India Pharma – Of Markets and Morals

Of late, the pharmaceutical industry has been in the news for all the wrong reasons. First, the government intervened to bring in large groups of medicines under the price cap to make them more affordable to the sick. Even before that happened, companies were caught overcharging for some medicines in violation of the prices set by the national price regulator.  Recently fixed dose combinations (FDCs or products containing two or more medicines in a single dosage form) were banned en masse by the government. All these decisions caused observers to declare that the free market in pharma had all but failed.

Fixed Dose Combinations (FDCs) – convenient but deadly

Recently, an expert committee found about a 1000 of these products to be irrational in nature which means that they could potentially harm patients who consumed them. Commentators pegged FDCs to constitute nearly 50% of the $15 billion domestic Indian pharma market. It is impossible to believe that such a large market exists without consumer demand to match.

These medicines have been available for years – in some cases, over 30 years. To be sure, this doesn’t make it legitimate. If FDCs have been deemed to be unsafe for patients by experts, then we must accept the verdict. What is wrong is wrong and one should not defend it.

What one should definitely do though, is debate how to make things better. Why were irrational combinations approved? What systemic shortcomings should be plugged to ensure that this doesn’t happen again? What kind of punitive action should be forthcoming?

Rather than engage in such conversation, the discussion in the public domain has been completely a moralistic one. Pharmaceutical companies have been labeled greedy and corrupt. They have been accused of caring nothing for human lives and focusing only on making profits instead.

This is not to absolve companies at all, but what seems to irk some commentators more than anything else is that no laws were broken and so it is difficult to lay the blame squarely on one party. To confound matters, the courts immediately granted stay orders on the ban. This prompted commentators to wonder if companies bent the rules. Why else have state regulators – who approved most of these products – not stood up to defend their case, they ask?

Instead of such conjecture, would it not be more fruitful to understand why this was allowed to go on for so many decades?

Governance and Free Markets

If FDCs were irrational, why were they authorized in the first place? If the rules stipulated that licenses obtained from state regulators be validated by the central regulator, why were there no checks in the system to make sure that was done?

Obviously, there isn’t an appropriate approval system that seeks proper documentation. There is no proper adverse event reporting (AER) system in place that helps gather real-world evidence of the harm caused by such medicines. Absent all these systemic check-points, the government action seems ham-handed and open to moralistic judgment.

This is probably why an informal survey carried out by a leading business daily found that 40% of doctors disagreed with the ban on products they had routinely used in thousands of their patients over many years.

It is common knowledge that the governance system is severely underdeveloped in India. Yet, when a PIL was filed in the Supreme Court of India, the judges threw the case out saying something to the effect that they had bigger priorities to work on! An indifferent judiciary kills free markets.

In this backdrop, does a ban seem like the best solution to the problem? It seems more like a reaction by a hapless regulator to fill the void created by an inefficient judicial system. Yet, there is not a single voice appealing to reform this system. That would have been more logical than moralistic jingoism.

Aside from the lack of science to support the products, the ban is based on the fact that these FDCs aren’t approved by the US-FDA. This is simply because the single medicines used in creating the combinations are often under patent protection and belonged to different companies. It would take extraordinary effort for these companies to forge deals to create such combination products. India does not recognize these patents and therefore Indian companies can easily formulate combination products.

Voice of the patient

Sadly, what began as an exercise to help patients reduce pill burden and increase compliance to therapy ended up in an overambitious industry effort to create products, not all of which were supported by science.

But, has anyone bothered to ask what the patient wants? It would be interesting to examine if patients complained about problems with these products. What happens to people for who a particular combination that worked to relieve cold and fever for years is suddenly pulled off the market? Shouldn’t consumers have a way of lending their voice too?

Despite being morally correct to do so, no commentators called for the formalization of patient bodies that can have a place at the table during such decisions. No one asked if it was right for government to decide what’s right for people. No one asked about personal choice.

On one hand, it is common knowledge that goods with great demand that are banned by governments, find their way to consumers through a parallel marketplace that we commonly call the ‘black market’. The government knows this through its strict regulation on alcohol, narcotics, gold and other such goods. Sadly, it learns nothing. Is it morally right to allow patients to buy low grade medicines off the black market? If the government cannot tell people about legitimate medicines, can we expect them to “protect” citizens from spurious and counterfeit ones?

