Context: 

• This article is based on an Editorial “Centralised-procurement as a powerful health idea” which was published in the Hindu. Centralized procurement, or pooled procurement is an idea with both theoretical backing, and empirical validation. And if it would include drug procurement, it can revolutionize the health-care system in India.

What are the significance of pooled procurement of drugs?

• High Saving: As per a recent paper, “A National Cancer Grid pooled procurement initiative, India”, with the help of pooled procurement purchases by hospitals associated with the National Cancer Grid for 40 drugs resulted in savings of ₹13.2 billion. 
• Important for High-value Medicines: It reveals the advantages of pooled-procurement for high-value medicines. This approach can be applied to other health systems besides cancer.
• Reduce Dependencies on Private Manufacturers: Government can establish benchmark prices through pharma Public Sector Units, to ensure competitive prices and prevent dependency on private manufacturers.

What are the concerns with pooled procurement?

• Neglect by the Government: The central government is already aware of the benefits of pooled procurement and price discovery and still chooses to ignore its merits when it comes to various schemes like the Pradhan Mantri Jan Arogya Yojna (PMJAY) and the Employees’ State Insurance Scheme (ESI) despite its proven efficiency.
• Advantage of Corporate Hospitals: Corporate hospitals have direct negotiations with pharmaceutical companies and availing significant discounts, and monetary benefits.
• Missing the Buyers’ Clubs: Hospitals can collaborate with buyers’ clubs, benefit from better bargaining power, and then, being not-for-profit institutions, pass on these cost savings to patients.

Also read: Drug Trafficking in India

The Path Ahead

• Government needs to work upon the addition of cost savings.
• Formation of buyers’ clubs to ensure better quality by having the supplies tested independently.

Conclusion:

Pooled-procurement is a simple yet powerful idea that has the power and the potential to reduce costs, ensure better deployment of funds, and ensure availability of life-saving drugs in this country, that India should implement at scale, and as soon as possible.

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