Kerala’s medicine procurement system is shifting to direct purchases from pharmaceutical manufacturers, with the Kerala Medical Services Corporation Ltd (KMSCL) reporting major cost reductions for essential drugs and plans to extend the arrangement to medicines facing shortages in government hospitals.
The change was initiated following a directive from health minister K Muraleedharan amid persistent concerns over medicine availability in the state’s public healthcare system. By bypassing intermediaries, KMSCL expects to reduce procurement costs while streamlining supplies to government hospitals.
One of the clearest savings has been recorded in insulin procurement. The medicine, earlier purchased at Rs 99.60 per unit, will now be bought directly from the manufacturer at Rs 73 per unit. KMSCL officials said the direct procurement of erythropoietin, used in treating patients with serious conditions including cancer and HIV-related complications, has also reduced the cost by at least Rs 30 per injection.
The revised arrangement has produced a substantial reduction in the cost of medicines used by patients with spinal muscular atrophy, or SMA. A batch that was previously sourced from a foreign company for more than Rs 5.5 lakh will now be procured from Indian pharmaceutical company Natco Pharma. Although the company initially quoted Rs 15,900, KMSCL finalised the purchase at Rs 8,000, according to KMSCL officials.
The procurement changes come as government hospitals face pressure to maintain timely supplies of essential medicines. For the public health system, the purchasing model affects not only the price paid by the state but also the time taken for medicines to move from manufacturers to hospitals and patients.
Pharmaceutical companies have agreed to participate in the direct-purchase arrangement subject to a payment condition. They have sought settlement of their bills in full within a maximum of two months after supplying the medicines. KMSCL has accepted the condition, allowing the corporation to pursue further direct procurement from manufacturers.
The corporation plans to extend the arrangement to other medicines that are in short supply at government hospitals. KMSCL is also considering dispensing with the tender process for next year’s procurement and sourcing medicines directly from pharmaceutical companies.
The proposed expansion will place greater importance on the corporation’s ability to identify shortages, negotiate prices, ensure quality and make payments within the agreed period. The current arrangement, however, has already been used to lower the reported purchase prices of insulin, erythropoietin and medicines for SMA patients.
KMSCL’s next step is to assess additional medicines affected by shortages and extend direct purchasing to those products. The corporation is also considering the procurement model for next year as it seeks to reduce costs and improve the continuity of medicine supplies in Kerala’s government hospitals.