Corporatization of Free Markets

On the other hand, it goes without saying that exploiting loopholes in the law is definitely not a smart business decision. History has taught us that such seemingly short-term benefits can turn out to be disasters in the medium to long term. Companies considered market leaders and ‘too-big-to-fail’ have disappeared after doing so in the past. Why do executives not learn from history then? Are they evil, scheming Scrooges as they are made out to be?

Perhaps, corporate incentives are completely misaligned. They are too skewed towards profit. While this in itself is not bad, it can encourage risk, recklessness and avarice especially in a system with a grossly underdeveloped governance structure.

What about internal ethics and governance policies of companies? Even if local laws are not stringent about submitting scientific evidence to back up the therapeutic benefit of these products, shouldn’t drug-makers have gathered evidence anyway? It is no excuse at all as observers claim,  and rightly so.

Morals and Markets

At the end of the day, whether for moral reasons or economic ones, companies should know that irresponsible behavior undermines the very nature of the free markets that they advocate for. Popular moralistic sentiment mistakes corporate behavior as the epitome of the evils of privatization and the subsequent failure of free markets. The irony is that bans, punitive government action and continued interference prove time and time again that markets are NOT free at all.

Much reform in the space is required to set markets free in the true sense. To argue against free markets by pointing out recent failures is to not understand what free markets truly mean.

Not much can be said if the government is forced to intervene because of reckless corporate behavior. The key question is who will stand up and take the responsibility of breaking this vicious cycle?

Until then, we will misguidedly worry about markets becoming detached from morals instead of using the opportunity to push for reforms that will truly benefit patients. And that is through a free and fair market.

“Challenge” – Pharma’s middle name

For the Indian pharmaceutical industry, ‘challenge’ has come to be its middle name. While for one part of the industry it is to create newer and better medicines for the diseases of tomorrow, for the rest of it; the challenge is simply to get to that tomorrow.

40 years after India aspired for self-sufficiency in medicines, the Indian pharma industry has emerged as a robust, globally-aligned industry that has witnessed substantial growth. Yet, challenges remain. We tend to think of these challenges as applicable to different sections of the industry i.e. MNCs and domestic companies. In my experience, they more often than not, apply to different parts of the same organization.

Domestic Giants:

  1. Abiding by the UCPMP code – the challenge is to continue growing at the same rate (13-15%) within a strictly ethical business framework. This is made worse by a total lack of co-ordination between the different lobbies representing the industry in India.
  1. Re-establishing credibility– Here the challenge plays out at multiple levels

(i) HCPs – resetting expectations within a new business model

(ii) MSMEs – gaining orders from govt tenders, Jan Aushadi and other public health initiatives.

(iii) Manufacturers looking to enter the lucrative US market after the slew of 483s issued by the FDA

(iv) General public – convincing them that the prices that they pay for medicines are the best possible ones

(v) Public health – convincing the govt and other activist groups that pharma cares enough about society to participate in neglected diseases (eg – Sun Pharma partnership with govt on malaria eradication)

  1. Non-evolving business models – This challenge is common to both domestic and MNC companies albeit in different contexts. For domestic giants, this would involve issues like inability to transcend a transactional model with all stakeholders (docs, pharmacies and patients). This involves incentives to HCPs and rebates to pharmacies and patients. While money is definitely a decision driver, it precludes the opportunity to create meaningful value which is often more appreciated by receivers.


