Health care services to the people of Assam have been a priority item in the planning of social services by the State Government. Distribution of medicines through the health care units viz. hospitals, community health centres, primary health centres and dispensaries are an integral part of providing health care. A performance review of procurement and distribution of medicines in Health and Family Welfare Department of Government of Assam revealed that procurement of medicines was not need based. During the last five years (2002-03 to 2006-07), supply of medicines to health care units was inadequate. Thus, the intended health care services were not made available to a large section of the people of the State. The objective of providing comprehensive health care to the people was not fulfilled due to uneconomical procurement policy, inadequate planning and funding, lack of transparency and effectiveness in bids evaluation and short supply of medicines to health care units. Medicines were procured in some cases at higher rates indicating lack of financial discipline and weak internal control mechanism. Non receipt and delayed receipt of laboratory test reports defeated the purpose of maintaining quality control of drugs. Dispensing of allopathic medicines by ayurvedic doctors due to non-procurement of ayurvedic medicines also defeated the objective of providing health care under Indian System of Medicines.