India looks to Artificial Intelligence to solve Health Infra Problems

 In early June, the government think tank Niti Aayog unveiled its discussion paper on national strategy on Artifical Intelligence (AI) which aims to guide research and development in new and emerging technologies. While the paper per se focuses on five sectors for India — healthcare, agriculture, education, smart cities and infrastructure and transportation, this post will focus on healthcare alone.

In the paper, the think tank says India is not leading in healthcare because of issues such as shortage of qualified healthcare professionals and services like doctors, nurses, technicians and infrastructure. There are 0.76 doctors and 2.09 nurses for every 1000 people (as compared to WHO recommendations of 1 doctor and 2.5 nurses per 1,000 people). Hospital infrastructure is creaky and bursting at its seams with 1.3 hospital beds per 1,000 people as compared to the WHO recommendation of 3.5 hospital beds per 1,000 people.

Amazingly, the government believes that AI, and not fixing the inherent problems that are rotting the sector from the inside, can play a major role here. In the backdrop of India’s stretched and limited basic healthcare infrastructure, at one level the strategy for AI is indeed a bit like putting the cart before the horse.

New tech such as AI can often be spoken of to solve problems, but one forgets that tech is only an enabler and is not a substitute. It is only as good as its supportive infrastructure. The “intelligence” in AI basically comes from massive data repositories that the machine gleans information off. Not sure if India has much of that to boast of.

Even in the West where data is meticulously collected, stored securely and analysed, massive deployment of AI has still not happened and is still being tried out. In India which has 66% population in rural areas and 67% of doctors in urban areas, the requirements are still fundamental such as the need for physical hospitals, healthcare professionals and last mile connectivity for drugs and pharmaceuticals.

In a country where people in remote villages are just becoming aware of the magical effects of electricity; where clean drinking water and two meals a day are aspirational, talks of broadband, the internet and AI seem quite out of place.

Like most things that come from govt, these are noble intentions which pave the road to hell.

Over the long term, technology upgrades in the healthcare delivery model can create efficiency especially at the point of care level (in PHCs, clinics, hospitals etc). There are definite areas where the existing burden of care on doctors can be eased. But this has many pre-requisites – from as basic as having physical hospitals and doctors, medical supplies, electricity, and water to advanced things such as cloud-based tech, data privacy and security, trained personnel etc. The starting point would be to collate and build out massive data repositories, do away with silos and get different data collection points to inter-connect.

In a country as large and diverse as ours with a population as immense, this is a colossal project – one that can take years. Paradoxically, we Indians are great at managing scale (as we’ve seen with General Elections, the Kumbh mela and Aadhar enrolments) but are terrible at relatively basic tasks (simple queues, traffic rules and building roads & ensuring health and sanitation). One worries that we might succeed at putting up the technology but forget basic training and infrastructure creation.

If we get all that right, the potential is unlimited in areas such as screening and diagnosis, home healthcare, DIY healthcare for primary health (tend to simple cuts and wounds, treat common colds, aches and pains etc) and making health care participatory (arming patients with enough information for them to understand and participate in treatment).

Lessons can be drawn from tele-medicine (eg: The Sky program launched by World Health Partners in Bihar which didn’t do too well due to lack of participation from both providers as well as the targeted social groups). This of course, doesn’t mean that nothing new will work. It just means that a lot of things have to be in place for this to work.

One shouldn’t fall prey to the fallacy that technology is the panacea to all problems.

A good way to foretell the future is to study the past. And the past in this case doesn’t hold much promise. We have had “digital India” and “make in India” and now we have “solve for India”. The intention is noble, and the premise is strong. However, it doesn’t account for the fact that a very wide and capable ecosystem is necessary for innovators and entrepreneurs to survive. Especially those of the social nature who will dedicate their work to helping out strata of population that will not necessarily have the ability to pay. This will require major govt funding and backing which we haven’t really seen before. Plus, the fact that it takes years for such an ecosystem to thrive and investors have to be patient.

