Aug 27, 2024
The high OOP expenditure in India leads to a situation where consumers, often less aware and not backed by government support, face rising medicine prices. This creates a perverse incentive structure in the market and thus despite being a major producer of generics, medicines in India are often sold under brand names, preventing consumers from benefiting from the lower costs of generics.
Healthcare expenditure is a critical indicator of a country’s commitment to its citizens’ well-being. India’s per capita government healthcare expenditure is approximately $83 as of 2023, reflecting thechallenges in providing adequate public healthcare services. Despite being known for its generic drug production, the high OOP expenditure, about 48.2 per cent of total healthcare spending, indicates that a significant portion of healthcare costs are borne by individuals.
The USA leads with the highest per capita government healthcare expenditure at approximately $12,318 in 2021 and with a per capita government expenditure of around $583, China has made substantial investments in healthcare infrastructure. India stands similar to Bangladesh on per capita basis.
Issues in the Indian Healthcare System
The high OOP expenditure in India leads to a situation where consumers, often less aware and not backed by government support, face rising medicine prices. This creates a perverse incentive structure in the market and thus despite being a major producer of generics, medicines in India are often sold under brand names, preventing consumers from benefiting from the lower costs of generics.
Doctors in India face a big dilemma. They often prefer prescribing branded generics over non-brancled generics due to concerns about quality. This trust in branded generics, which involves higher marketing costs, leads to higher medicine prices for consumers. So even if doctors want to write generics to consumers to provide them with affordable options, they restrict themselves to do so.
Role of Government
For a country with a population of around 1.5 billion, making swift changes in healthcare policy is challenging. However, the Indian government has taken steps to improve healthcare affordability, such as the Ayushman Bharat scheme. Yet, more rapid and structural changes are necessary.
Recommendations:
1. Raise Manufacturing Standards: Ensure that all domestic pharmaceutical manufacturers meet the highest quality standards, similar to those enforced by the US FDA. This will ensure and entrust doctors that every medicine their patients take is of highest quality
1. Mandate Generic Prescriptions: With increasing the standards of the domestic manufacturing, the government can then implement laws requiring doctors to prescribe generics, assuring them of the quality of all medicines manufactured in India. Once the quality is assured there will be much higher buying from doctors fraternity on adoption of generics.
1. Involve Private Sector: Until domestic manufacturing standards are uniformly high, allow reputable private companies to sell generic alternatives like they have allowed government-sanctioned channels like Jan Aushadhi stores. Newer licensing and compliance laws can be made here to ensure the quality dispense is top notch.
Conclusion:
India’s healthcare system is at a crossroads. While public healthcare expenditure has increased from 1.6 per cent of GDP in FY 21 to 2.2 per cent in FY22, per capita spending remains low compared to countries like China and the USA. To reduce the financial burden on its citizens and make healthcare more accessible, India must continue to improve the quality of its generic medicines and ensure that these savings are passed on to consumers.
Source: Economic Times