Improving Governance and Accountability in India’s Medicine Supply System

1. Improving Governance and Accountability in India’s Medicine Supply System Sakthivel Selvaraj, Maulik Chokshi, Habib Hasan and Preeti Kumar Public Health Foundation of India (PHFI) New Delhi, India Presented at Peer Review Workshop of TAP Results for Development Institute-World Bank

2. Access to Medicine Framework • Unreliable Medicine Supply • Unfair Health Financing mechanisms • Unaffordable Medicine Prices • Poor Quality Medicines • Irrational use of medicines • Lack of new medicines

3. Objectives of the Study • Identify gaps & institutional challenges that impede access to medicine; • Examine budgetary allocation on drugs & associated inefficiency & leakages; • Assess competitiveness of medicine procurement price in 2 states; • Generate evidence on availability & stock-outs; • Analyse prescription & dispensing pattern; • Explore alternate policy options.

4. Methodology • Sampling • Two-stage Stratified Sampling; First Stage Unit - Districts • 17/18 districts • diverse geographic & economic profile Second Stage Unit - Public Health Facilities • 60 Community Health Centres (CHCs) • 30 Referral Hospitals - Bihar & • 30 Upgraded PHCs -Tamil Nadu • Survey Period • October, 2009 – January, 2010.

5. Methodology Number of First Level Referral Units and Sample Selected

6. Methodology Selected Sample of Public Health Facilities in Bihar Selected Sample of Public Health Facilities in Tamil Nadu

7. Sources of Data • Budget Documents/Records • Central and State governments • Actual expenditure - year 2006-07 • Revised and Budget figures - years 2007-08 and 2008-09 • Major states – accounts 90% total health expenditure • Data/information on public procurement • Tender Documents • Rate Contracts • Bidding process information–technical and financial bid

8. Geographic Location of Bihar & Tamil Nadu

9. Districts of Bihar

10. Districts of Tamil Nadu

11. Description of Survey Instruments • From health facility, we administered questionnaire on broad variables such as: • volume & value of drugs procured, stored and dispensed at the facility level, • availability of drugs, adherence to EDL (Essential Drug List), stock-outs, price charged at the facility, quantity and price of drugs that would have to be paid out-of-pocket (OOP) outside the public sector outlets, rational prescription practices, etc. • To be specific, at the facility level, we examined records of Main Stock and Sub Stock Registers. • In addition, we also obtained photo images of prescription slips from patients (roughly about 30-40 slips from each of the facility).

12. Demographic Profile

13. Health Infrastructure of Bihar vs Tamil Nadu

14. Procurement models in India • Centralized procurement for vertical programs through procurement agencies • HLSP, HLFPPT, UNOPS • Pooled procurement through autonomous agencies • Tamilnadu (TNMSC), Rajasthan (SPO), Delhi (DPSRUD) • Decentralized procurement • Chattisgarh • Rate contract based • Bihar

15. Competitive Bidding Process • In Bihar, the number of drugs procured in 2007-08 was 369, compared to 91 and 89 in previous two years. In the year 2006-07, there were 19 successful bidders, 3 companies lesser than the previous year. The number of co submitting tender, being successful and number of products selected has seen increase over a period of time. However, there are considerable numbers of drugs without any bid or not procured by the SHS. • TNMSC floats tender for an EDL of 262 drugs annually and have been successful in getting bids for most of the EDL. Around 100 companies have shown interest in supplying drugs to the state through TNMSC during the year 2007-08.

16. Health Expenditure

17. Public & Private Expenditure in Health

18. Drug Expenditure by Major States

19. Drug Expenditure by Levels of Care * Figures for 2007-08 estimates

20. District-wise Share of Drug Expenditure

21. Expenditure Pattern of Drugs in Bihar as Per EDL & Rate Contract

22. Availability of Medicines at District Level

23. Availability of Medicines at Facility Level

24. Comparative Scenario of Drug Availability: Bihar vs Tamil Nadu (% Drugs available on Day of Survey)

25. Stock-Outs at Facilities: Bihar vs Tamil Nadu(% Stock-Outs)

26. Duration of Drugs Stock-Out:(Stock-out (days) in preceding 6 months)

27. Availability and Stock-Out Scenario

28. Availability of Individual Drugs across Health Facilities

29. Availability & Stock-Out: Therapeutic Categories

30. Availability of Therapeutic Class of Drugs: Bihar vs Tamil Nadu

31. Summing Up • Bihar spent inadequate funds on health care & on drugs in the past, but recent trends in post-NRHM years show reversal of that trend and therefore availability of drugs has improved considerably. • This evidence is also corroborated from various stakeholders themselves during visit to facilities & other available data. • Moreover, Bihar is now on its way to replicate TNMSC model (Tamil Nadu Model of Procurement and Distribution), the benefits of which is expected to bear tangible fruit in near future. • Alongside, acute shortage of health workforce – pharmacists need attention.

32. Way Forward…. • Scale up public spending 1-3% of GDP. • A centralized procurement system with a well-functioning decentralized distribution model appears to usher in competition, transparency, value-for-money and ensures availability of quality and rational medicines at affordable rates to government. • Therefore, centralized drug procurement & decentralized medicine distribution system appears to be the key to improve governance and transparency in medicine supply system in India.