In the union budget 2014-15, the Government announced that two key initiatives i.e. Free Drug Service and Free Diagnosis Service would be taken up on priority to move towards “Health for All”.

Pursuant to the budget announcement, Operational Guidelines along with Model RFPs for implementing the NHM Free Drug Service Initiative were developed and shared with the States on 2nd July, 2015. The guidelines emphasis on procurement of generic drugs. 

Under this Initiative under NHM, support is provided for provision of essential drugs free of cost in public health facilities. The support is not only for drugs but also for various components necessary for effective implementation of Free Drug Service Initiative viz. strengthening/setting up robust systems of procurement, quality assurance, IT backed supply chain management systems like Drugs and Vaccines Distribution Management Systems (DVDMS) developed by CDAC, warehousing, prescription audit, grievance redressal, Information, Education and Communication (IEC), training, dissemination of Standard Treatment Guidelines, etc.

All States have reported to have notified policy to provided free essential drugs in public health facilities. Under NHM incentives were provided to States to implement Free Drug Service Initiative.