Multi-National Corporations:

  1. Growth through fewer new product introductions – This challenge has recently become applicable to domestic giants as well after the govt action against fixed dose combination products. However, I do not consider this a rate limiting step for companies since they have the option of launching free-dose combinations or the single drugs on their own. Specifically for MNCs, a dry pipeline followed by uncertainty of monopoly in the Indian market (Sec 3(d)) and a threat of capped pricing is a far bigger needle mover in my opinion since MNC business models are copied from the western parent orgs and rarely if ever localized in the true sense. This brings me to the next challenge.
  1. Operating in a Gx market like an IP firm – Following western business models may add to novelty for a while but are rarely sustainable on scale. Dabbling in ‘new financing methods’ or other such may reflect the temporary genius of the MNC marketer but hardly does much for long standing issues of creating true access to innovative medicines or penetrating beyond Tier-3,4 markets. Again, opportunities to create meaningful legacy in a foreign land is all but lost.
  1. Non-evolving business models

(i) In the context of MNCs, this challenge comes from the fact that the parent organizations do not consider the 4Ps very seriously when marketing an innovative product and very few MNCs market generics globally. Therefore, their prescribed business model remains very HCP focused and ignores opportunities to partner with other stakeholders. This despite the fact that there is enough literature to prove the considerable and certain shift in decision making from HCPs to HMOs/insurance payers, pharmacies, patient groups and caregivers.

(ii) MNCs also struggle with making sense of the digital space (one does not see this too much from domestic giants) and make their models very rep-centric. This allows a single channel to be maximized while all but ignoring multiple other channels of direct contact with HCPs and other stakeholders.

(iii) Utilizing alternative (non-rep) channels can be a good way to harness the increasing power of the patients and their caregivers while reducing the appalling asymmetry of information that plagues this industry.

(iv) Unfortunately, with the power of making conversations comes the great responsibility of owning up to mistakes. Not having to do so is a singular pleasure offered by monologues.

Of course, challenges are aplenty and hardly limited to the ones listed above. As the country moves ahead, these challenges, coupled with fierce competitive pressure, could further escalate, if not attended to with crafty strategies by companies keep up with the evolving business environment.


Health and the freedom of choice

People talk a lot about “freedom” these days.  Be it freedom from colonial rule or the freedom of expression, the freedom of the Internet, the freedom to watch porn, to have consensual sex in beach-side resorts or the freedom to marry irrespective of faith. At the root of each of these passionate beliefs is the resentment of the State intervening in the freedom of personal choice. Why then, does this resentment dissolve when we think of health and health care?

Health and health care is as much a subject of personal choice as is the right to choose what you want to watch on the internet or do in your free time. Would you like it if the State told you to consult this doctor and not that one? Or if they told you which hospital you could be treated in or to what cost your treatment should be limited to? And yet, that is exactly what a pharmaceutical industry lobby in India, demanded that the government should do!

At a recent event, the Organization of Pharmaceutical Producers of India (OPPI) asked the government to increase public spending in the health sector. This would include subsidizing health insurance and providing universal health care. This sounds perfectly reasonable, doesn’t it? After all, shouldn’t everyone be able to access free healthcare?  It isn’t really very reasonable, if you think about how it would actually be done.

The first thing the government would look for is the money to fund this mammoth task. And that money would obviously come from the taxes that we pay!  Just as the industry should choose to resist a move by the government to fund universal health care through an increase in corporate taxes, ordinary citizens should also have the choice to pay lower taxes from hard-earned salaries.

As if in preemption, the National Health Policy recommended a ‘sin-tax’ – a tax on fast food, tobacco, alcohol, aerated drinks and other such – to fund healthcare. Do you think companies who sell these products will pay that money – or will you? And do you think the money collected through an indirect tax is enough to fund free healthcare for 1.25 billion people and more? The next step is prioritization. Should money be spent to build new medical colleges, or hospitals, or primary health centers? Isn’t it more important to give away free medicines? Maybe health insurance for everyone is an urgent need too. See the confusion? There are just too many things to do, and the money is too little. Even the NITI Aayog – that advises the government on policy matters – doesn’t think this to be a good option.

I believe the OPPI – as a powerful industry body – should focus on getting the government to simplify if not simply to do away with healthcare laws in their present form. For example, if the laws that require licenses to set up hospitals and medical colleges are simplified, they could attract many more players to the health sector. The result will be more colleges and better trained doctors and paramedics.

Today, despite the attractiveness, even the biggest home bred industrialists running multi-sector conglomerates, fear to tread into this space because of over-regulation.  Yet, CEOs of pharma companies have rarely – if ever – called for a simplification of or doing away with the law.

