India Spent Over Rs 1.6 Lakh Crore on Medicines in 2022-2023, Reveals NHA Report

New Delhi: Despite a significant increase in government spending on healthcare over the past decade, medicines remain among the largest contributors to India's healthcare expenditure, underscoring the continuing challenge of ensuring affordable access to essential drugs.

According to the National Health Accounts (NHA) Estimates 2022-23 released by the Union Health Ministry, Indians spent more than ₹1.61 lakh crore on medicines during the financial year, including ₹1.35 lakh crore on prescribed medicines and ₹26,670 crore on over-the-counter (OTC) drugs. Together, pharmaceutical expenditure accounted for nearly 21% of the country's current health expenditure, making medicines the second-largest healthcare spending category after inpatient hospital care.

The findings come at a time when India has witnessed a significant increase in public health spending. Government Health Expenditure (GHE) has nearly tripled from ₹1.30 lakh crore in 2013-14 to ₹3.85 lakh crore in 2022-23. During the same period, the government's share in Total Health Expenditure (THE) increased from 28.6% to 43.7%, reflecting a sustained policy push towards strengthening public financing of healthcare.

The report also highlights a notable decline in household out-of-pocket expenditure (OOPE), which fell from 64.2% of total health expenditure in 2013-14 to 43.4% in 2022-23. Health economists have long regarded OOPE as a key indicator of financial hardship, as high direct payments for healthcare often push vulnerable households into debt or poverty.

However, despite these improvements, the NHA data suggest that medicines continue to represent a substantial share of healthcare spending. Current health expenditure on pharmacies alone stood at ₹1.63 lakh crore, accounting for 21.2% of total current health expenditure. By comparison, expenditure on inpatient curative care was estimated at ₹2.88 lakh crore, while outpatient care accounted for ₹1.43 lakh crore.

The figures indicate that while government-funded schemes and insurance programmes may be reducing the burden of hospitalisation costs, expenditure on medicines remains a major recurring expense for households, particularly for patients managing chronic conditions such as diabetes, hypertension, cardiovascular diseases, respiratory illnesses and cancer. Such conditions often require long-term or lifelong medication, making pharmaceutical spending a significant component of household healthcare budgets.

The report underscores the growing role of public financing in healthcare delivery. Government Health Expenditure as a share of Gross Domestic Product (GDP) increased from 1.15% in 2013-14 to 1.43% in 2022-23. Under the revised GDP series with base year 2022-23, the figure stands at 1.48%. Similarly, health's share in overall government expenditure rose from 3.78% to 4.89% during the same period.

The COVID-19 pandemic appears to have played a significant role in accelerating public health investment. Government health expenditure reached 1.84% of GDP in 2021-22 as authorities expanded spending on pandemic response measures, including emergency preparedness initiatives and the nationwide vaccination programme. During that period, out-of-pocket expenditure declined further to 39.4% of total health expenditure.

The NHA estimates also reveal a growing focus on primary healthcare. Government expenditure on primary care more than doubled from approximately ₹50,000 crore in 2013-14 to ₹1.4 lakh crore in 2022-23. Social Security Expenditure on healthcare, which includes government-financed health insurance schemes and employee health benefits, increased from 6% of total health expenditure to 9.9% over the decade.

While these trends point towards greater public investment and improved financial protection, the medicine expenditure data raise important policy questions. The continued dominance of pharmaceutical spending suggests that access to affordable medicines remains a critical challenge despite the expansion of publicly financed healthcare programmes.

The findings are likely to renew discussions around strengthening free drug distribution schemes, expanding access to essential medicines through public health facilities, promoting generic medicines, and enhancing price regulation mechanisms. They may also prompt policymakers to examine whether existing insurance schemes adequately address outpatient and medicine-related expenses, which often account for a substantial portion of healthcare spending but receive comparatively less coverage than hospitalisation costs.

Taken together, the NHA 2022-23 estimates present a mixed picture of India's healthcare financing landscape. On one hand, higher government spending and reduced out-of-pocket expenditure signal progress towards greater financial protection and universal health coverage. On the other, the country's ₹1.6 lakh crore medicine bill serves as a reminder that pharmaceuticals continue to be one of the most significant drivers of healthcare expenditure, underscoring the need for sustained policy interventions to improve affordability and access.