Overview - Jan Aushadhi Scheme

An Overview

                                                                                                                                Swapna Jha*

According to World Health Organisation estimates (2008), 65 per cent of India's population does not have access to modern healthcare. Further, according to National Statistics Office estimates, up to 79 per cent of health care expenses in rural areas are due to the cost of medicines. Thus, access to low-priced generic drugs is critical to ensuring reasonable healthcare.

A report published in May 2017 by Global Burden of Disease, has revealed that India has recorded a poorer healthcare index as compared to the neighbouring Asian nations of Bangladesh, Bhutan, Sri Lanka and China in the last 25 years.1

The Inclusive Growth and Development Report 2015 published by the World Economic Forum suggested that India must take further action to ensure that the growth process is broad-based in order to expand a small middle class and reduce the share of the population living on less than $2 a day (many of them in poverty despite being employed). The report pointed out that on a policy level, social spending continued to be low, which limited accessibility of healthcare and other basic services, resulting in poor health outcomes.

First Drug Policy formulated in 1978

A careful analysis of the past initiatives by the government establishes that lack of policy is certainly not the reason for this poor healthcare index. In 1978, on the basis of the Hathi Committee report, the first Drug Policy was formulated. The report, among other issues, suggested measures for ensuring that all essential drugs were made available to the consumers at reasonable prices. This was followed by the Drug Policies in 1978-79, 1986-87, 1994-95, the Pharmaceutical Policy of 2002, which too mostly dealt with price control. Though the industry evolved over the years with a strong capability in producing quality branded and generic medicines, which compared to other countries was reasonably priced, yet a large population of poor people in the country could not afford the more expensive branded category of medicines.

Jan Aushadhi Scheme (JAS) launched in 2008

Hence, to provide institutional healthcare support to the relatively poor, the Jan Aushadhi Scheme (JAS)

was launched for the first time in 2008.The campaign aimed at achieving the following goals:

  1. To make available quality generic medicines at affordable prices for masses by sale through

outlets called Jan Aushadhi stores.

  1. To encourage doctors in government hospitals to prescribe generic medicines.
  2. To reduce the out-of-pocket expenses for patient treatment.
  3. To promote awareness about cost-effective drug prescriptions through education.
  4. To develop a sustainable business model for the programme.

The campaign failed to achieve its desired results. The Parliamentary Standing Committee on Health and Family Welfare, in its 58th report2 pointed out the reasons for the scheme's failure, and a few international organisations in their respective studies also arrived at similar conclusions.

Why Did the Scheme Fail to Take Off?

The Public Health Foundation of India (PHFI) was entrusted the task of a third party evaluation of the scheme. In its final report, “Rapid Assessment and Potential Scale up of Jan Aushadhi Scheme” submitted on December 18, 2012, PHFI identified potential challenges in scaling up the scheme. The report pointed out that over-dependence on support from state governments, poor supply chain management, non-prescription of generic medicines by the doctors, state governments launching free supply of drugs and lack of awareness among the public were the main reasons for the failure of the scheme.

Additionally, not all JAS prices were lower than branded medicines. For example, the cheapest branded cefuroximeaxetil (500 mg) (antibiotic) in the market was almost three times cheaper than its JAS price.

Pricing of Medicines

From the policy perspective, it raised serious questions regarding the pricing of medicines in the JAS and its overarching goal. Since patients were dependent on physicians for medicine prescriptions with little knowledge of the price variations among branded and generic medicines, the JAS did not provide the cheapest alternative for the patients. Hence, there was a need to urgently review the JAS prices to achieve its goal of providing low-cost affordable medicines. Furthermore, strong supply-side regulations such as prescription audits were necessary to prevent the widespread prescription of costly branded medicines. In the absence of such steps, the JAS policy did not meet its objective of providing low-cost affordable medicines and financial risk protection to households from the cost of medicines3.

Also, due to lack of awareness and owing to old habits, doctors in government hospitals continued to prescribe branded medicines. The Drugs and Cosmetics Act 1940 and the rules framed there-under do not allow the substitution of branded medicines with generic medicines by the pharmacists at store. News reports indicate that modifications to the Drugs & Cosmetics Act to legally allow pharmacists of Jan Aushadhi stores to offer alternate generic drugs to customers instead of prescribed branded drugs have been suggested by the ministry concerned. This should be expedited and safeguards evolved so that interest of poor patients is secured.