One must but look at China and how Govt invested millions of dollars into building such an ecosystem that is on the verge of catapulting China ahead of the US in terms of innovation. A recent MIT report that compared China and India in the race for dominance in AI, didn’t have very kind words for India.

There is a need to reskill many people in a short span of time. Insufficient research support, poor data quality, and the lack of expertise in the field will be stumbling blocks for India. China has had an early start with a robust digital infrastructure and their unmatched ability to produce PhD-level mathematicians and stem engineers.

The AI game is on. India is playing catch-up with China and the West in terms of technology, research prowess, investment, and most importantly, data, which is the lifeblood of AI.

How India grapples with issues such as water scarcity and poverty alleviation, while daring to believe that AI can change the world will be fascinating to watch. However, it’s important to remember that AI is just a tool, it is not an end.


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

What can the pharmaceutical industry expect from the new government?

India’s economy is performing poorly, at least compared to its relative dynamism just a few years ago. With a general election to be concluded by the end of May 2014, many are looking to the country’s next government to break India out of its economic doldrums. Pre-poll surveys (whether you like them or not) have predicted a strong wave of support for the Bharatiya Janata Party (BJP), led by its prime ministerial candidate Narendra Modi. It is expected that a business friendly environment and policies that support the health care sector may well be on the cards if this was indeed to happen.

 I am certainly hopeful that a BJP led govt comes to power at the Centre with a majority mandate. This will ensure that the government has a free hand to set the economic agenda of the country. This is, of course, assuming that the agenda will favor right leaning economic policies all the way which may not be likely. 

 Are changes to India’s health policy likely?

 At the moment, it is speculative to say what the changes in policy are likely to be since the BJP has not spelt out its agenda or made its “Vision 2025” document publicly available. That said, the only thing one can be fairly certain about is that market sentiment will be buoyed only if the political environment remains stable. It will be a shame if a fractured mandate forces any party to align with parties of opposed ideologies – or God forbid – an Alternate Front comes to power.

 On the health policy, I can be fairly certain that a new govt will have two important things to address: 1) reduce the current account deficit (to control inflation and prices) and 2) bring in revenues to a depleted treasury. To work towards these two objectives, it can be fairly assumed that industry friendly policies will be adopted since welfare schemes are populist in nature and cannot be withdrawn in India.

 While the FDI policy is clear (uncapped), the same is not true of areas such as clinical trials and IPR. The BJP manifesto promises to support industry that transfers technology into India. If this happens, we may see FDI flow into greenfield projects which has been quite slow so far. However, this will require complexities such as the Land Acquisition Bill, Labour laws etc. to be simplified. At the moment it is assumed that a Modi govt will be more inclined to push Economic Reforms 2.0 than the UPA was. This means that we may see a fillip to the industry overall.

 If the govt pursues industry friendly policies we are unlikely to see capped pricing on patented drugs but a more nuanced approach to balance prices of medicines and access. There maybe an inclination to strengthen insurance coverage through RSBY and the private sector, state-purchase and distribution of medicines through the Jan Aushadi 2.0 scheme, more hospitals through PPPs etc.

 What will be very interesting is to see how the IPR issue is tackled. I believe this is more a diplomatic failure and grandiose posturing rather than a real issue. There have been more cases of CLs being rejected than issued. Validity of patents have been upheld fairly, so I feel it is unfair to term India’s IPR regime as “fluid”. India has the responsibility of protecting the health interests of its citizens and it should continue to do so. The issue can easily be laid to rest through some deft diplomacy which a govt strengthened by stability can achieve. 

 Another development that hasn’t captured public imagination and debate in India is the US sponsored TPP agreement. Indian generic players can be strongly impacted if the TPP comes into effect and the US de-prioritizes India as a result of the agreement.

 Will the new government pursue Universal Health Care?

