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India is among the countries with the highest Out Of Pocket (OOP) expenses on health care. Expenditure on drugs constitutes over 67% of out of pocket expenditure on health care (NSSO 68th Round 2011-12). High Level Expert Group Report (HLEG) on Universal Health Coverage (UHC) for India recommended that an increase in the public procurement of medicines from around 0.1% to 0.5% of GDP would ensure universal access to essential drugs, greatly reduce the burden of out-of-pocket expenditures and increase the financial protection for households.

As per WHO study estimates, about 65% of the Indian population lacks regular access to essential medicines. This is a paradox given that India is one of the largest manufacturers and suppliers of generic drugs to the world. Government procurement of generic drugs in bulk, substantially lowers the cost compared to the price paid for a branded drug by an individual consumer. It can be as low as 2% of the retail price of a branded drug. If quality essential drugs are provided free of cost to all patients visiting public health facilities, it would bring significant savings to the patients.

Provision of free drugs is therefore one of the most important interventions towards mitigating the burden of health care costs. One of the targets of the proposed Sustainable Development Goals is to “achieve universal health coverage, including financial risk protections, access to quality essential health care services, and access to safe, effective, quality and affordable, essential medicines and vaccines for all”, testifying to the importance of this initiative. Under the National Health Mission (NHM), the Ministry of Health & Family Welfare (MoHFW) has been supplementing the efforts of the States to improve access to free/affordable and quality healthcare.

This support includes provision for strengthening/setting up robust systems of procurement, quality assurance, IT backed supply chain management systems like Drugs and vaccines Distribution Management Systems (DvDMS), warehousing, prescription audit, grievance redressal, Information, Education and Communication (IEC), training, dissemination of Standard Treatment Guidelines, etc.

NHM continues to provide incentives to those States that notify a policy to provide free essential drugs in public health facilities. While beginnings have been made in many states, only a few states have been able to successfully implement such a scheme at scale. In order to support the other states to rollout/implement the provision of free drugs, NHM has developed this set of Operational Guidelines for the Free Drugs Service Initiative. NHM will support States to ensure that a set of quality essential drugs are available free of cost to all those who access public health facilities, irrespective of economic status.

These Operational Guidelines lay out the key features of the Initiative including operational steps on establishing systems for effective roll out and implementation such as procurement, quality assurance, supply chain management and monitoring mechanisms. The guidelines also include a model tender document to support states in adopting transparent tendering processes. These guidelines build on state experiences, in rolling out such initiatives. The guidelines provide a flexible framework for state adaptation based on context without compromising the benchmarks for transparent procurement, distribution, quality assurance, adherence to Standard Treatment Guidelines (STGs), and an effective grievance redressal mechanism. This Initiative needs to be accorded the highest priority so that accessibility of free essential drugs to the beneficiaries is assured.
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