health
care, but also in a wide range of social determinants of health
- food security and nutrition, water supply, sanitation, working
conditions, housing, environment, education and other sectors.
The same kind of challenges that afflict the health system - of a
dominant private sector and neoliberal, market friendly policies,
combined with weak public systems - plague most of these al
lied sectors. Hence working on these fronts requires building
alliances with like-minded campaigns, such as the campaign on
Right to food and campaigns against privatisation of water, to
wards building a broad people's movement in the social sector
which challenges privatisation and corporate friendly 'public-pri
vate partnerships'.
This booklet examines how, besides direct privatisation
of public health services, a wide variety of 'Public private part
nerships' (PPPs) are now being institutionalised across the coun49
try. These are being justified on the basis that they would make
services available to people, especially the poor. We need to
take an extremely critical look at such models, since most of
them place public resources in private hands without making
the involved private providers follow a public logic, and without
the public interest being promoted in a larger sense. Besides
piecemeal and local or state specific 'PPPs', we are now seeing
the emergence of proposals for 'Managed care' and
'Corporatisation of public health facilities' at the national level.
This threatens to elevate the promotion of profit logic in the
health sector to a qualitatively higher level.
We also need to be aware that diametrically opposing
conceptions of 'Universal health care' are contending today
at global and national levels. On one hand, the concept of'Uni
versal health coverage' is being promoted by certain interna
tional agencies, and seems to have been taken up by the Plan
ning commission in India, in a framework that uncritically
endorses and promotes the existing private medical sector,
including its high costs and irrationality. This framework ad
vocates handing over public funds, often through the insurance
route, to the private sector to expand 'coverage'. This needs to
be countered by the alternative vision of Health care for all
in the larger framework of'Health for ail', which envisages
a transformation of the health system in a setting of broader
social transformations. This vision dates from the Alma Ata
declaration of 1978, and certain aspects of this approach deal
ing with aspects related to 'Health care for all' in the current
context have been outlined in this booklet. Health activists need
to be keenly aware of the crucial differences between these
opposed conceptions — between 'UHC Pvt. Ltd.' and 'Health
and Health care for all' — which might sometimes superficially
appear to have similar objectives.
We also need to recognise that while we oppose
privatisation and champion public systems, there is a need to
'reclaim' public systems while they are strengthened and ex
panded. There is a growing recognition that public systems need
to be made accountable with active involvement of people at
various levels; a range of initiatives ranging from demanding
Right to information, to whistle-blowing against corruption, to
conducting Social audits and Community based monitoring, ex
emplify the social churning tha.t is underway to redefine the re
lationship between public systems and the public. Unions and
associations of health care workers are increasingly opposing
privatisation, semi-privatisation and contractualisation in vari-
50
ous forms, and hence would be crucial allies for the health move
ment in the coming period.
Finally, based on not only the analyses in this booklet
but the broader range of experience of the health movement,
we can confidently say that 'there are alternatives!'. On one
hand, neoliberal policies stand increasingly exposed across the
globe, as evident from the multiple crisis facing the globe - fi
nancial, food and environmental — and the massive growth of
inequities within countries and between countries. On the other
hand, in diverse contexts people are forging alliances, are en
gaging with public systems in new ways, and are developing
alternative models in a manner that generate's hope and opti
mism. While we have an uphill struggle ahead of us, there is no
doubt that widening sections of people are questioning the
existing manner of functioning of the health system, and are
beginning to expect qualitatively better ways of organising health
care. Hence the health movement needs to take up the chal
lenge of building broad based alliances with other social move
ments, to challenge corporate oriented health care models, and
to instead place a public-centred system of 'Health care for all'
squarely on the social agenda, as a key step towards achieving
the dream of 'Health for all'.
Jan Awasthya Abhiyan (JSA) is a Network of several all India
networks and regional and state level networks that work to
promote health and acccess to health care. The National Co
ordination Committee of JSA includes the following
organisations:
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All India People's Science Network (AIPSN)
All India Drug Action Network (AIDAN)
Asian Community Health Action Network (ACHAN)
All India Democratic Women's Association (AIDWA)
Bharat Gyan Vigyan Samiti (BGVS)
Breast Feeding Promotion Network in India (BPNI)
Catholic Health Association of India (CHAI)
Centre for Community Health and Social Medicine, JNU
Christian Medical Association of India (CMAI)
Forum for Creche and Child Care Services (FORCES)
Fed. of Medical Representative Assns. of India (FMRAI)
Joint Women's Programme (JWP)
Medico Friends Circle (MFC)
National Alliance of People's Movements (NAPM)
National Federation of Indian Women (NFIW)
National Association of Women's Organisations
(NAWO)
Positive Women's Network
PRAYAS (Rajasthan)
SAHYOG
SAMA - Resource Group on Women's Health
SATHI - CEHAT
Society for Community Health, Awareness, Research
and Action (SOCHARA)
Voluntary Health Association of India (VHAI)
In addition state JSA organisations, representing a large
number of state level organisations working in the area of
health and health care are members of JSA's National co
ordination committee.
52
Jan Swasthya Abhiyan
National Secretariat:
c/o Delhi Science Forum, D-158, Lower Ground Floor, Saket,
New Delhi 110017. Ph: (011) 26524323/24
Email: jsasect.delhi@gmail.com
c/o SAMA, B-45, 2nd Floor, Main Road Shivalik,
Malyiva Nagar, New Delhi 110017.
Ph: (011) 65637632/26692730
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