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The Economics Times
27 July 2009
New Delhi, India
By Gireesh Chandra Prasad & Sushmi Dey

After wooing the masses with the largest job guarantee scheme in the world, the ruling Congress–led coalition will launch a healthcare programme in two months to increase the coverage of the public health system manifold.

Under Rajiv Gandhi Aushadhi Yojana, medicines for all ailments will be given free to a large section of the population through state–run hospitals.

The programme will be funded through an innovative scheme: the costly branded drugs used in public healthcare, which cost the exchequer Rs 5,000 crore a year, will be replaced with unbranded drugs, which are cheaper by up to 10 times. The states will use these savings, estimated at Rs 2,500 crore, and extra funds from the Centre to give free medicines to more people.

The programme also envisages replacing branded drugs with unbranded ones in the nine existing health insurance schemes for the poor and using the savings for paying premium to insure more people.
Rajasthan and Tamil Nadu will implement the programme by September, followed by Orissa and Himachal Pradesh. Subsequently, the scheme will cover the entire country.

The finance ministry has given in–principle approval to the scheme proposed by minister for pharmaceuticals M K Azhagiri, who wanted the scheme to take off in the current financial year.

The Planning Commission is examining a detailed report on the programme, said a senior government official who asked not to be named. As per the report, the central government would bear 70% of the cost of these unbranded medicines while the state governments will meet the balance.

The programme is in line with the Congress party’s manifesto that promised health security for all and pledged to cover all poor families in the Raashtriya Swasthya Bima Yojana, a health insurance scheme. State governments implementing the programme will instruct all medical practitioners in government hospitals and public health centres to prescribe medicines by their chemical names instead of brand names.

Unbranded and branded drugs have the same pharmaceutical ingredients and are of similar quality, but branded drugs are expensive as they require huge promotional expenses. When implemented, the programme will boost the market for unbranded drugs, which will act as the much–needed market force for checking the rise in prices of branded drugs.

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