Fair Price Medicine shops -innovative public policy interventions that worked in West Bengal

Health care expenditure is the largest budget component of family expenditure in our country as share of private expenditure to total expenditure is more than 80 percent. Public expenditure through budgeting in State and Central Govt. planning is still very low and covers expenditure on salaries, capital cost on health infrastructure and recurring expenditure on running health facilities. Expenditure on drugs, investigation and transport is generally paid by patients as Out of Pocket Expenses despite free drug supplies and efforts to provide investigation at subsidised rates in Public hospitals.

There have been several policy interventions by State to reduce OOPE including free and full time course of prescribed medicines in Public hospitals. Model of Fair Price Medicine Shops in West Bengal assures drugs and devices at affordable discount on MRP ranging from 37 percent to 77 percent on mandatory 142 essential and vital molecules in generic composition. There are 94 FPMS running in Public hospital premises where apart from 142 mandatory drugs, stents, orthopaedic devices, JSSK drugs and drugs from National list of Essential Medicines are sold at the same agreed discount rate.

1. FPMS model : Rented space in Public hospitals allotted through competitive bidding based on highest discount offered to sale mandatory and other drugs on generic prescription. Selection was done in a transparent open bidding by a committee of experts. Electricity charges and rent of space at market assessed rates are paid to the hospital on monthly basis. FPMS is free to keep stock beyond mandatory drug list provided the sale is done on fixed discount as agreed in bidding.

2. Monitoring system : all transactions of stock entry,  sale billing and stock out is effected through software developed by the department and all transactions are updated on department server on three hourly basis. There are systems in place to monitor new stock for validation of MRP not exceeding Drug Price Control Order 2013 price cap, no stock in except from manufacturer having General Manufacturing Permit (GMP) and rolling annual turn over above Rs 20 Crores and stock availability. Computer printed Bills are generated through software only where discount is prefixed and can't be modified by shop owner. Daily sale and discount value are captured in central server. There is monitoring and supervision committee at each FPMS comprising of hospital authorities and doctors to ensure that quality, stock and generic prescription based dispensing is done 24x7.

3. Statutory and Non Statutory Medical audit : Mandatory quality control samples are drawn by Director drug control for quality testing in addition to non statutory quality testing through NABL accredited laboratories. Out of 275 samples tested this year, quality of drugs was found standard and ok in 269 cases. This confirms high standards of quality in FPMS. State level teams make frequent visits to FPMS.

4. Generic prescription mandatory : State Government issued orders last year making it mandatory to write generic prescription by doctors. Ethical norms of Medical Councils mandates generic prescription for all doctors registered with them. Generic means name of chemical molecule with composition contains in the drug. For Cetrizine is chemical molecule, zyncet is branded product containing Cetrizine. Some products contain   combination of molecules. For example Mannitol injection containing Mannitol and Glycerin. Now, it has been decided that names of both the molecules to be written in generic formulation for combination drugs also. MRP of drugs depend on generic contents and cost of promotion, marketing strategy and local taxes. There is tendency to prescribe the brands of market leading drug companies where higher commissions/ profit margins are offered to doctors and retailers irrespective of MRP. Naturally, there is tendency to prescribe selective brands instead of generic formulations on the basis of offers. Consumer has to pay the MRP irrespective of actual consumer price as break up of margins to retailer and marketing promotions are never disclosed. Same generic drug consumer cost may vary from 100 percent to 500 percent, though efficacy of both the brands/ drugs containing same composition of generic molecules is the same. For example MRP of MERO brand of Meropenem injection is Rs 2251 whereas Moromonas brand Meropenem injection MRP is Rs 980 and that of leading brands is Rs 600 (approx). All three products are equally effective and contains the same generic molecules. Now, medical marketing promotions will push their brands influencing prescription and retailers margin but consumer has to pay the MRP. Imagine the retailer's price of MERO is Rs 400, that of Moromonas Rs 490 and leading brand is Rs 450. In open market consumer has to MRP but in FPMS consumer pays fixed discount, say 65 percent. So cost of drug will be less than Rs 400 for generic prescription based leading brand or Moromonas whichever the FPMS is selling. Since Meropenem is regulated by DPCO price cap, FPMS is not allowed to stock MERO having higher MRP than Price cap. There are numerous examples of such variations of prices.

Take the example of Mannitol injection. MRP is Rs 98, but branded product released by drug company contains Mannitol plus Glycerin molecules with MRP Rs 150. This does not come under price cap so can be sold at higher consumer price influencing prescription. To prevent such attempts, Orders being issued to make generic prescription mandatory for double combination molecules also.

FPMS model has successfully influenced the prescription and retailer's margins in favour of consumers and has also reduced the pharmaceutical market in favour of consumers. Private Medicine shops forced to sale drugs below MRP reducing retailers margins and of course promotional cost to compete with FPMS.

 5. Results : 94 FPMS are running in West Bengal and 22 more will come up in next three months. Sale of Rs 500 Cr happened thro

ugh 116 lakhs prescriptions, mostly generic providing discount of Rs 300 Cr on MRP. Stents, Insulin injection and devices are being made available at affordable prices.

This is one of the most effective Public Policy initiative of West Bengal Government which yielded effective positively outcome in reducing OOPE. There is need to create awareness re mandatory generic prescription.