Simple economics tells us that markets immediately respond to increasing demand. The healthcare space in India is bursting at its seams with demand. Why then is supply still regulated by the government? Open it up! Allow anyone who wants to enter the space to come in and set up shop. This will reduce an enormous amount of workload on the government and pressure on the health budget as private capital is infused into the sector. The increased competition will also drop prices, improve quality and allow consumers the freedom to choose instead of being told what to do.

To be sure, a lesser regulated sector will definitely attract the greedy.  This is why I do not advocate for public-private partnerships (PPP). PPPs are as full of cronies as any crony organization is, and is as full of opportunists as the government is. PPPs often have a low probability of working efficiently since the government controls private capital and promote “profiteering” over “profit”. Distinguishing “profit” from “profiteering” is an important task the OPPI must undertake. To ensure that players understand the differentiation and stay fair, we need a less-burdened government to run an efficient justice system.

As a representative of the industry, the OPPI must remind the government of what it’s Chief Executive promised India’s people – minimum government, maximum governance. If the government focuses only on governance, we might have a more efficient justice system in India and with it, more providers of service.  In such a situation, power moves to the consumer and he is free to reject cronies and cartels and opt for those who serve him well. That is the power of choice.

In a country driven by electoral politics and vote-banks, the most dangerous part of large-scale welfare is that it cannot be rolled back. Look at the newspapers to see how many countries with welfare went belly-up. To continue funding such welfare, the government slowly but surely will begin to control everything else.  Is there any part of the state-controlled apparatus that you like? Why should you expect healthcare to be any different then?

State provided insurance will probably be worse. The sums for which you are insured are ridiculously low and rarely keep up with evolving prices. Look up the fines that convicted criminals have to pay! If we still follow a penal code made in 1860, what are the chances of the health policy keeping pace with escalating health costs in the future?

When the insurance sector opens up to competition, the few players who have formed powerful cartels will be forced to break them, resulting in cheaper and better insurance schemes. Also with lesser taxes and benefits to pay, you have more money in your pocket to decide how to use it. Think of it as a 50% increment every year!

With efficient courts, cronyism and cartels will reduce. Pricing mechanisms that are “set-up” or “rigged” will be set free to respond to market realities. More hospitals, more doctors, paramedics and lower medicine prices; health insurance that does not ditch you when you need it the most – isn’t this the stuff patients’ dreams are made of? Why does the OPPI not think of this approach to improve access to healthcare?

The OPPI’s appeal probably reflects a point of view that it is the role of the government to provide healthcare. Not so! It should be the role of anyone capable, to provide it. Instead of asking for access to free healthcare, the OPPI should instead ask for free access to healthcare. The government’s presence hinders that. I would resent having to entrust my healthcare to it, if I had the freedom of choice.

Published in the September 2015 edition of MedicinMan

The Swift-Apple standoff – Lessons in the UCPMP era

Every single time you hear a doctor or a medical association trying to pass on its costs (travel, conference or anything else) to you, remember the Taylor Swift – Apple episode.

For those who aren’t very familiar with the episode here is a little primer. When Apple announced a promotional idea of offering a 3-month free trial period for Apple Music, it also decided to leverage its clout a little by not paying the artistes whose music it would distribute. In effect, what Apple did was ask music artistes to bear the cost of promoting Apple music! Being a company worth $700 billion, it figured it could pull it off.  What it didn’t expect was a push-back from one single artiste.

Taylor Swift, a gutsy 25-year old music star announced yesterday, via a blog-post, that she would not allow Apple to distribute her music. I am sure most people who read the post brushed it off as an arrogant attempt to take on a technology giant. Yet, late last night Apple announced that it would reverse its payment policy and not ask music artistes to bear the cost of its promotional campaign.

This episode struck me as familiar. It is strikingly similar to something pharma routinely gets from medical associations – to bear the cost of their conferences. However, Taylor Swift’s reaction to Apple’s initial proposal and Apple’s response to her fascinated me.  How it unfolded has a lot to do with bargaining power and its amplification through social media. It also is about taking a stand. I learnt some valuable lessons from this episode and could not resist comparing it to the industry I work for. A few from the top of my head are listed here – I am sure there are many more.

