INDIA Law and Practice Contributed by: Malathi Lakshmikumaran, Vindhya S Mani, Pallaash Shankhdhar and Khushi Lokwani, Lakshmikumaran & Sridharan Attorneys
8.3 Reimbursement From Public Funds India does not operate a universal reimbursement system for pharmaceuticals or medical devices. Reimbursement from public funds is scheme‑based, eligibility‑driven and primarily linked to public health insurance and welfare programmes, rather than indi- vidual product reimbursement, as seen in some OECD countries. As a result, reimbursement occurs only in specific circumstances and for defined beneficiary populations. Examples of such government schemes include the following. • The Ayushman Bharath Pradhan Mantri Jan Arogya Yojana (AB PM-JAY) provides INR500,000 (approxi- mately EUR 5,000) per year of a cashless cover- age to each family, which includes secondary and tertiary medication like drugs, diagnostic services, devices used in various treatments, etc, when received at empanelled providers. • The Central Government Health Scheme (CGHS) reimburses or provides free or subsidised medi- cines and select medical devices to eligible gov- ernment employees, pensioners and dependents through dispensaries of the CGHS or approved providers. • State insurance schemes, such as Medical Insur- ance Scheme for State Employees and Pensioners (MEDISEP) or Karunya Healthcare Scheme (KHS), provide reimbursement or cashless benefits for expensive treatments, including devices used in hospital care for targeted population or state gov- ernment employees. • The Employees’ State Insurance Scheme covers insured workers in the organised sector earn- ing below the statutory wage threshold and their families. To qualify for a reimbursement, beneficiaries must be eligible under the relevant scheme, and treatment must be undertaken in the empanelled hospitals or at the approved CGHS centres, with all the necessary service documents and costs for processing the claims. 8.4 Cost-Benefit Analyses Price Determination Cost‑benefit analysis or health technology assessment are generally not applied in determining the statutory prices of pharmaceuticals or medical devices in India.
Prices are set through market‑based mechanisms under the DPCO or through administrative interven- tions aimed at affordability and margin control, without reference to cost‑effectiveness metrics. Reimbursement Decisions Health Technology Assessments (HTA) have been institutionalised in India through the HTA in India (HTAIn) body to generate proof, although this proof is not yet binding on the NPPA’s pricing decisions. HTAIn, under the Department of Health Research, evaluates the clinical and cost effectiveness of health technologies to inform policy, but there is no statu- tory requirement for price‑fixing authorities to use its assessments under current law. 8.5 Regulation of Prescriptions and Dispensing by Pharmacies In India, the pricing of medicines and medical devices is mainly controlled at the point of manufacture; once an MRP is fixed under the DPCO, no wholesaler, dis- tributor or retailer is allowed to sell the product for anything higher than that price. Therefore, there is relatively limited regulatory emphasis on cost contain- ment at the prescribing and dispensing stages. In addition, to ensure the affordability of generic drugs, the government of India has taken certain regulatory steps, as follows: • doctors are ethically required to prescribe medi- cines by their generic names, and to ensure the rational use of drugs under medical ethics regula- tions; • regulatory bodies have the power to take discipli- nary action for violations; • the government promotes affordable generics through Pradhan Mantri Bhartiya Janaushadhi Ken- dras (PMBJK), which sell low‑cost generic medi- cines nationwide; and • under the National Health Mission, essential generic medicines are provided free of cost in public health facilities, supported by centralised procurement, supply chain systems and prescrip- tion audits. Although the schemes and framework are in place, the enforcement thereof remains a challenge.
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