What India’s Budget 2019 means for Healthcare?

By Meghna Misra-Elder

“Healthy society – Ayushman Bharat, well-nourished women & children. Safety of citizens” – delivering Ayushman Bharat (the world’s largest health insurance scheme) was heralded in last week’s Budget as one of the Government’s top ten priorities for the next five years.

In investigating the details, it appears that whilst tertiary care, health care research, and insurance were the big winners from the budget, little, if any, movement was made on drug pricing and healthtech delivery – both crucial to delivering Ayushman Bharat.

Overall, the budgetary allocation for the Department of Health and Family Welfare has been increased by 15%. Much of this is accounted for by the increase in tertiary care programmes which take centre stage in the healthcare aspects of the budget. Allocation to tertiary care programmes saw an increase of 60% on the previous year’s revised estimates. This appears to be the highest increase among all components of the healthcare budget confirming that while primary care does need utmost attention, tertiary care is currently gathering pace.

The Department of Health Research also saw its allocation go up by 9% compared to last year’s revised estimates. However, beyond simple financial terms, the budget proposed to go further, promising to establish a National Research Foundation under the ‘New Education Policy’ to promote and commercialise research, including medical research.

The Government’s New Education Policy aims to transform India’s higher education system, which, alongside greater internationalisation, aims at cultivating the skilled doctors and specialists needed to deliver Ayushman Bharat.

Likewise, opening up FDI in the insurance intermediary sector from 49% to 100% is a step in the right direction that will help expand FDI in the health insurance industry as Ayushman Bharat comes on stream.

These successes aside, little dedicated attention was given in the budget as to how to realise the next steps of Ayushman Bharat, particularly in regard to drug pricing, health-tech, and bridging the rural-urban divide.

NITI Aayog’s health division has already highlighted disparity in the Indian healthcare sector existing across states with excessive focus on vertical disease control programmes and inadequate attention towards strengthening the healthcare system. Given that the India’s healthcare sector is already facing challenges.

According to the McKinsey ‘Digital India Report 2019’, India has an average of 2.2 medical professionals per 1,000 people with 60% of hospitals in urban areas. Clearly there is a shortage of quality healthcare, particularly in rural areas where last-mile delivery is a major barrier. This is where digital disruption and healthtech could make all the difference and will need concerted attention from the Government.

This sector highlights huge opportunities for UK plc who have the necessary skills and resources to support India’s requirements and the UKIBC continues to work with Central and State Governments to address these needs by creating UK-India partnerships.

Likewise, in drug-pricing the National Pharmaceutical Pricing Authority (NPPA) earlier this year capped trade margins on 42 cancer drugs at 30%, raising concerns that this would be expanded to all drugs within the first 100 days of the new Government.

As we outlined in our report, ‘Drug Pricing in India’, excessive price regulations often distort market competition and availability. Because of declining revenues, drug companies may exit the market. This has a bearing on availability in the short-term. With fewer resources available, companies may also refrain from expanding to rural areas or investing in newer formulations even where there is large epidemiological evidence suggesting demand. This has a longer-term impact on the health of citizens.

As such, UKIBC very much look forward to continuing our work with the Government of India to deliver a sustainable drug pricing system that delivers quality and meets demand at a low unit price.

If you would like to find out more about UKIBC’s work supporting healthcare in the UK-India corridor, please get in touch with our Sector Advocacy Manager, Meghna Misra-Elder, at meghna.misra-elder@ukibc.com

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