  • No organization can take its size for granted
  • Alternate media can amplify power and speed of outcome
  • Taking a stand is important
  • Fighting for the underdog gets you support
  • A win of this size can catapult popularity

Taylor Swift is an artist with five albums out. Sure she is popular, but contrast it with the organization she stood up to. Apple is a single company valued at almost 3/4th the sales of the entire pharmaceutical industry, an industry that allegedly ‘shapes’ the agendas of governments around the world.  A company so large and powerful took 17 hours to reverse its payment policy to music artistes. In comparison, how important and powerful do you think the doctor associations that pressurize you are?

We don’t ask you for free iPhones. Please don’t ask us to provide you with our music for no compensation” wrote Swift in her blog-post addressed to Apple. There is obviously a quid-pro-quo in the Swift- Apple relationship. But it is one between peers. Neither Swift nor Apple demeans each other. They are peers in the relationship.

Why can’t pharma have a similar relationship with doctors? Quid-pro-quo is a bad word you say? Not if it is stated upfront, it’s not. Pharma and doctors need each other – there is nothing illegal about that. Using unfair trade practices is illegal. In this example, an unfair practice would be if Swift leveraged her clout and popularity to strike a deal with Apple that promoted her music over others. She did not. She spoke for the music industry at large. The pharmaceutical industry acutely lacks this foresight and broad mindedness which explains its half-baked attempts at anything constructive.

From the point of view of enforcing this change, I doubt this would have happened if Taylor Swift had sent in a nicely typed-out letter on her letter-head (does she have one?) either directly or through her lawyers.  A simple social media broadcast immediately got her the support of millions of her fans – who incidentally are Apple’s consumers too! The transparency, the openness and the willingness to share her actions with her fans won their hearts. What is pharma so scared of? Why does it not share the same transparency, openness and willingness to share? Why the hesitation with voluntarily accepting the UCPMP to win some hearts?

Taylor Swift probably won more support for also speaking out for the underdog. “These are not the complaints of a spoiled, petulant child. These are the echoed sentiments of every artist, writer and producer in my social circles who are afraid to speak up publicly because we admire and respect Apple so much. We simply do not respect this particular call.” Very rarely does someone this popular and widely admired speak out for the underdog. Rarely does one put another person’s agenda over their own for the larger good. Where are the pharma leaders who have this popularity and credibility? Where do they stand on the UCPMP issue? Why do they not speak out in one voice to an industry that is so starved of leadership and direction?

How much do you think Taylor Swift’s popularity has grown since yesterday? And how much do you think Apple’s has by responding in the way it did? I would wager that Apple will gain a lot more from this for showing the flexibility, urgency and for respecting the sentiments of its consumers whose collective expression Taylor Swift seemed to represent. Why can the industry not engage with doctor associations to show them how much they can gain by regaining lost reputation?

Taylor Swift won praise for taking a stand. Apple won praise for showing that it cares. When will doctors and pharma do either or both?

NB: Correction: She (Taylor Swift) wasn’t the only one  (courtesy @rushwrites)

I Find…

I find myself thinking.

I find myself wondering about the world

I find the world doing better economically

I find that a wealthier world is an unhealthier world

I find the global disease burden increasing

I find governments trying to control health care costs

I find governments unwilling to renounce patents and embrace free markets

I find the industry insisting that patents fuel innovation

I find the industry R&D pipelines are still relatively dry

I find the US-FDA approving many new medicines that are more or less like the old

I find the prices of those medicines increasing

I find the industry still complaining of pricing pressure

I find the industry cajoling governments to negotiate unfair trade deals

I find that those trade deals can further drive up medicine prices

I find the same governments who speak of alleviating poverty around the world, negotiating those deals

I find the industry worried about future growth

I find industry leaders looking for growth in the same place

I find companies acquiring and merging for quick but largely unsustainable wins

I find companies struggling to grow but resistant to change

I find the industry focused more on Wall Street than on patients

I find health systems encouraging disease than prevention

I find patients and caregivers increasingly dissatisfied with medical care

I find patients and caregivers more willing to empower themselves with information

I find the industry doing too little too late to empower them

I find the industry wide open for non-traditional competition to pave the rules of the future

I find a large majority unwilling to live healthy and reduce dependence on those faulty health systems

I find them asking what the alternative is

I find them largely unable to think or decide

I find myself wondering about the world

I find myself thinking.

