Role model to rudderless entity: Tale of TN Medical Services Corporation

The Tamil Nadu Medical Services Corporation that is today, however, was much efficient 20 years ago

Muthusamy had urged Jayalalithaa to start a separate establishment to deal with the purchase of drugs and medical equipment | File Photo

The Tamil Nadu Medical Services Corporation (TNMSC), the state’s drug procurement arm for 25 years, which recently drew criticism for allegedly importing second-hand ventilators and not having enough stock of drugs and medical equipment to deal with COVID-19, has witnessed a great fall — from an efficient and independent entity to a pliable body.

The corporation, according to knowledgeable persons, was more efficient 20 years ago.

Premise of founding

The corporation was set up in 1994 under the chief ministership of J. Jayalalithaa, on the request of then health minister S. Muthusamy, a close aide of M.G. Ramachandran, Jayalalithaa’s mentor and predecessor. Muthusamy, in a note in February 1993, had urged Jayalalithaa to start a separate establishment to deal with the purchase of drugs and medical equipment.


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Until then, drugs and equipment for government health centres were procured by the Central Purchase Committee which was under the control of the state Health Secretary and comprised heads of the Directorate of Medical and Rural Health Services (DMRHS), Directorate of Medical Education (DME), and Directorate of Public Health and Preventive Medicine (DPH).

The procurement caused delays as it was done through tendering system. While the prices were hardly competitive, the payments made to the suppliers also got delayed. The procedural delays resulted in unavailability of essential drugs in many government hospitals. Muthusamy’s note also pointed to the low quality of drugs.

TNMSC was allotted an initial fund of Rs. 4 lakh. At that time, R. Poornalingam, an IAS officer, had taken charge as the state’s Health Secretary and he is largely credited for the corporation’s success those days.

Transparency was key

Poornalingam ensured transparency in the procurement process. The corporation had created a ‘standard’ or ‘essential drug list’ based on the World Health Organisation’s approved list of common drugs. The corporation used to procure the drugs and store them in warehouses, from where they were distributed to government health centres.

“Drug manufacturers were told that all supplies to the TNMSC were to be marked ‘TN’ in English or Tamil. Each capsule had to bear the mark as did the foil sheet, bottles, syringes, and all disposables. This was followed up with an order that if these marked drugs and material were found at any point of retail, the retailer would be arrested and punished. This was intended to stop the leakage of medicines procured by the state into open market,” writes former bureaucrat S. Narayan in his book Dravidian Years.

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The suppliers were paid directly by the corporation, contrary to the earlier methods where the respective government health centre or hospitals settled the bill. Also, all government health centres were given passbooks that documented the amount allocated for medicines. Whenever health centres received supplies, their passbooks would get updated with order details and the deducted amount. This helped in dealing with stocks, expiry and wastage.

“Passbook is like a credit card. Hospitals can buy medicines from district drug warehouses whenever they need. In the initial years, we were allocated Rs.100 crore for a year to procure drugs. We were able to save Rs. 35 crore in those times and it was an unprecedented achievement,” Poornalingam told The Federal.

Replicating the TN model

A 2010 article in Forbes India says Tamil Nadu spent more to procure drugs than other well-off states. “At about 9 per cent of its health budget, Tamil Nadu spends the most on drugs among states. Its per capita drug allocation in 2006-2007 was Rs.27. In comparison, Rajasthan’s was Rs.2 in 2005-2006 and Uttar Pradesh’s was Rs.3. Even Kerala, which boasts of reasonably robust public health care, spent only 1.5 per cent of its health budget on drugs,” the article claimed.

Following the Tamil Nadu model, Kerala (Kerala Medical Services Corporation) and Odisha (State Drug Manufacturing Unit) had set up their own models. Even the Central Medical Services Society of the Union Ministry of Health and Family Welfare, in its objective, says its Central Procurement Agency will be an organisation similar to the TNMSC.

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“Due to word of mouth recommendation by drug manufacturers and suppliers, the success of TNMSC has been carried to the length and breadth of the country. As of now, about 15 such corporations are established in various states,” said Poornalingam.

Researchers also point out that setting up of TNMSC had brought down the maternal mortality in the state, drastically.

Blame the government

While doctors complain about TNMSC delaying the purchase of PPEs, masks and other equipment required to deal with the COVID-19 situation, many in the health department point fingers at the state administration.

Blaming the government, a doctor said once a successful corporation like TNMSC is now slowly losing its sheen due to the current regime. “In the last five years, the government has decreased the funds allocated to government health centres. So they are finding it difficult to procure medicines from TNMSC. Political interference is high,” a senior doctor alleged. Requesting anonymity the physician implied that, “a lot of procurement in recent years were done through non-TNMSC method.”

Dr. G.R. Ravindranath, general secretary, Doctors’ Association for Social Equality, said all drugs and equipment should be procured only through TNMSC, and the state should not procure it via any other means.

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“The Centre has been creating a lot of confusion in the procurement of rapid testing kits. It has refuted the allegation made by the state’s chief secretary that the kits were given to the US. The current leadership in the state lacks guts in taking decisions independently,” he said.

The Federal repeatedly tried to get the TNMSC’s version, but the authorities were not available for comment.

Can states procure drugs from abroad?

While the number of positive cases has long crossed 1,000 in Tamil Nadu the state is still waiting for the rapid test kits that it had ordered through TNMSC. When the purchasing process was on, the Centre had instructed the states to refrain from ordering drugs and other medical equipment from abroad on their own.

Speaking about this, Poornalingam said the Centre had no rights to interfere when a state was procuring medicines from other countries.

“Health is a state subject. We have a centralised institution for procurement of drugs. When states try to purchase drugs and equipment from their own money, the Centre has no right to prevent it. If the state tries to purchase with the help of central funds, then the latter has a stake in it. The Centre can arrange for those drugs,” he said.