Understanding public drug procurement in India

When I started my work on access to medicines in 2010, I wanted to answer a few critical questions (listed below).

1. Is the procurement price solely determined by the procurement process? Is it influenced by or immune to market externalities?

2. Some states follow a system of centralized rate-contracting and decentralized purchasing (Maharashtra) while others have centralized rate-contracting and purchasing (Tamil Nadu, Punjab, Odisha, Kerala). Does decentralized purchasing offer the states the theoretical advantages of faster decision making, promoting bottom-up planning etc.?

3. Kerala (Kerala Medical Services Corporation), Tamil Nadu (Tamil Nadu Medical Services Corporation) Punjab (Punjab Health Systems Corporation) and Odisha (State Drug Management Unit) have a system of centralized procurement. What are the finer differences between the four models and do these differences reflect in the efficiency of the models?

4. Tamil Nadu’s model is widely publicized as an efficient model for procurement in the Indian context by WHO, DFID, High Level Expert Group on Universal Health Coverage etc. Is the TNMSC model only replicable in specific scenarios? If yes, what are the critical success factors?

5. Kerala and Odisha have adopted (with changes) Tamil Nadu’s model for drug procurement with varying outcomes. What changes led to the varying outcomes?

I tried to answer questions 4 and 5 in the paper I wrote for the Economic and Political Weekly (EPW) last year. [Link to the paper]

Here is a paper I recently wrote for the British Medical Journal (BMJOpen) that (partly) answers questions 1, 2, 3 and 4 by comparing the procurement processes and prices of Tamil Nadu, Kerala, Odisha, Maharashtra and Punjab. [Link to the paper]

More on my learning from the comparison in the next post.


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