Project in peril

ONE of the seemingly significant interventions by the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) at the Centre has been in the arena of health care. Beginning with the unveiling in March of the National Health Policy (NHP) aimed at universal health coverage at affordable prices, followed by a cap on the prices of cardiac stents—despite the soaring maximum retail price (MRP) of other medical devices—and the Prime Minister’s exhortations that doctors should prescribe generic medicines instead of branded ones, the Centre appeared to be committed to guaranteeing certain aspects of health care. One of the first things it did was to rename and rebrand the Jan Aushadhi (people’s medicine) Scheme, which was launched by the previous United Progressive Alliance (UPA) government in November 2008. Around the same time, the Department of Pharmaceuticals, under the Ministry of Chemicals and Fertilizers, set up the Bureau of Pharma Public Sector Undertakings of India (BPPI) as a nodal agency to implement the Jan Aushadhi Scheme, after procuring drugs from public sector pharmaceutical companies.

In its new avatar, the scheme came to be known as the Pradhan Mantri Bharatiya Janaushadhi Pariyojana, with an appropriate acronym, PMBJP. In September 2016, the Narendra Modi government declared that by March 2017 it would set up 3,000 centres under the revamped scheme as part of its declared commitment to health care. On the basis of some confidential correspondence, made available to Frontline, on the quality and availability of medicines at the centres, procurement issues and the functioning of the process itself, it transpires that not all is well with the scheme. One of the critical elements that the PMBJP seems to be relying on is the private sector for both procurement and delivery of services. The NHP 2017 declared that the critical gaps, which a former Health Secretary described as a “hole” in health care, would be filled by a “positive and proactive engagement with the private sector” to achieve national goals. It is in this spirit that the Jan Aushadhi centres have been envisaged, which is part of the problem as well.

The NDA government began a Jan Aushadhi centre opening spree, with a target of 3,000 stores by March 2017. More than half of the target has been met, but medicines are not available at the stores. Some internal correspondence has revealed that there are serious issues pertaining to the quality of service and the procedures followed.

A confidential note—a copy of which is available with Frontline— and sent to the Prime Minister’s Office and BJP president Amit Shah points out the pitfalls in the scheme in its current form. It recommends procurement from public sector undertaking (PSUs), and says that “more than fifty per cent of the drugs procured were slow-moving drugs with very low demand from the market”. The procured drugs, it points out, constitutes only 25 per cent of the 563 “drug bucket” of the BPPI. It further states that orders worth more than Rs.4 crore have been given to new vendors with no track record and that procurement is done at rates higher than the MRP, which is causing a loss to the BPPI. The note also says “we must buy generic drugs from PSUs or branded companies as they would not compromise with the quality”, adding that preference can be given to companies that had foreign direct investment (FDI) certification. Market surveys from the BPPI and feedback from consumers, it states, indicated that “PSU manufactured drugs had a better consumption rate and acceptability than drugs manufactured by private (manufacturers) because they were more effective”.

Hinting that drugs past their expiration dates are also sold at the stores, the note states: “We need to discard all ‘expired drugs’ lest they be sent out to the stores by mistake. This could prove to be fatal for the organisation and the Ministry.” It says no company has been blacklisted despite the drugs supplied not matching the prescribed quality. The note, which seems to have been prepared by someone familiar with the process, states that there are lacunae in the “quality and testing procedures”, that quality procedures are not “transparent”, that various complaints have been registered regarding the poor quality of the goods supplied, and that the procurement department is hesitant in sharing the details of the selection of vendors. (The Chief Executive Officer of BPPI, Biplab Chatterjee, told Frontline that details of vendors were given on the website but it was not so.)

The note also alleges that the quality assurance team is unwilling to share “procedures and checks undertaken while procuring drugs”; that there are no guidelines to take action against discrepancies in the quality of goods ordered; and that the Central warehouse stored 80 per cent of the stocks and the rest was stored in Indian Drugs and Pharmaceuticals Limited (IDPL) facilities that did not have the mandatory drug licence, fire safety measures and waterproofing arrangements. According to the note, around 12,000 memoranda of understanding were signed in the past few months but there has been no follow up by the marketing team. More importantly, at a conceptual level, there was no strategy for collaborating with the State governments to “penetrate into government medical centres such as CHCs [community health centres], PHCs [public health centres], dispensaries and district hospitals, where the maximum target audience arrived”.

Frontline spoke to some store owners in Punjab regarding the supply chain of medicines. One store owner in a district government hospital, who has worked for six years, complained that he had not received his salary for the past 18 months. He said doctors did not prescribe medicines that were available at the centres. “There is no provision to make it mandatory. Patients come to us for cheap medicines, but in the absence of supplies, we are unable to provide them. They go away. We are in a small district centre. The patient footfall is much higher in bigger districts,” he said.