 UHC is something that has been on the cards of all political parties for a long time. However, there seems to be no clear direction on how to progress. With the BJP proposing to support federalism and strengthening the state govts, it remains to be seen if they will put their money where their collective mouths are and first, increase spending on healthcare as a % of GDP to at least 3% (the WHO mandates 6%) and second, transfer a bulk of that money to state govts.

 This is the tricky part. Opinion polls have shown that the BJP will rule at best in 15 out of 29 states. Assuming 100% of BJP states comply with UHC, ~50% of India’s population would be deemed to be covered. This is in line with the UPA govts plan of increasing health coverage to about 52% of the population, up from the currently covered 35%.

 This alone would be a significant step to achieve in 5 years since UHC would involve a paradigm shift in health policies and programs in favor of vulnerable population groups, restructuring of public health cadres, reorientation of undergraduate medical education, more emphasis on public health research, and extensive education campaigns

What should the new government’s focus be?

 The one big issue would be to ensure quality and affordable health for all its citizens. It is criminal that after almost seven decades, Free India still cannot save mothers and babies from dying, ensuring that the sick get treated without either going bankrupt or being turned away from hospitals for not being able to pay and that productivity of its citizens is so sub-optimal. No Right to Education can make a malnourished child learn. No Right to Food can save lives of children who do not know it is important to wash their hands before eating. No Right to Information can empower the sick and the disabled. No aspiring superpower can afford to miss so badly on MDGs.

 Only when its populace is healthy can India think of educating its young, employing its youth and caring for its elderly. Health can have a multiplier effect on the GDP of India. And it must be available freely and equitably to every citizen of this country.

 Will the change be for the better?

 Apart from progressing on UHC, the present government could have done a lot to ensure that the health care sector was seen as a attractive destination to investors. While there are statistics to show that the sector still is attractive, it has been badly dogged by several flip-flops from the government, be it on clinical trials, on FDI, on drug pricing, on IPR, or on frowning on acquisitions. With the global economic crisis and govts across the world cutting back on health care costs, India had a golden opportunity to position itself as a world class health provider. Formidable terms such as “largest number of FDA approved plants outside the US”, “pharmacy to the world”, “medical value travel destination of the world” were all lost to other nations who grabbed the opportunities with open hands.

Over the last decade, India was a tragic case of epithets becoming epitaphs. There are no silver bullets here. Tackling these issues is a very big project. But the present system needs to change. Many countries have successfully transformed similar systems after seeing them lead to a rise outlays but a drop in outcomes. The next government must do what it can to help push India toward similar progress. 

Clinical Trials and Judgmental Errors

A few days ago, the Union Health Ministry accepted the Prof. Ranjit Roy Chaudhury Expert Committee report on approval of new medicines, clinical trials & banning of medicines. One of the points in the Action Taken Report was that the Ministry decided to admit data from Phase I and Phase II trials done overseas for medicines that are being developed in India. This, they say, will reduce the time for new medicines to be launched in India.

Phase I trials study the effect of newly discovered medicine – which is either a chemical or a biological compound (new chemical/molecular entities or NCE/NMEs) – on the body of healthy volunteers. These studies determine the way the medicine behaves in the human body. The data is important to identify the dose at which the medicine has the best desired effect.

Once the dose is identified, Phase II studies are conducted to assess the efficacy and the safety of those medicines at the identified doses. Both these phases are essential first steps in the journey of drug discovery and provide confidence to both researchers and government regulators that the medicines are safe for mass commercialization. Phase III trials study the safety and efficacy of new medicines closer to availability in the market and Phase IV study them after the medicines are available on the market.

Before the Roy Choudhury Committee recommendation, the law did not allow the Central Drugs Standard Control Organization (CDSCO) – of which the Drugs Controller General of India (DCGI) is a part – to accept Phase I and II data of NCEs/NMEs that were conducted abroad. What confounded this rule was the fact that India does not have enough capacity in the first place, to deal with the requirements of Phase I and Phase II trials. This often delayed the process.