This issue was discussed in the 45th Report of the Parliamentary Standing Commmittee on Health and

Family Welfare in the following words:

"One of the suggestions put forth before the Committee was to make it mandatory for all doctors to write all prescriptions in generic names only. However, the Committee feels that going for a “generic only” prescription policy has its flip side. Even if the doctor prescribes a drug by generic name, the chemist will be free to dispense any equivalent. Thus the power will shift from doctors to the chemists. The pharma companies would unethically start wooing the chemists instead of doctors. This will be worse than current situation. If the patient does not get any relief, doctor will blame the chemist. Moreover, while the doctor has some interest in the continued patronage from the patients, chemists could not care less. For them profits will be the only criteria of selling medicines.” Taking clue from this, immediate steps are required to provide cheaper medicines to the poor people, as envisaged under the government programme.

Major Bottlenecks in Implementation

  1. Stringent Eligibility Criteria for Operating Entities: Although the revised plan permitted any NGO/charitable society/institution/self-help group with experience of minimum three years of successful operations in welfare activities, supported by three years audited accounts, eligible and individual pharmacists/registered medical practitioners even outside the hospital premises, in addition to the state government's nominated operating agencies, to open Jan Aushadhi Stores in the government hospitals, the scheme did not succeed. Thus it seems that further revised lenient criteria would be required.

2.     Medicines for All Ailments Were Not Available: Even the reviewed and further expanded list of items for sale at the Jan Aushadhi stores failed to cover all therapeutic categories of drugs.

3.     Supply-Chain Management Non-Efficient: The lack of adequate monitoring of availability of medicines at the Bureau of Pharma Public Sector Units of India (BPPI)'s warehouse, led to stock out situation of medicines. This non-availability of medicines due to lack of supervision frustrated the purpose of the scheme.

  1. Sourcing of Drugs: All the drugs were not procured through open tender system, resulting in short supply of drugs due to issues with manufacturers and suppliers.
  2. Working Capital: Under the scheme there was a lack of adequate funds for providing working capital advance to the Central PSUs to facilitate the production and supply of medicines in time.
  3. Arbitrary Policies of the States: All the states did not have the same policies and some state governments provided free medicines to all patients visiting government hospitals. This restricted the success of the scheme.
  4. Lackadaisical Media Campaign: Media campaigns play an important role in educating people about government schemes, especially on the use of generic medicines, and more specifically, on the benefits of the Jan Aushadhi Campaign. The scheme did not initiate necessary steps so that people could take full advantage of the availability of generic medicines at affordable prices at the Jan Aushadhi stores.
  5. Lack of Monitoring: Progress in implementation of the scheme was not reviewed regularly, thus negating accountability.

Jan Aushadhi Scheme 2.0

In order to infuse life into the previously failed scheme, a laudable step forward by the present government is the 'Pradhan Mantri Bhartiya Janaushadhi Pariyojana' a campaign re-launched by the Department of Pharmaceuticals to provide quality medicines at affordable prices to the masses through special kendra's known as Pradhan Mantri Bhartiya Jan Aushadhi Kendra (PMBJK).

Thus, PMBJKs have been set up to provide generic drugs, which are available at lesser prices but are equivalent in quality and efficacy to expensive branded drugs. In essence, this is a revamped JAS, with better strategies in place.

However, the focus on generic drugs has inherent nomenclature issues in India. The Drugs and Cosmetics Rules do not identify the distinction between generic, branded generic and branded medicines. The basis of categorisation is as follows:

                                                                                                                                      [ 30 ]

  1. Branded Medicines contain one or more ingredients marketed under brand-names given to them by their manufacturers in India. These are normally promoted to doctors. [In western countries, brand-name medicines are defined differently: the term refers to new drugs developed by the innovator patent holding companies].
  2. Generic Medicines are those which are marketed under their chemical/salt names. [In western countries “generic” medicines are defined differently i.e. products that contain the same ingredient(s) as brand-name medicines but are manufactured after the expiry of patents by companies other than innovators. These are marketed under new brand names]
  3. Branded-Generics is an exclusively Indian terminology and refers to branded products [same as category (a) above] but not promoted to the medical profession and marketed through heavy incentives to retail chemists. Obviously such products are unethically and illegally sold either without prescriptions or by substituting prescribed brands.4

The distinction that is drawn in India between branded products and generics has more to do with marketing strategies than nomenclature of the product. The so-called generics in India are pushed directly through retailers rather than through doctor's prescriptions. As a consequence, the generics in India provide high trade margins as opposed to the high promotional costs that are built into the pricing of the branded products.

To make matters worse, even the so-called generics typically have specific brand names and the name of the "Active Pharmaceutical Ingredient”, although given the prominence required by law under the Drugs & Cosmetics Act, is not popularised in the manner that it should. This state of affairs tends to obscure the fact that true generics have no role to play at present in the Indian drug scene, as was observed by the Task Force in 2005.5

Suggestions on Making the Scheme a Great Success

The Task Force to Explore Options other than Price Control for Achieving the Objective of Making Available Life-saving Drugs at Reasonable Prices submitted its report in September 2005. It felt that in order to make the proposed system of price regulation effective, a number of collateral measures need to be implemented. Some recommendations of the task force, worthwhile in the context of promotion of generic drugs, are given below:

All other drugs (other than controlled drugs) should be brought under a comprehensive price monitoring system with appropriate market-based reference prices and with mandatory price negotiations, if necessary.

