Editorial 1. Centralised procurement as a powerful health idea
Introduction:
Franchising, or a business franchise model, is a contractual business model or relationship whereby an established brand, known as the 'franchisor,' allows an independent business owner, or franchisee, to use its branding, business model, and other intellectual property. Centralised procurement is a defining feature of the franchise model which enhances its efficiency and profitability.
Case of healthcare in India:
In India Many countries and international organisations (including McDonald’s) have shown that a pooled buyer model for drug procurement addresses many issues that are related to price efficiency, stockouts and quality concerns.
But for reasons that have remained mysterious for decades, the central government chooses to ignore the merits of pooled procurement when it comes to schemes such as the Central Government Health Scheme (CGHS), the Pradhan Mantri Jan Arogya Yojna (PMJAY) and the Employees’ State Insurance Scheme (ESI).
Corporate hospital chains, on the other hand, are well aware of the benefits of pooled procurement. For years on end, they have conducted direct negotiations with pharmaceutical companies, and availed of significant discounts.
More hospitals can team up to form buyers’ clubs, benefit from better bargaining power, and then, being not for profit institutions, pass on these cost savings to patients.
The focus in these papers
A recent paper, “A National Cancer Grid pooled procurement initiative, India”, demonstrates the viability of just such an idea. Group negotiation, uniform contracts, and, finally, purchases by hospitals associated with the National Cancer Grid (NCG) for 40 drugs resulted in savings of ₹13.2 billion. Without pooled procurement, the cost would have been ₹15.6 billion, with savings ranging from between 23% to 99%.
As the authors say with quiet understatement in the last sentence of their abstract, their study reveals the advantages of group negotiation in pooled procurement for high value medicines. This approach, they conclude, can be applied to other health systems besides cancer.
The central government is not consistent in how it covers different categories of beneficiaries under the CGHS, ESI and PMJAY. The same procedure, for example, might be available in one scheme, but not the other.
The issue of price:
It is not that the central government is unaware of the benefits of pooled procurement and price discovery. When the government (through the National Aids Control Organization or NACO) procures male contraceptives, it invites tenders from private manufacturers and then offers to buy from all those who are willing to match the lowest price.
How does the government ensure that the suppliers are not colluding to keep the price high? HLL Lifecare Ltd., a public sector unit (PSU), with the highest manufacturing capacity in India, provides a benchmark price. All the bidders know that if they are not competitive on price, the government will just procure all its requirements from HLL and they will be left with unused manufacturing capacity — and as a result, face huge fixed costs and overheads.
The government can follow this model for most of the drugs it procures. It has many pharma PSUs that can provide benchmark prices and also ensure that the government has leverage. Such leverage ensures that the government is not forced to buy from private manufacturers, given that there is competition from PSUs which can make supplies at a competitive price.
The issue of better quality
Finally, in addition to cost savings, buyers’ clubs can ensure better quality by having the supplies tested independently rather than having to rely on the drug regulator to ensure quality. This is not a new idea; this is standard operating procedure for buyers in many developed nations.
Conclusion:
Centralised procurement, or pooled procurement, is a simple yet powerful idea that has the power and the potential to reduce costs, ensure better deployment of funds in other areas related to health care, and ensure availability of lifesaving drugs in this country. It is an idea with both theoretical backing, and now empirical validation. It is an idea that India should implement at scale, and as soon as possible.
Editorial 2. When tigers and jackals get the same protection
Context:
Many ecologists are incensed that an inordinate number of species have been included in the new schedules of the Wildlife Protection (Amendment) Act, 2022, without an objective or replicable process.
The 2022 amendment to the 1972 Act (WPA):
Wildlife Protection (Amendment) Act, 2022 made significant changes to India’s 50 year old law on wildlife conservation, including in the number and purposes of schedules. It ‘rationalised’ the earlier 6 schedules under WPA 1972 to 4 schedules under the new law.
Under the new law, Schedule 1, which confers the highest protection, contains about 600 species of vertebrates and hundreds of invertebrates, while Schedule 2 contains about 2,000 species (with 1,134 species of birds alone).
Issues for conservation
The first issue with this listing regards conservation itself. The WLPA was originally intended to regulate the use of various species (including hunting), restrict trade, and police the trafficking of species.
The original Act is written in this form, with research being an exception under the hunting clause. The new Act goes one step further by aligning itself with CITES, and including the CITES appendices as well.
Nowhere in the Act is there a clear connection between endangerment and conservation. The listing of species has following direct effects.
One, even if it were to have benefits for conservation, species would have to be prioritised. Listing hundreds of species of mammals and over 1,000 species of birds and innumerable other taxa means that it is unclear where resources should be allocated on the basis of this list. The same level of protection is offered to tigers and jackals, to the great Indian bustard and common barn owls, to the king cobra and rat snakes.
Two, every action has consequences, and in law, often perverse ones. For example, the Tree Preservation Acts of Kerala and Karnataka proscribe the felling of native trees. Instead of promoting conservation, these Acts disincentivise plantation owners from planting native trees, and promote exotics such as Silver Oak, that they can cut any time they need to.
In the case of the WLPA, a particularly absurd consequence of listing has been the presence of the spotted deer (chital) in Schedule 1. Common throughout India, these are invasive in the Andaman Islands and have caused untold harm to the vegetation and herpetofauna. But they cannot be legally culled or removed because of the WLPA.
Impact on people
Various Schedule 1 species pose enormous physical, mental and economic harm to people. Crocodiles in the Andamans, leopards in certain pockets, and elephants everywhere kill people, destroy their livelihoods, and leave lasting psychological impacts. And yet people are told glibly by elite conservationists that they should learn ‘coexistence’.
The WLPA serves to enforce this viewpoint. The new Act elevates wild pigs and nilgai to Schedule 1, which means that the few States that have now allowed limited culling of problematic animals may not be able to retain that policy. This shows utter disregard for the plight of farmers and marginal cultivators.
The WLPA also has a restrictive view on hunting and the use of animals, even when it has been done traditionally for hundreds of years. Restrictions on use were imposed because those species had declined in numbers, but by the same logic, regulated use should be considered when animals are abundant, at least to support the livelihoods of local communities. But this is seen as unacceptable by the bureaucracy and abhorrent by many conservationists, with no consideration of science or society.
Issues of wildlife research:
The third issue is that despite the support of many individuals in the forest bureaucracy, the paperwork involved in getting permits for research is tedious and time consuming. The listing of such a large number of species could have debilitating effects on research.
Environmental NGOs will have a harder time getting permits for research and conservation, even of common species such as barn owls. It is not clear whether citizen science will be able to proceed.
Larger issues:
Unfortunately, while lamenting the impact of the WLPA on their work, some ecologists have often been insensitive to the larger issues at play. Although there has been considerable criticism of western scientists conducting parachute science in the Global South, many ecologists in India have been guilty of the same, swooping in and out of distant remote field sites, taking knowledge and biological material and leaving no benefits.
Worse, we have often promoted policies that have negative consequences for the very communities that we exploited. The Act that poses a hindrance to our work is a much graver threat to the lives of the people that it impinges upon.
In reality, all three issues of conservation, people’s issues, and research – need to be attended to, with different degrees of urgency. Those whose lives are at stake need to be safeguarded first.
Management actions for species and habitats need to be tailored to ecology, species biology, and context. Often, this calls for research or at least regular monitoring by independent agencies, which is hampered by the scheduling of species.
Conclusion:
Finally, both citizens and ecologists have a right to observe nature and collect data if they so desire, as long as it does not cause undue harm to populations, and follows the basic principles of the ethical treatment of animals.