 It is another story that these delays were inconsequential because very few NCE/NMEs are actually developed – and therefore need to be tested – in India. Almost all new medicines launched in India are discovered abroad and none of those innovator companies conduct Phase I or II studies here.  This is because Phase I trials are completed in 4-8 weeks in the US and Europe while it takes at least 16 weeks to complete the first phase in India.

If the idea is to encourage drug discovery in India, it is an inconsequential one. As a study in 2012 by the Institute of Bioinformatics and Applied Biotechnology, found that the prospects for original drug discovery in India are poor. Improving drug discovery in India will need reforms at a much broader structural level. Merely allowing trials to be done abroad is hardly an incentive for companies to begin to invest in drug discovery – a process that involves hundreds of millions of dollars. So how does this development actually help the Indian patient?

To be fair, this maybe an attempt to reverse the damage created by the knee-jerk reactions plaguing the clinical trials industry in India. The rules currently allow parallel Phase II and Phase III Clinical trials in India for NCEs/NMEs undergoing clinical trials anywhere. This is an important step if the government is serious about making new drugs available faster to the Indian patient, since it is willing to approve medicines which have been studied in a sizeable sample of Indian subjects during Phase III. However, by clamping down on approvals of clinical trials, MNCs will continue to remain unclear on whether those parallel trials will ever take off in India.

Companies will also be forced to reconsider bringing to India even those medicines that have completed all trials (Phase I-IV) overseas. This could mean a delay of many years. To worsen this situation, the government wants to amend a rule that allowed the waiver of clinical trials in Indian subjects if the medicines had approval abroad. The government now intends to make it possible to waiver trials in Indian subjects only if there is a national emergency or an epidemic. This means a few more years of delay to the availability of new medicines in India. Add to this the ambiguity around India’s stand on IP laws and pricing of new medicines.

So will the changes make new medicines available in India faster than before? Are these changes going to be accepted independent of the other interlinking factors which often seem contradictory? At the moment, the hullabaloo around India’s health policy continues. Viewed macroscopically, it seems to be a misguided case of almost comical trials and judgmental errors.

Free Medicines or Better Health?



A few days ago, the Vice President of the Indian National Congress party, Mr. Rahul Gandhi tweeted that his party would implement the free medicines scheme for the poor across India. Since the tweet coincided with Mr. Gandhi’s visit to Rajasthan, it can only be assumed that he was touting a relatively successful scheme that his party’s government runs in the state.

Sometime last year, India announced a $5.4 billion policy to provide free medicine to its people. This was the outcome of the report of the High Level Expert Group appointed by the Planning Commission in 2011 to look into the broader issue of Universal Health Coverage (UHC), a key requirement to improve social indices in India.

While the availability of free generics can be a decision that could change the lives of hundreds of millions of Indians, the proposal runs the risk of being overly simplistic and potentially dangerous. The underlying assumption here is that merely providing medicines free would help improve the health and the productivity of the nation. In isolation that is simply not true.

Health is a concept that far exceeds doctors, hospitals and medicines. You need these only when you have to treat a condition. The concept of keeping good health is to prevent anything from affecting you mentally, physically or spiritually. When the government decides that the first step towards UHC is free medicines, it is a step forward gone horribly wrong. It means that the government will do little to keep you in good health and will come up with hare-brained schemes even after you fall ill, leaving you to largely fend for yourself.

This is not to say that receiving free medicines is not a great idea. To the sick and the infirm, it will provide succor to millions who have to otherwise pay for it from their pockets. The problem is in its implementation. That Rajasthan did well with the scheme – as did a few other states – is well studied. However the fact that its nation-wide scale up was shelved demonstrates the government’s sheer lack of confidence. Here’s why.


