China's health reform cuts drug prices, but still fights pain   2011-04-23 16:06:01 FeedbackPrintRSS

A consumer buys medicines with the help of a retailer at a pharmacy in Lianyungang, east China's Jiangsu Province, March 28, 2011. The retail prices of 162 medicines have been adjusted with an average drop of 21% since Monday, a move which will save consumers about 10 billion yuan (1.5 billion U.S. dollars) a year. (Xinhua/Wang Chun) (zn)

A consumer buys medicines with the help of a retailer at a pharmacy in Lianyungang, east China's Jiangsu Province, March 28, 2011. (Xinhua/Wang Chun)

By Xinhua writers Tian Ying, Gu Ye, Ni Yuanjin

NANJING, April 23 (Xinhua) -- At a time when almost every commodity in China is getting more expensive, the dwindling cost of medicine is a rarity.

Zhang Jinkui, a hypertension patient, buys medicines from the community health center of his neighborhood in Changzhou, a city in east China's coastal Jiangsu Province.

His prescription list includes Aspirin Enteric-coated tablets, down to 1.4 yuan from 4.7 yuan (0.7 U.S. dollars) per unit, and Fosinopril Sodium Tablets, down to 41.39 yuan from 51.6 yuan per unit.

Both drugs are found on the essential drug list unveiled in 2009. The list names the 307 most common western and traditional Chinese medicines, which are heavily subsidized so hospitals can sell them at cost price.

All essential medicines are listed by their generic names, and drug producers compete to supply essential medicines through public procurement.

Due to a long history of low government funding for state-run hospitals, which often covers only 10 percent of the hospitals' operating costs, doctors have generated income for hospitals by aggressively prescribing expensive, and sometimes unnecessary, medicines and treatments.

The essential medicine system and the reform of publicly funded hospitals, two pillars of China's health reform, are designed to address high medical costs and low accessibility of medical services.

In April 2009, China kicked off health reforms aimed at correcting these long-standing problems facing China's health system and easing public grievances.

Two years later, the essential medicine system has reduced drug prices, but still fails to please hospitals, patients and drug producers.

The system requires government-funded grassroots health clinics, including urban community health centers and rural clinics, to prescribe only essential medicines and to sell these medicines at cost price, rather than with the previous 15 percent mark-up.

Such policies have brought hard times to grassroots health clinics, especially in cash-strapped areas.

Song Wenzhi, a public health professor at Peking University, said "Grassroots health clinics, without the expertise to perform operations and other treatments, rely heavily on selling drug," adding that these hospitals have found themselves scraping by due to the zero percent mark-up policy.

Wang Zhiying, Vice Director of the People's Hospital of Anxiang County in the city of Changde, Hunan Province, said four grassroots hospitals in Changde tested the essential medicine system as pilot projects, but the zero percent mark-up policy took away 60 to 70 percent of the hospitals' revenue.

Wang was quoted by "Health News," a newspaper run by China's Ministry of Health, as saying that, due to financial difficulties, the county government had not yet channeled the 8 million yuan (1.2 million U.S.dollars) in support funds into the hospitals' accounts, resulting in the resignations of many doctors.

The essential medicine system covers 60 percent of government-funded grassroots hospitals and drug prices have fallen by an average of 30 percent, said Sun Zhigang, Director of the Health Reform Office under the State Council, or China's Cabinet.

According to the health reform plan for 2011, the essential medicine system will cover all government-sponsored health institutions at the grassroots level by the end of the year and drugs will be sold there at a zero percent mark-up.

Song Wenzhi said the key will be the commitment of local governments to health reform and their financial input. This way, essential medicines can benefit the public without bankrupting grassroots health institutions.

"That would be a great sum of money." said Song, citing his own studies. "There are roughly 5,000 government-funded hospitals in China. One third of them make profits, one third barely break even, and still one third rely heavily on government subsidies."

To maintain the poorest hospitals, central and local level governments would need to invest 15 billion yuan (2.3 billion U.S. dollars) each year, according to Song's estimate.

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Editor: Wang Guanqun
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