Search :   
“Sharing innovative solutions to common health management problems”
»  Information about HS-PROD
»  HS-PROD Report
»  List of Entries
»  Entries by State/UT
»  Entries by Subject Area
»  FAQ

Streamlining drug procurement at appropriate levels of the health system, Orissa
Post your Comments
Subject Area="Logistics." Objective="Drug supply"
Details for Reform Option "Streamlining drug procurement at appropriate levels of the health system, Orissa"

Background: Prior to 1998, drugs in Orissa were procured by the districts, with the state government fixing the purchase prices. Drug supply was not tailored to the needs of the district, with drugs being purchased by brand name at high prices and with no quality controls. Districts did give written orders but the information was not used to plan supplies. Action: Under the new scheme an essential drug list has been set up, divided into drugs for primary, secondary and tertiary level. A Central Drug Management Unit has also been established. Ordering and payments are centralised, and supplies reach the districts properly packed after quality testing of each batch. Each facility has a budget and a passbook (showing orders and deliveries) and responsible officers in the facility administer 20% of the drug budget for emergency supplies and contingencies. A centralised online inventory control for stock management has been established. Provision for continuing education of doctors for rational drug use and better logistics, etc. has been made. Comprehensive treatment protocols for common illnesses are in place. The procurement procedure is transparent and the tender procedure is comprehensive. Several safeguards are in place to ensure the quality of drugs. Results: The new system (which follows the example of Tamil Nadu) has resulted in better value for money through: - lower drug prices as a result of the purchasing of generic drugs in bulk; - improved quality of medicines with the introduction of quality tests and blacklisting of poor quality drugs; - the use of guidelines for rational prescription based on the essential drug lists. Public acceptance of drugs offered through the public system as well as availability of drugs in the facilities has increased.

Cost Estimated costs: The total budget for drug procurement for 2000-01 was INR 135 million . The 2002-03 budget was INR 120 million. The budgeted cost is an overview of the cost of medicines to be required for primary health care. Detailed cost including operational cost of procurement system is not available.
Place Orissa as part of the Orissa Health System Development Project (OHSDP) – World Bank; Bhadralok and Keonjhar District for Department For International Development (DFID).
Time Frame Information not available.

Economical: Lower prices through centralised procurement of large quantities of drugs. Comprehensive: Information costs for medical officers decreased through use of essential drug list. Efficient: Less wastage because institutions order drugs as per requirements. Acceptable: Quality control and appropriate packing has increased consumer acceptance.


New skills needed: Managers must be trained to deal with the new budget and passbook system. Corruption: Danger of increased corruption.


Advocacy to overcome resistance of population who want high profile/ heavily marketed drugs Agency with the technical means and procedures to handle the tendering process for large drug contracts.

Who needs to be consulted

State government, district officials.



It is sustainable if a fully streamlined system is in place. Financial support is also required.

Chances of Replication

Proven, as Orissa has adopted the successful model from Tamil Nadu. Other states are in the process of doing the same.


Took one year to stabilise the programme and overcome opposition from vested interest group resistance.


Submitted By

Dr. Matthew Jowett, Former Programme Adviser, European CommissionTechnical Assistance Office, New Delhi. July 2002. Updated August 2006.

Status Active
Reference Files
Reference Links
No Record Updated
Read More
» Comparable Databases
» State/UTs Government
» UN Organisations
» Bilateral Organisations
» NGO's
» Miscellaneous
Read More