Middlemen in crosshairs: Kerala plans five-state drug procurement consortium; direct deals to cut medicine costs

THIRUVANANTHAPURAM: The Health Department has begun efforts to form a consortium with the medical services corporations of five states to ensure the supply of quality medicines at lower prices to all government hospitals in Kerala. The move is aimed at eliminating intermediaries alleged to have profited from medicine procurement.

The department plans to collaborate with the medical corporations of Tamil Nadu, Rajasthan, Himachal Pradesh, Odisha and Gujarat, where medicines are procured at reasonable prices. Through the consortium, direct transactions can be carried out with pharmaceutical manufacturers operating in these states. This would enable Kerala to procure medicines at similar prices. As the companies would receive bulk orders, they are expected to offer significant price reductions. The Kerala Medical Services Corporation Limited (KMSCL) had been procuring large quantities of medicines through intermediaries at high prices, including medicines reported to be of inferior quality, according to reports. Based on reports of corruption involving crores of rupees, Health Minister K. Muraleedharan had decided to order a Vigilance investigation.

The medicines will be procured through price negotiations. The department is also seeking to purchase medicines at prices lower than those offered to the In-House Drug Bank at Thiruvananthapuram Medical College, which currently procures medicines at low rates in the state.

Political clout allegedly powered medicine racket

Intermediaries allegedly exploited high-level political connections to profit from the pharmaceutical trade. Patients in need of life-saving medicines were allegedly among those affected. Allegations had also been raised against close relatives of ministers in connection with the issue.

Earlier price-cut bid fell through

The Health Department had made an attempt towards the end of 2012 to procure quality medicines at lower prices by joining hands with the medical services corporations of other states. Then Health Secretary Rajeev Sadanandan and Biju Prabhakar, who was the managing director of KMSCL at the time, held discussions with health secretaries and heads of medical services corporations in various states.
The move lost momentum after Biju Prabhakar was removed from the post of managing director.