Currently, less than 35% of India’s population has access to health care. This means approximately 2 out of 3 residents in India do not have a medical facility (clinic or primary health centre) to go to or a doctor to consult, much less be able to get a prescription and buy medicines. Even the 1 out of 3 residents, who have access to a medical facility, barely get to see a trained medical professional. This is because of an acute shortage of trained staff and chronic absenteeism – doctors get their salaries from the government anyway and prefer to spend more time at their private clinics where they can charge for their services. And if the patient is lucky to see a doctor and get a prescription, chances are that the medical stores will be out of stock. The medicines are either not purchased and delivered to the stores or sold into the private market for a hefty profit.

If this is the state of affairs when only 420 million people are anywhere close to accessing health care, imagine the sheer grit, determination and resources needed to scale this up to 1.2 billion Indian citizens and a few million other residents[1]. Is it any wonder then that today 80% of doctors, 26% of nurses, 49% of beds, 78% of ambulatory services and 60% of in-patient care are provided by the private sector?[2]

Providing free medicines is indeed a laudable idea but one that is fraught with impracticality. Mr. Gandhi must outline the measures he would put into place to prevent corruption in the tenders floated for the purchase of high quality medicines, create adequate storage facilities, tackle absenteeism of medical professionals in public hospitals and ensure constant supplies. These are just a few issues. And going by the way the Public Distribution System has shaped up over the last few decades, there is enough room for skepticism.

So, what is the alternative? Given that India vies for the title of “Pharmacy to the World”, it is safe to assume that there is no domestic shortage of production of medicines. The difficult part is to ensure that the medicines are of good quality. If the FDA can tighten the noose on Indian suppliers of generic medicines to the USA, there is no reason why the Indian regulatory agency cannot do it for its own residents. By ensuring the quality of medicines, the government can rely on the open market mechanism that influences the consumption of health care. The naysayers will do well to merely check on the systematic rot and neglect that public sector pharmaceutical companies have been put through by the government to understand why manufacturing has to be private-sector dependent.

The delivery system would also be efficient since it has to be competitive and competent. The huge saving thus accruing to the Government could be utilised to step up public investments in rural and urban health infrastructure and services, thereby generating employment and income opportunities — both directly and indirectly. For the genuinely needy, `medicine vouchers/stamps’ could be supplied through the Panchayat Raj or local government machinery that could be strengthened and empowered for the purpose. But all this services the sick and is a drain on the economy. Countries with the most efficient health care systems are those that prevent illness through early detection combined with community-based primary care to limit more costly upstream interventions.

India faces enormous challenges such as high disease prevalence, unregulated and fragmented health-care delivery system, non-availability of adequate skilled human resource and inadequate finances to name a few. To address these challenges there has to be a paradigm shift in health policies. While the planners of his government have realized that the central government is not ready to set up a scheme of this scale in the face of such challenges, it seems Mr. Gandhi is more optimistic about it.

[1] Report of the Steering Committee on Health for the 12th Five Year Plan, Health Division, Planning Commission, Sec 2.3, Page 24.

 [2] Report of the Steering Committee on Health for the 12th Five Year Plan, Health Division, Planning Commission, Sec 1.6.8, Page 15.

Images courtesy: Rahul Gandhi from here and the Adilabad PHC from here.

Edited version published earlier at Mera Bharosa.


Health care policy in most developing countries has emphasized the development of government-owned health services, largely financed by tax revenues. Following the recommendations of the World Health Organization (WHO), many countries established systems consisting of peripheral clinics and health workers, integrated community health centers and a tiered system of public hospitals. As such systems became established, there was increasing attention given to how to obtain greater health impact from this service capacity.

Not in India. Here since Independence, the private health care sector has grown significantly. That its growth has profound implications for the general public is well understood but highly under-debated. Significantly, despite the problems resulting from the growth of the private sector, there has been little meaningful effort to establish market or regulatory mechanisms to ensure its appropriate growth. Instead of greater commitment to public spending towards health care, we see knee-jerk reactions like controlling prices of medicines that are already the cheapest in the world.

