Govt plans centralised purchase for Ayushman; medical devices on GeM soon

Govt plans to negotiate prices with medical devices makers by assuring bulk volumes | Photo: iStock
The central government may soon start “collective bargaining” for medical devices that are used by hospitals for procedures covered under its flagship Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY). 

The idea is to procure essential medical devices such as cardiac stents at a lower cost and put them on the Government e-Marketplace (GeM), from where the empanelled hospitals can buy. 

At present, PMJAY does not have any system of centralised procurement of medicines or devices. The scheme has a defined annual benefit cover of Rs 5 lakh per family for hospitalisation. It follows an insurance model and aims to cover 10 million families, or roughly 40 per cent of the country’s population based on the socio-economic and caste census database. 

According to a senior government official, the plan is to do “collective bargaining” for certain medical devices and implants by assuring a bulk requirement to the manufacturers. “The requirement for these devices runs into millions. We assure them that the requirement is going to be in bulk. In return, they should offer us better rates,” he said. 

The official added that these devices could then be put on the GeM and the empanelled hospitals could procure them from there for PMJAY patients. “Hospitals empanelled with PMJAY can thus procure these stents or devices based on these lower rates.” 

There is no plans to do this for medicines because it is logistically difficult. However, the government plans to procure cancer medicines at prices lower than those capped by the National Pharmaceutical Pricing Authority (NPPA). “PMJAY rates could be lower than the prevalent rates by the NPPA. We can provide these medicines to our hospitals at lower rates,” said the official, who is closely working on the project. 

The industry is happy about the move. “This sounds like a good idea. This will reduce the cost of the government in Ayushman Bharat, which will give more room to them to treat more patients,” said the CEO of a leading domestic stent maker. 

He, however, highlighted that hospitals which used to get 8 per cent profit margins on stents may be reluctant to adopt the new model, as they would lose control and some profitability. 

The Association of Indian Medical Device Industry (AIMED) said it was already working closely with the government to reduce the procurement costs of empanelled hospitals so that the packages became more viable. 

PMJAY is also working on its plans to roll out diagnostic centres under the public-private-partnership (PPP) model. For states that have opted for an insurance model, there are ongoing contracts, and any change in those contracts has implications for the cost. “So, for states where PMJAY runs through an insurance model, the government will have to wait till the contract runs out. The government may try to negotiate new benefit packages,” said the official. States like Jammu and Kashmir, Kerala, and Punjab run through an insurance model. 

In states where the PMJAY operates through a trust (Madhya Pradesh, Uttar Pradesh, Haryana, Uttarakhand, etc), it is easier to implement. "These states have to take approval of their respective finance departments," he said. 

A timeline for the roll-out of such diagnostic centres has not been set, but the government is working to tie up with partners or empanel diagnostic centres that would conduct tests for PMJAY patients at the stipulated rates.  

So far, over 6.5 million patients have been treated under PMJAY, with treatment worth Rs 9,549 crore. Of this, treatment amounting to Rs 6,133 crore was provided through private hospitals. There are 1,392 health benefit packages and their rates have been defined for providing secondary and tertiary healthcare to the beneficiaries at the empanelled hospitals under PMJAY.

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