After several years of dilly-dallying on the issue, the Union health ministry has at last set up a Central Procurement Agency (CPA) under the Societies Registration Act, 1860, in the name of Central Medical Services Society (CMSS).

The CMSS has been registered on March 22 this year. The agency is expected to start functioning in the financial year 2012-13. The Society shall function as an independent, professional and autonomous agency for procurement of quality health sector goods and services required by the Department of Health & Family Welfare, Ministry of Health & Family Welfare, Government of India in a transparent and fair manner and make goods available at convenient locations for the benefit of users by addressing efficiently the supply chain issues.

The CMSS will be an autonomous procurement agency for purchasing all medicines, vaccines, contraceptives and medical equipments for all the government's disease control programmes and will have an estimated annual budget of Rs.2000 crore.

Senior officials in the Union health ministry said that a professional, autonomous and efficient organization like CMSS is being established by the government to eliminate the existing deficiencies and streamline the drug procurement and distribution system in the country. At present, the health ministry is procuring drugs, vaccines, contraceptives and medical equipments departmentally and through procurement agents for its various disease control programmes. However, certain deficiencies, such as inadequate professional procurement expertise, absence of supply chain management system, manual collection of data and absence of any credible Management Information System (MIS) have been adversely affecting the procurement system.

Earlier, on October 3 last year, the union cabinet had approved the health ministry's proposal to create a fully autonomous agency under the ministry of health as a Society under the Societies Registration Act, 1860 for efficient procurement and distribution of drugs for the health sector in the country. The cabinet had also approved a one-time budgetary support of Rs.50 crore to establish the agency. The cabinet had also approved the creation of one post of the chief executive officer (CEO) for the agency of the rank of the Joint Secretary to government of India.

Officials said that the establishment of CMSS will enable the union health ministry to efficiently procure and properly distribute quality medicines, vaccines, contraceptives and medical equipments to the state/Union Territory governments and also eliminate shortages and wastages, resulting in considerable savings to the government.

The CMSS will be functioning on the same lines of Tamil Nadu Medical Supplies Corporation (TNMSC) which procures drugs for all government hospitals in Tamil Nadu. It will be an IT-enabled supply chain and procurement will be driven by actual demand from states as opposed to the present mode of procurement where approximate calculations about requirement are made from population statistics. In the TNMSC model, drugs and vaccines are purchased through tenders and as a bulk procurer it gets rates better than market rates.