To be fair, since Independence, life expectancy at birth has doubled to 65 years. Yet, India is likely to fall short of deadline on most other Millennium Development Goals (MDGs) set by the WHO. It still accounts for 21% of the global disease burden and loses 6% to 12.5% of its GDP annually due to sickness.

It is therefore surprising that even in desperate times such as now; a glaring public need like universal and equitable health care fails to make it to the agenda of electoral politics. If good governance and its ensuing benefits are the main plank of the BJP, why then did its party President, Rajnath Singh simply talk of providing medical insurance to “even those living in villages and huts” and not pledge to deliver on the promise of Universal Health Care (UHC), a platform that the incumbent UPA fell woefully short on?

The popular adage ‘health is wealth’ has been turned on its head by successive governments that ruled India for the last 66 years. To the Indian citizen no wealth means no health. It is therefore, fervently hoped that an innocuous mention by the BJP will materialize into a strong electoral platform to provide much needed succor to the average Indian citizen.

India’s Flawed Health Policy

Despite knowing that spending on health has a multiplier effect on its GDP, it is only over the last two years that the UPA-2 government spared a thought for the health of its population. Goaded on by the National Advisory Council (NAC), the government made grandiose announcements to provide relief to the common man’s health problems.

The idea of “Universal Health Care/Coverage” (UHC) as detailed in the 12th Plan made perfect sense. Adapted from an Expert Group recommendation, the vision is to ensure equitable access to all Indian citizens to affordable health services of assured quality.

UHC promised to take care of all the three major problems that impact the teeming masses that are the UPA’s vote bank – finding a good hospital, ensuring good investigations leading to accurate diagnosis and bearing the financial burden of healthcare.

Despite knowing that implementing UHC would have provided UPA with a strong electoral plank, it chose to shelve it. This is because the reality on the ground is very different. To find a good hospital, it needs to exist. We are all aware of the supply side constraints even in urban areas. Health penetration in India is estimated at 30% of its population.

Yet there is very little action from the government to build more facilities that will serve to diagnose and treat common ailments (primary care), offer advanced care such as hospitalization during pregnancy, accidents or epidemics (secondary care) and allow specialized treatment of conditions such as mental illness, heart conditions or diabetes (tertiary care).

To achieve this, the government would have to increase public spending in health to at least 2.5% of GDP from the current 0.9% (WHO recommends 5-6%). While public-private-partnerships (PPP) could have provided a well-intentioned start in the absence of immediate funds, the left-leaning NAC’s distrust of all things private led to its overruling the Planning Commission’s recommendations to this effect.

Unfortunately for its citizens, investing scarce resources into creating affordable world-class diagnostic and treatment facilities – all part of its grandiose announcements – has not been prioritized by the Government. Rather, by declaring health a state subject and pushing the onus onto state budgets, the UPA-led Government chose to free up and divert precious tax-payer money into ill-conceived centrally driven social welfare schemes that despite evidence of failure will continue to dole out munificence.

Why are health reforms difficult in India?


India’s health policy confuses the lay person as much as the investor. What does the government really want to do? Does it want to provide health for all its residents (not citizens) under the Universal Health Coverage (UHC) scheme? Will it distribute medicines free to everyone? Is it seeking Foreign Direct Investment (FDI) actively in the pharma sector? If so, why does it create bureaucracy? Overall, why is there so much uncertainty over policy making in India? If the government indeed wants to reform the health sector, why does it find it so difficult?

I think it is because, political, economic and social forces drive or block policy change in India. Reforms depend on key elements such as the presence of domestic economic difficulties (inflation and rising prices), pressure from international financial institutions (S&P and Moody’s rating), a nod from groups with vested interests and strong political leadership. Since India’s economic reforms in the 1990s, the typical ‘back-scratching/palm-greasing’ environment under the ‘license raj’ has been replaced by stronger dependence between politicians and their constituencies, commonly called ‘vote-banks’. Vote-bank politics and its necessary appeasement divert scarce resources and create inefficiencies.