The regulatory mechanism should be significantly strengthened both at the Centre and in the states. Since quality, quantity and price are to be addressed in an integrated manner, there should be a unified regulatory structure covering all aspects.

A process of active promotion of generic drugs should be put in place, including mandatory de-branding for selected drugs. All public health facilities should be required to prescribe and dispense generic drugs, except in cases where no generic alternative exists. The government should consider providing financial support to dedicated generic manufacturers and small-scale units for achieving Schedule M compliance. For this, the Department of Chemicals & Petrochemicals should formulate a separate planned scheme to be funded through the budget. The government should create and maintain a public website with complete data on prices of all formulations by APIs (Active Pharmaceutical Ingredients) and therapeutic categories which can be used by medical practitioners, and perhaps even consumers, for price comparison purposes.

Code of Pharma Marketing Practices

The government has also introduced the voluntary Uniform Code of Pharmaceutical Marketing Practices (UCPMP) released by the Department of Pharmaceuticals in January 2015. This is to be replaced by the mandatory UCPMP. The mandatory code, which is in the preparatory stage, is aimed at making the drug supply chain, involving pharmaceutical companies, distributors, retailers and doctors, accountable to the proposed marketing code. The code will be binding and its violation will attract punishment and penalty under the Essential Commodities Act, the Indian Medical Council Act as well as the Drugs & Cosmetics Act. The seriousness of the government in making medicines available at cheap prices can be gauged by the fact that the drug pricing regulator, the National Pharmaceutical Pricing Authority announced provisional ceiling prices of 761 medicines, including anti-cancer, HIV, diabetes and antibiotics, with a majority being reduced ahead of the GST implementation. It plans to notify them as formal revised ceiling prices immediately after the GST notification. On June 30, 2017, it was clarified that the prices of around 78 per cent of 'actively used' drugs will remain unaffected after the rollout of the GST from July 1, 2017.


The Jan Aushadhi campaign is expected to make a great contribution by way of achieving the socio-economic goal of affordable healthcare, by ensuring availability of quality drugs at affordable prices for all. The scheme is also expected to reduce expenditure on medicines, thereby extending patient coverage under the public health scheme. Popularisation of the use of unbranded generic medicines will reduce out-of-pocket expenses on medicines for the common man, thereby making healthcare affordable and safe. Jan Aushadhi Scheme will prove to be an effective market intervention strategy to bring down the prohibitively high prices of medicines, and will create market for drugs manufactured in Central Public Sector Undertakings (CPSUs), other state PSUs and private sector, particularly small and medium enterprises

However, in order to promote generic drugs, some additional measures are required, such as the use of software to make the names of generic drugs available to all doctors. to facilitate generic medicines prescription and better awareness among prescribers, consumers and sellers; a drug policy which supports local industry; effective regulatory framework; and legislation making prescription of generic drugs (except when options in generic not available) should be mandatory. The journey of providing affordable healthcare should not end here. In a lecture on the subject at Tata Institute of Fundamental Research, Nobel Laureate Amartya Sen said that healthcare should include other social determinants (nutrition, sanitation & social equity) too. He also laid emphasis on a higher allocation of GDP towards healthcare. Lamenting on the exploitation of poor patients by private doctors, he said, “many of the private doctors know extraordinarily little, combining quackery with crookery," and stressed on the need to protect poor patients from being exploited by these private doctors. We need to carry on this journey forward taking our cue from the past failures and the way suggested by various experts.

  1. http://indianexpress.com/article/india/india-ranks-below-bangladesh-sri-lanka-bhutan-nepal-in-healthcare-index-report-4663079/
  2. Department-related parliamentary standing committee on health and family: welfare fifty-eighth report on action taken by the government on the recommendations/observations contained in the forty-fifth report on issues relating to availability of generic, generic-branded and branded medicines, their formulation and therapeutic efficacy and effectiveness.
  3. Kanchan Mukherjee, A Cost Analysis of the Jan Aushadhi Scheme in India
  4. Department-related parliamentary standing committee on health and family welfare; forty-fifth report on issues relating to availability of generic, generic-branded and branded medicine, their 
  5. Task force to explore options other than price control for achieving the objective of making available life-saving drugs at reasonable prices

*Swapna Jha is a Senior Legal Consultant with Common Cause.

Volume: XXXVI No. 2
April June 2017