Strongly backed by Prime Minister Manmohan Singh himself, the free-medicines-for-all scheme — being referred to as the "real game changer" — has received its first financial allocation of Rs 100 crore from the Planning Commission for 2012-13.
The ministry has sent the National List of Essential Medicines, 2011, (348 drugs which includes anti-AIDS, analgesics, anti-ulcers, anti psychotic, sedatives, anesthetic agents, lipid lowering agents, steroids and anti platelet drugs) to all the states to use as reference.
The states, however, have been asked to create their own Essential Drugs List (EDL), keeping in mind the diseases that worst affect them. Around 75% of the funds under the scheme will be borne by the Centre, while the rest will be the state's responsibility.
Around 5% of the district funds will be allowed to be used to purchase drugs outside the EDL. The Cabinet has approved the setting up of a Central Procurement Agency (CPA) for bulk procurement of drugs.
The PMO has asked the ministry to set up the CPA as early as possible. At present, 78% of the entire health expenditure in India is from out of pocket (OOP). Purchasing drugs alone accounts for 72% of this OOP expenditure.
Additional secretary in the ministry L C Goyal said a scientific committee will have to draw up the EDL list for the states.
They have also been asked to devise standard treatment protocols in order to avoid unnecessary and irrational treatments.
Tamil Nadu has been providing free medicines in its public health centres for the past 15 years, while Rajasthan introduced it last October. Both these states have a corporation that runs the show with complete functional autonomy.
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