A senior official familiar with the sector said pharma PSUs should not be shut down. “When Patanjali can run a successful business, why cannot pharma PSUs be made profitable? It is a good business model. The land is there, the building is there and the staff are committed. Why doesn’t the government work on that? There is a lot of money to be made in the pharmaceutical sector. The basic salts don’t cost much,” he said, adding that the government should procure at least 20-25 per cent from the Central PSUs as the quality was good. He said while centres in Punjab, Haryana and Chandigarh had some medicines, the entire range of medicines for psychiatric problems and eye and skin ailments was not available. “If the government put pressure on doctors to prescribe only those medicines available at the Jan Aushadhi centres, the doctors will strike work,” he said.

The new approach

A booklet published by the Union government, which traces the decade-old history of the scheme, states that the “noble project launched by the Government of India in 2008 has not reached anywhere near the desired objectives”. The booklet is critical of the fact that “much reliance was placed on the CPSUs for supply of medicines to the Jan Aushadhi Pariyojana” and that “experience is that the CPSUs were not able to cope with the increasing demand of medicines and the range of medicines which were needed to be kept… as the CPSUs had a limited coverage of therapeutic groups and dosage forms”. The booklet explains that the CPSUs were able to cover only 130 of the 319 medicines identified for availability at the PMBJP kendras and that around 85 products covering only about 11 therapeutic groups were made available. It also pointed out that while the original plan was to provide one centre in each of the 630 districts in the country, only 157 were opened, of which several of them became non-functional.

The booklet was a critique of the scheme during the UPA’s tenure. In February, while responding to questions from the opposition, mainly the Left parties and the Dravida Munnetra Kazhagam, the Minister of State for Chemicals and Fertilizers, Mansukh Mandayva, gave the assurance that PSUs would not be sold to foreign companies. He was clear that the major pharma PSUs—IDPL and Rajasthan Drugs and Pharmaceuticals Limited (RDPL)—would be closed while there would be a strategic sale of Bengal Chemicals and Pharmaceuticals (BCPL) and Hindustan Antibiotics Limited (HAL). He was only reiterating a Cabinet decision taken earlier this year.

When Biplab Chatterjee assumed charge in September 2016 after a four-decade-long career in the multinational pharmaceutical sector, including a stint with Abbot, there were around 400 Jan Aushadhi centres. He told Frontline that the number crossed 1,700 after he took over. Chatterjee said that “the purpose of this mission is so great and good that I would expect the media to be completely with it so that the benefit will pass on to the people”.

Forty per cent of the population contributed to the domestic turnover of the pharmaceutical industry, which was about Rs.1.2 lakh crore, while 60 per cent did not have access to branded medicines, he said. “We export generic medicines to 184 countries and one out of seven medicines consumed by mankind is made in India. The PMJAP [Jan Aushadhi Pariyojana] seeks to bridge this anomaly—the idea is to provide drugs of the same quality that we export to the people in the country at a price that everyone can afford. Of the various manufacturers, there are 1,400 manufacturers who are World Health Organisation-good manufacturing practice [WHO-GMP]-approved. We procure the products from the WHO-GMP manufacturers through e-tendering. The product basket is based on data from the All India Chemists and Druggists Association and also prescription data. The idea is to pick up a thousand combinations prescribed by doctors. The BPPI identifies the product basket. We are the implementing agency of the PMJAP. We have to ensure the identification of the product up to their availability at the end stage.”

He said procurement from CPSUs was less and it was done mainly from the private sector. “We select products randomly and send them to NABL [National Accreditation Board for Testing and Calibration] laboratories. After we get the certification, the product is rendered salable. That is the way we ensure quality. We also have a quality committee. The mandate from the government is that the prices cannot be more than 50 per cent of the average prices of three branded products. We are able to procure at much lower prices. The entire benefit is passed on to the patient. Jan Aushadhi is the best model. There are reports in the media that products are procured at high prices. These prices are fixed by the National Pharmaceutical Pricing Authority [NPPA], not us,” he explained.

Negligible procurement

“For one reason or the other, CPSUs did not make profit. The CPSUs decided to create the BPPI. It had a lot of hope, but none of the plants did well. Only Karnataka Antibiotics and Pharmaceuticals Ltd (KAPL) and IDPL made some profits last year. The vision was there in 2008, but over a period of time, the PSUs did not sustain. The plants made losses; they have high overheads. Many of the CPSU products do not come under L1 pricing. The quotation and bidding is more expensive. They have to quote covering their expenses. We don’t even buy from the CPSUs,” he said.

Chatterjee said there was a lot of demand. The challenge of his team was to “weed out the negative perception” about Jan Aushadhi. The first thing that was done was to make the products available. There was no procurement seven to eight months before Chatterjee took over. He said there was a lot of response to “open stores from the private sector”. The BPPI advertised to encourage people to own stores. Earlier, Jan Aushadhi stores existed only in government hospitals and procurement was only from CPSUs.