TNMSCOn the other hand, the concentration of power with State Governments has intensified. Health is a state subject in India. This often means that the problem (broken health care system), its solution (UHC) and the political climate to implement that solution are rarely aligned and precious time for agenda setting and political capital is wasted. Policy paralysis appears to be the outcome of incentives created by dependence on parties with different interests. This implies that the government of the day has little influence and is at a disadvantage. However, one sees more willingness from States ruled by political parties that do not hold power at the Centre such as Chattisgarh (BJP), Tamil Nadu (DMK), and Karnataka (BJP). Rajasthan is the only exception. This leaves the Central Government at the mercy of the States to implement its health policy.


Something interesting to note is that reforms by their very nature intend to introduce radical shifts into the accepted system. This requires those who are comfortable in status quo to adapt to environmental changes that affect society. Only a relatively narrow range of policy changes are considered politically acceptable. This “window”,  known as the “Overton Window“,  of politically acceptable options is primarily defined not by what politicians prefer, but rather by what they believe they can support and still win re-election. Therefore politicians are more likely to consider implementing policy reforms not when ideas change among politicians, but when ideas change in the society that elects them. This concept flies in the face of the general assumption that politicians are fools. On the contrary, politicians accept only those ideas that gain amplification through public discourse. In short, the more you lobby, the more the idea gets closer to implementation. How many public debates on health care can you remember watching?

This explains why politicians prefer incremental change to a paradigm shift, since such ideas are rarely adjacent to existing policy and fall outside the ‘window’ making them a political impossibility. Politicians will therefore, prefer to wait until the problem, its solution and the political climate align favorably. If you have ever wondered why there are hardly any programs that encourage disease prevention, it is because the government will move to change something only when pushed to the wall and left with no alternative. This explains the failure to strengthen institutions and governance structures well in advance since politicians like to cross a bridge only when they come to it.
17smOver the years, because of an indecisive government and the ensuing policy paralysis,  India’s bureaucracy has become more politicized and powerful, performing both administrative and political functions as politicians rely on a few ‘hand-picked’ technocrats to formulate and implement policy. This has led to a greater blurring of transparency and accountability in policy decisions, and a distancing of policymakers and elected politicians from their constituencies when they bring to bear their personal views and interests to decision-making. They would rather work to assuage public opinion as represented by a publicity-hungry mainstream and more recently, the alternate media, than talk to the man on the street to understand the problems he faces.

Despite the federal system of government, there is a large decentralization of power to state governments. As in organizations, it is easy to see why decisions taken at the Centre are sometimes out rightly opposed by state governments or regional parties (eg: land acquisition and FDI in retail) and sometimes simply not implemented (eg: NRHM in UP). This makes the task of implementing policy reforms extremely difficult in sectors such as health care, which is directly controlled by state governments, despite its glaring need and total absence.

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As responsible citizens, it is up to us to ensure that we create the right environment that aligns the problem, its solution and the political environment. It is unlikely that the agenda for the 2014 elections can include health. But, we only have a year to create a difference and get into the politician’s mind-space if we want to see the 2019 elections fought on the plank of quality health care for all Indians.

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India’s Health Policy: Flip Flops or Opaque Policy Shifts?

The directive from the Drug Controller General of India’s (DCGI) office to all State Drug Controllers to issue trademarks for generic names instead of brands – even if it was just to resolve trademark issues – is yet another display of confounding decision making by the Union Government that has been plaguing the country in general and the health care sector in particular.

Over the years despite knowing of its multiplier effect on GDP, India never attached great importance to the improved health of its population. Policy lapses witnessed the private sector stepping in to address a fast rising demand for health care creating one of the most privatized medical systems in the world. As a consequence, India is confronted with the problem of meeting growing expenditure on health care which is heavily skewed towards out-of-pocket expenses for its citizens, driving large sections into poverty.