Vision = Strategy?


A recent Facebook post by a friend that praised her CEO’s ‘vision’ caught my attention. Curious on why a CEO would discuss his vision for the company in a media interview, I decided to read on. Turns out, what the CEO described was not his vision. It was not even the company’s strategy. It was, at best, the company’s medium-term tactical plan for India. Being a hands-on CEO, he was probably briefed about it earlier in the day by the executive team.

My friend does not lack experience. She is a senior member of the marketing team with a proven track record. Why then does she (and many others like her) get confused between vision and tactics? Are the two concepts that close to warrant confusion?

Vision  – the raison d’etre

In the context of a company, its vision – decided by the CEO and agreed upon by the Board – is an ultimate stretch goal. It is not a milestone but the raison d’etre of the company – its reason to exist. And because the vision is the most important reason or purpose for the company’s (and its employees) existence, it often seems ethereal and far-reaching. That’s the way it has to be; the elusive end of the rainbow where the pot of gold lies. Only that can keep the vision stable and unchanging.

Consider the vision statements of some of the world’s most successful companies. I have edited it to glean out its essence, but feel free to look up the full statement on the company’s website.

“ be one of the world’s leading producers and providers of entertainment and information…” – Walt Disney Company

…to continually improve all aspects of the world in which we operate – environmental, social, economic – creating a better tomorrow than today.” – PepsiCo

“…to organize the world’s information and make it universally accessible and useful” – Google Inc. This statement merges both the vision and mission of Google’s founders.

 “Our vision is to be earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.” – Amazon

And the best for last….

“Better.” – Apple

As you see, the vision statement is the North Star for a company. It is meant to guide and provide direction to those at its helm. It energizes constantly by describing the company’s purpose and outlining the values that drive it. The vision of the company is linked to but very different from its strategy.

Strategy – what achieves advantage

Strategy is about being different. It is choosing to differentiate a company from competition and create an advantage for its products and services so that the customer sees more value in choosing and paying for them. It is in short, a plan to beat the competition.

Let’s use the example of Walt Disney Company to see how their vision statements translated to strategy:

To realize its vision “ be one of the world’s leading producers and providers of entertainment and information…” the company’s strategy is to create and distribute entertainment through its own media networks (Disney Channel & Movies), parks (Disneyland) and studios. To further increase business they also have consumer products (clothes, gifts, souvenirs) and interactive media (DVDs, games etc).

It doesn’t end at just creating successful franchises like Mickey Mouse, Toy Story, Cars and its latest blockbuster Frozen. (Did you know that Frozen is a bigger sensation than Harry Potter and Star Wars?). It encompasses an ecosystem (content created and distributed across channels) that successfully differentiates it from Universal Studios, SeaWorld, and other merchandising companies. In the words of Chief Financial Officer, Jay Rasulo: “… unlike other media companies, we really do have a very clear strategy of an ecosystem in which we both own the franchises and own the means of distribution to get those franchises out across almost all consumer touch points.”

Clearly, setting up this ecosystem was very important for Disney to roll out its tactical plan – which is the next step.  As with the vision, its strategy is linked to but very different from its tactical plan.

Strategy, not Tactics

Often, I hear colleagues talk about “strategies”.  I assume they mean ‘tactics’ – or the set of specific actions that are taken to implement the strategy. It is the part of the plan that explains how you are going to do it.

A successful vision, strategy and the tactical plan link into each other. For Disney to be a world-leading producer of entertainment and information, its strategy is to not just create world-class content franchises, but to also own its distribution. This leads to its tactical plan of creating the different channels of distribution (media/movies/studios, amusement parks, retail & merchandise and interactive media). The company allocates resources to these tactical arms and monitors appropriate business metrics for each channel.

I am sure you can easily superimpose this example on the pharmaceutical industry.