“It didn’t work. This government understood. It tweaked the policy by giving more individual incentives and other things. So Jan Aushadhi was taken out of the premises of government hospitals. Hindustan Antibiotics Limited is requesting me to give orders. But it has to come within our price range. In order to sustain PSUs, we cannot affect supplies to people. The government is giving Rs.2.5 lakh as support to any premise, government or private. For government centres, it is in the form of a grant. Private operators are given certain criteria to operate a store, including getting a drug licence. They are connected to distributors,” he said.

“There are hurdles. Doctors don’t prescribe Jan Aushadhi medicines. They still prescribe brand names. There is propaganda that Jan Aushadhi is not giving quality medicines. The generic contribution to the market is very low; over a period of time, there will be a branded segment and a generic segment. If you go to any chemist’s shop, you won’t get everything. I am not saying we are 100 per cent perfect, but we have taken steps to take procurement under our fold. The other problem is that we are not able to reach our products from our Central warehouse to the States. Many distributors are appointed from the old time,” he said.

He was confident that by mid July there would be a drastic improvement in the situation. He felt the complaints were exaggerated. He said there were a large number of stores in Kerala and “if one or two products were not there, they created a huge uproar”. But there were complaints from other States as well. The Kerala BJP president, Kummanam Rajasekharan, had written to Union Minister of Chemicals and Fertilizers Ananth Kumar complaining of a nodal officer, about whom complaints had been sent earlier to Chatterjee. The nodal officer, according to a complaint by a proprietor of a Thirumala-based store, had “allotted shops to BJP workers after too much pressure from BJP leaders”. Another complaint pertained to the sale of branded medicines from a Palayam-based store in Thiruvananthapuram.

Elsewhere, an Ahmedabad-based distributor, Ramesh Mehta of Mehta Trading Company, wrote to the CEO in June about discontinuing his distributorship for reasons including lack of timely payment from the head office, lack of standard quality drugs and shortage of drug supplies from the Centre, among other things. Mehta, who was in charge of supplying to 80 stores, had mailed several letters to the Centre since May and finally, on June 13, discontinued his distributorship. A copy of the email correspondence is with Frontline .

Irrational combinations

The Indian chapter of the People’s Health Movement, Jan Swasthya Abhiyaan (JSA), wrote to Ananth Kumar on June 8 drawing his attention to several unscientific and irrational fixed-dose combinations (FDCs) under the PMBJP, which, it said, should be removed from the list of provisioned medicines. There were 90 unscientific FDCs of the 580 medicines in the price list, “most of which were combinations of vitamins, supplements or antibiotics having no pharmacological validation”. Only a dozen FDCs were rational while only half a dozen on the PMBJP list were included in the National List of Essential Medicines, or NLEM (2015). The WHO list of essential medicines had approved 33 rational FDCs while the NLEM had 24 such FDCs.

Chatterjee dismissed the JSA’s criticism on the grounds that the intent of the BPPI was to give maximum products according to the prescription. “If a product is banned, Jan Aushadhi will not prescribe it. Banned products are not prescribed. There are some pundits who feel some combinations are wrong. These are opinions. If they are bad, the government will not prescribe them. We procure products that are permitted by the government,” he said. The “product basket”, as of May 2017, has more than 1,100 items, 1,000 medicines and 154 surgicals and consumables.

If the government can cross-subsidise the private sector, it can adopt a similar approach with the pharma PSUs. In its chapter on pharma PSUs, the annual report of the Department of Pharmaceuticals notes that RDPL “has embarked upon expansion, modernisation and upgradation programme (Phase II) to quality for WHO-GMP certification to become eligible for exploring international markets as well as for participating in the internationally funded projects of Government of India and other government”. On BCPL, it says that “ointment & Betalactam Block and Panihati Project have been completed while Cephalosporin Block is under commissioning. Besides, OSD Project & ASVS Project are being commissioned”. Both RDPL and BCPL have been slated for strategic sale despite the favourable noting in the annual report (see “Perilous prescription”, Frontline , February 3, 2017).

In April 2016, the Union Cabinet directed the Ministries of Finance, Corporate Affairs, Shipping, Transport and Highways, Information and Broadcasting, and Chemicals and Fertilizers to examine the status of public sector pharmaceutical companies. The Ministry of Health and Family Welfare was excluded from an exercise that had to do with the health of the people. After three meetings in 2016, the Ministers recommended that “after liabilities have been met, balance sheet cleansed and the Voluntary Separation Scheme/Voluntary Retirement Scheme effected, the Department to close IDPL and RDPL and HAL and BCPL be put up for strategic sale”. All PSUs barring KAPL were considered “sick or incipient sick”.

A people’s medicine scheme cannot depend on the private sector alone in spite of a huge amount of cross-subsidisation. The pharma PSUs have not been found wanting in quality, as government reports have pointed out. By opening Jan Aushadhi centres without supply and quality assurances, without weeding out irrational and unscientific FDCs from the list, as pointed out by stakeholders, and without substantially increasing the health budget, any mass movement to achieve universal health coverage is bound to fail.