India’s future lies in its demographic dividend – the advantage of having a young, healthy and productive work force. And to reap the benefits of this work force we have to achieve decent health and education outcomes for the majority. India averaged 8% p.a. GDP growth rates over the 11th Plan period. And yet, its public spending on health has hovered around an abysmal 1-1.2% of GDP, one of the lowest in the world. The Approach Paper to the 12th Plan declared an increase to only 1.58% by 2017. And how is this possible, given the government’s recently vocalized desire to move towards universal health care (UHC) for not just its citizens but its residents that include millions of illegal immigrants as well?

India chose to begin its journey towards UHC with one step – to provide free medicines through its public health system. The Centre released approximately Rs. 30,000 crores to the States to fund the procurement of medicines, over the next 5 years (2012-17) under the ongoing NRHM. After the Supreme Court’s intervention and with the five public-sector pharmaceutical companies lying in shambles, the government quickly approved the new drug pricing policy that led to the inclusion of 348 medicines (approximately 30% of medicines and 60% of the market) into the National List of Essential Medicines (NLEM) and effectively under a price controlled not by the market, customers and competition but by the government.

Simultaneously, in an ostensible effort to make medicines affordable to its residents (not citizens), the government did two other things: 1) allow foreign direct investment into brown field projects in the sector with caveats such that foreign companies who invest in India will produce stipulated quantities of essential medicines and invest in local manufacturing and R&D 2) demonstrate that it will use compulsory licensing more as a weapon of choice than as one of need.

Both these steps make sense in the short term thus providing political capital to the government for the upcoming general elections in 2014, but harm the future of India as a preferred destination in the long term, thus depriving the opportunity to create economic capital. What vindicates this point is that to this date, there has been no effort from the government to invest in creating the infrastructure required to deliver superior health outcomes to the population despite it being the root cause for the inflow into the private sector despite all its societal evils.

However, all this pales in comparison to the DCGI directive to state drug controllers to not issue marketing licenses for trademarks or branded drugs but in their generic names alone. While the technicality of this decision alone warrants a separate column, it suffices to say that this makes no sense whatsoever. Authorities are expected to regulate or legislate to help either the industry, traders or end consumers. This decision helps none of these groups or anyone else. All it does is commoditize the industry thus threatening to wipe out small and medium players who lack the financial strength to compete with MNCs who despite severe pressure on profit margins will survive. The consumer has little or no knowledge of the brands of medicines and therefore is unlikely to benefit from the decision. The only group that will benefit are the middlemen – the traders – who will control the supply of medicines and make unholy profits in the bargain. Under harsh criticism, the DCGI recently clarified informally that this directive was more to resolve trademark issues. Apparently, too many similar sounding trademarks confuse doctors and retailers. If it really is the reason, the decision is laughable. Isn’t it easier for similar sounding trademarks to be denied by the regulators, thus pushing the onus back on the industry to decide on clearly differentiated trademarks?

On one hand, India signals that it will welcome much needed FDI into the sector. But on the other it threatens to disregard product patents, invoke compulsory licensing, discontinue issuance of marketing licenses to trademarks while controlling prices on essential drugs and also considers controlling prices for patent-protected innovative drugs as well. Such indecisiveness about policy bodes ill for a country that faces the daunting challenge of enrolling, financing and providing acceptable health outcomes for 1.2 billion citizens and millions of other residents, illegal or otherwise. For such largesse, it could actually do well with help it can garner from all quarters.

Why then is the government alienating itself both from the domestic industry as well the international society? These policy flip-flops are confounding! Why would the Indian government risk global criticism by openly demonstrating clear indecisiveness? Is this driven by an argument about poor public sector performance in delivering health care? Undeniably, it has been lacking, which reflects in the dismal health outcomes in the country. Or as noted academic scholar, Kaveri Gill wonders in a blog post, is this seemingly open decision-making process merely a dangerous opaque shift in policy, which has very little to do with evidence and even less to do with broad-based consensus?