The cost of a generic drug is 80 to 85 per cent lower than the branded product, according to data from the US Food and Drug Administration. In case of health insurance, medicines account for 15-20 per cent of healthcare costs. This component is higher in rural areas, which generally have poor hospitalization facilities. Also, in the case of several critical diseases, the cost of medicines is much higher than the hospitalization cost.

The prescription and sale of drugs by their generic name is less than 40% in India. Branded drugs rule the roost although India is one of the world's largest exporters of generic drugs. Both physicians and the government are responsible for the low use of generic drugs. Doctors have grown used to prescribing brand names. As students of medicine, they are familiar with generic names. When they start their life as interns and practitioners, brand names become imprinted on their minds through regular indoctrination by representatives of drug companies. As they fall into the habit of prescribing by brand, they start rationalizing it, to themselves as well as others, as an insistence on quality. Physicians should be restrained from prescribing costly branded forms when equally effective but cheaper generics are available.

Also increasingly, India’s disease burden has been shifting from communicable diseases to chronic ailments such as diabetes, cardiovascular diseases and other conditions that can be treated and managed by many older proven and effective low-cost generic medicines. Ensuring access to these low-cost generic medicines must therefore be an important priority for India’s universal healthcare reforms.

Another side to the story is that India has the dubious distinction of being in the top tier of countries with very high out-of-pocket expenditure on health (at present, estimated to be 71%). This is because of a very low-level of public financing (1.4%). As a result of high healthcare costs, 40 million Indians are pushed into poverty each year. About 72% of the out-of-pocket expenditure is due to spending on drugs. The supply of free drugs to in-patients in government facilities has come down from 31% in 1987 to 9% in 2004. During the same period, the provision for free drugs came down from 18% to 5% in out-patient care.

So while the reasoning is all good, and it has even received celebrity endorsement with Aamir Khan deposing before a parliamentary committee and pleading for the use of generic drugs, there is certainly room for some skepticism. Some time ago, the government had launched a similar program under the Jan Aushadhi scheme which looked to launch generic drug stores. Though the plan was to have 3000 stores by 2012 only 300 of them were set up. And that’s what worries us that though the intention is there, this scheme will come up against the same logjams that any government initiative faces. But let us wait and see what the future holds for us.