China has moved to control healthcare costs for its citizens from Beijing, setting plans to purchase and distribute hundreds of essential medicines that are now mostly sold at huge mark-up prices through hospital pharmacies.

The measures are part of an Rmb850bn ($124bn, €88bn, £75bn) overhaul of the country’s ailing health system, aimed at securing basic medical services for every citizen and increasing efficiency and transparency in drug use.

When Beijing began reforming its communist economy 30 years ago it discontinued free healthcare for all and, by 2000, the majority of the population was uninsured. Although the authorities have since tried to build a new healthcare system, large numbers of rural residents and migrant workers still cannot afford healthcare.

“By 2003, 30 per cent of poor households in the government’s National Health Survey were reporting healthcare costs as the main cause of their poverty,” the World Bank said in a report on health reform in China this year.

The World Bank said misaligned incentives encouraged hospitals to make money from selling drugs. China’s share of pharmaceutical expenditure relative to total health expenditure was nearly 45 per cent in 2003, compared to an OECD average of about 15 per cent.

Beijing has pledged to decouple hospital revenues from pharmaceuticals sales. “The essential drugs used in government clinics will be purchased centrally through government-controlled institutions, to be picked by provincial governments,” the health ministry said in guidelines published this week. Other clinics would also have to buy these medicines through similar mechanisms.

Beijing said that, under the essential drug system, patients could receive their medicine from independent pharmacies with a prescription from a doctor. The government added that it would set prices for the listed drugs, with adjustments every three years. It aims to get 30 per cent of all grassroots health institutions – small, mostly rural clinics – on board this year.

Analysts said much remained unclear as the list published this week only covered grassroots clinics and medicines for basic treatment of common illnesses, including aspirin and some antibiotics.

“Now we know that demand for the drugs that made it on to the list is certain to increase, but the key point of how prices are to be set hasn’t been addressed yet,” said Zhang Yin, an analyst at Bank of China International.

He added that there were clear benefits for producers of traditional Chinese medicines, because the traditional remedies on the list were mostly proprietary products, so suppliers would face no competition. The western drugs on the list are almost all compounds available in generic form.

Get alerts on News when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Comments have not been enabled for this article.

Follow the topics in this article