So in the interview that my friend read, the CEO of her company spoke of India presenting growth opportunities for his company, because of an ‘under-performing health care sector’. My friend probably mistook the suit-speak to depict something very ethereal, hence his vision. What the CEO might have meant instead, was how his company could use the opportunity to build newer products and convince more people to buy them through effective pricing. Was that his vision?

Has India really forgotten about “Health for All”?

A little bit of reading leads me to understand that the government decided not to offer a central scheme for drugs and diagnostics, as it had promised earlier, but to incentivize state governments to initiate and run these schemes within their ambit. It is relevant to mention here that the Constitution of India decrees health care as a state subject. The Centre also announced a token incentive of 5% of its allocated budget under the National Health Mission, if checks and balances such as quality assurance, prescription audits etc. are initiated. If the number appears paltry, remember it is but an incentive.

On the face of it, this seems relatively sensible going by the successes touted in states such as Tamil Nadu and Rajasthan and to a certain extent in undivided Andhra Pradesh and Karnataka. However another news item also caught my attention about the Rajasthan govt’s plan to “downsize” its successful free medicine scheme. Aha! So are the state govt run health programs not really as great as they’re touted to be?

It appears that the Rajasthan govt identified that nearly one in five people who avail the benefit of the free-medicine scheme do not belong to the state. These free-riders add significant weight on the state’s already overburdened public health infrastructure. In this context, Chief Minister Raje’s comments also explain that the state seeks to slow down and make the scheme more efficient. Is this really such a bad thing?

Both these developments bring to the fore two important challenges plaguing health care in India. One, the public health system is in shambles and just cannot be relied upon to provide health care of equitable quality across the citizenry. Two, given the pathetic state of the public health care system, governments (state or central) pursuing free health care for its citizens is a mere pipe-dream.

So what is a practical alternative? Common sense tells us that any measure which seeks to bridge the gap between the yawning demand for affordable health care and its lackadaisical supply is a practical alternative. It is clear that the government cannot meet this gap. The only other alternative is the market, which the govt does not allow to function properly through misdirected and disproportionate regulations.

Activists and other “pro-poor” observers accuse the govt of ‘withdrawing from the public health space’ and call this “anti-poor”. What then is the current public health system with its pathetic infrastructure, long queues of patients, lack of medicines, absent doctors and horror stories of patients dying unattended in corridors and on the pavements outside the hospitals , if not anti-poor?

Today, the poor victims of these horror stories have nowhere else to go as the private sector keeps prices very high. This can be easily solved by relaxing entry norms into the sector to allow a glut of service providers. The resultant competition will lower prices much more effectively than any govt mandate.

Chief Minister Raje seems to have understood this well and may work to shift the burden to the private sector while assuring health care through govt sponsored insurance cover. Even this, at best, can be a temporary measure. Simply assuring health care does not absolve the govt of its duty. Ensuring an open market that brings in lots of players and a fair system that players cannot game must still be its prime responsibility. Generally, a hyper-competitive market that is reasonably fair, drives prices down and greatly benefits the consumers. How can something like this be anti-poor?

A good thing for the government to do would be to stop all its unproductive subsidies in the sector, including free medicines that might require a whopping $5+ billion. A temporary re-routing of this money directly to citizens through cash transfers could definitely be more effective. The JAM trinity – Jan Dhan Yojana, Aadhar and Mobile – creates such an ecosystem effectively.

With money in hand through direct benefit transfers and a plethora of affordable service providers, the common man is free to choose health care solutions that best suits his need. Pro-poor crusaders must actually push for these subsidies to halt after a certain period as this can lull the population into the ‘entitlement siesta’. Instead they seem to want exactly the opposite! A truly pro-poor stand would be to push the govt to create millions of jobs, increase household incomes and then provide households the freedom to decide the best health care solution for themselves.

Instead of throwing good money after bad, a radically different approach may be required to solve India’s health care challenges. A senior health official in Rajasthan said it best when he said, “increasing the budget doesn’t guarantee its error free implementation.” So-called ‘pro-poor’ activists accused the govt of withdrawing from the public health sector to create opportunities for the private sector and called out the stand to be the govt’s idea of promoting the private sector. For the sake of the health and welfare of the poor, it is fervently hoped that they are right.


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