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Improving systems, investing in medicines

How better procurement systems offer the hope of greater access to medicines

Access to medicines is a crucial issue in India as it accounts for a substantial part of household expenditure. As a result of constant public underinvestment- India is one of those countries that spend the least on healthcare sector with a public spending of 1.4 percent of the GDP, the private market has thrived. Close to 40 percent Indians live on less than USD 1 a day and almost half of them pay for health services and medicines from their own pocket from the private market. Almost 70 percent of this out of pocket expenditure is spent on drugs in rural and urban areas. These expenditures on health care along with poor financial risk protection push many households in India to the brink of poverty.

India’s generics industry

India has one of the best developed pharmaceutical industries and produces about 20 percent of the world’s drugs and most of these are generics. However, most drugs are beyond the reach of people, especially the poor as their prices are too high. Further, the magnitude of public expenditure incurred on drugs is low. The component of drugs and medicines in the overall budget of both the central and state governments is only a minor share, as salaries account for the bulk of the health sector expenditure.

Low spending on medicines

The central government’s share of medicines in its total health budget is around 12 percent. The expenditure pattern on medicines of the state government shows that there are wide-ranging differences across states, from as little as less than two percent in Punjab to as much as 17 percent in Kerala.

Underfunding compounded by poor systems

In addition to funds, several other factors also influence the provision and use of essential medicines via the public health-care system. These include: weak procurement systems; poor stocking of essential medicines; poor supply chain management, leading to frequent stock-outs; prescription practices which prescribe inessential and costlier medicines from outside the public health-care system; and the public’s mistrust in the quality of medicines supplied through the public health-care system.


While government proposals for universal healthcare have raised hopes for access, health spending in India remains among the lowest in Southern Asia. The challenges are immense and multifaceted, but pragmatism and a willingness to learn from innovative approaches, could deliver greater access to medicines for the people of India.

Read the case study on Access to Medicines in India.

Tamil Nadu

In the early 1990s, Tamil Nadu, a southern state in India suffered a widespread shortage of essential drugs in government hospitals. Irregularities in the medicine procurement system in the state were discovered and following widespread media attention, there was a huge public outcry. The crisis forced the government to review and analyse the failing system and recommend reforms. With financial support for reform from the Danish International Development Assistance and the World Bank, Tamil Nadu succeeded in delivering significant, sustainable changes to the existing system for procurement of medicines.

Read the Tamil Nadu case study here.


Following the success of central state procurement and distribution of medicines in Tamil Nadu, the state government of Rajasthan launched the Mukhya Mantri Nishulk Dava Yojana (MMNDY) on October 2, 2011. The MMNDY initiative was an effort to reduce individual’s out of pocket expenses for healthcare and to overcome some of the barriers that stand in the way of access to medicines. The state’s initiative was due largely to the sustained advocacy efforts of Prayas, a grassroots public interest advocacy group.

Read the case study on Access to Medicines in Rajasthan.


In India’s poorest state, a young Health Minister and new drug procurement model raise hopes, but the challenges remain huge.

Read the case study on Access to Medicines in Bihar.

Uttar Pradesh

Despite successfully emerging from a devastating healthcare scandal the state government still faces the mammoth task of delivering better access to healthcare for over 200 million people in India’s most populous state.

Read the case study on Access to Medicines in Uttar Pradesh.

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