Health care is one of India’s largest sectors. Private and Public sector spending in India is highly skewed towards the private sector accounting for nearly 80% of total healthcare spending in India. However, a major chunk is through out of pocket (OOP) expenditure whereas only 11% of population has health insurance. About 35% of population is covered by state or central health insurance schemes. The public health spending is comparatively low. As a percentage of GDP the public health spending has reduced from 1.3% in 1990 to 0.9%. The overall budget on drugs and medicines by both central and state governments is only a fraction of health sector expenditure. The state expenditure is also not uniform as some states are spending about 5% on medicines whereas other states are spending as high as 17% on medicines and drugs. Despite these disparities in drug and medicine spending among states in India, it is reported that public institutions spend inadequate in India. Though the government of India has ceiling on drug prices of about 76 drugs, many drugs are out of control and for same drug offered by different companies’ different price exist. Due to differences in price of various brands of same molecule, access to health care is not uniform. This is an issue during reimbursement of drugs. Private health insurance companies do not have a list of medicines that would be reimbursed. Thus, private health insurance players reimburse different amount to different patients for same molecule with different brand names. If pharmacoeconomics is applied as a tool to identify the best treatment option, the burden on health care would reduce for all stakeholders including patients, insurance companies and the government.