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Drug Price Reform in Crisis

From News, page 6, issue no. 339, October 29th 2007
Translated by Rui Bingyou
Original article:

Ms. Zhang of Beijing's Shangdi Medical Clinic still remembers when Beijing kicked-off its community drug price reform last year and business was brisk. "At first, the locals ignored our announcements, and insisted on buying medicine in big bags as they had before."

One year later, things are much different. On October 1st, when the reporter arrived at the clinic, it was virtually desolate.

Ms. Zhang says that fewer buy drugs from the clinic now that their inventories are unpredictable. "The drugs that we urgently request never arrive, and while things have improved somewhat over the past three months, we still lack some of the most common ones-- especially those for the elderly.

This isn't an isolated case. Across town, the Beijing's Tongzhou district, Liyu clinic, is worried about their income. The clinic's subsidies have dropped 25 percent in recent months, the burden of which it has had to bear on its own. The clinic has become a first class hospital, and simultaneously has to manage four other service clinics. Before, the hospital mainly relied on drug sales for income.

A Beijing Pilot

On December 25 of 2006, clinics all over Beijing's 18 districts took up the drug price reform pilot, under which they keep 15 percent of the revenues made from dug sales. The goal was to sever direct ties between the drug industry and distributors.

When the pilot first came into effect, clinics received a flood of interest from patients. But problems quickly surfaced.

"Prices are much cheaper now, around 1/3 as cheap as they were, but I can't buy the blood pressure medicine I normally use, says Sun Shu. The medicine he's used to, which is produced in Shanghai, is not covered by the program. Instead, he must use one from Hebei province, which is not as effective, and also frequently unavailable. "Demand is too high," he adds.

"What we really lack are funds, " says Ms. Chen, who works at Qingyun clinic in the Hadian district of Beijing. "The subsidies provided by the government never arrive... what are we supposed to do?" Qingyun received its August subsidy in the beginning of October.

In the reporting process, the journalist visited over a dozen clinics, all of which turned out to be facing the same predicament.

Liu Guoen is a professor at Peiking University's Guanghua School of Management and director of the health care and economy research center there. He consults for the State Council's health care reform grup.

According to his research, 80 to 90 percent of the drugs sold by participating clinics are covered by the program, and thoseare around 40 percent cheaper than they would cost at a hospital.

But Liu says that though prices have decreased, the resulting market distortions have made the policy unsustainable.
More to Come

Thus it comes as no surprise that local media has reported that some clinics want to exit the system.

Meanwhile, the Department of Health has affirmed Beijing's methodology on several occasions, and the EO has learned that they even plan to expand the system. Recently, Shanghai, Hangzhou, and Chengdu will follow in the footsteps of Beijing.

At a press briefing in the beginning of September, Mao Qunan, a spokesperson for the Health Department, reiterated that the drug reform pilot was exellent and the future direction of community-based health care.

Mao suggested that Beijing continue to perfect the system, and second, that participating industries make the development of the system their top priority.

Aside from other adjustments to the reform that are in the pipeline, the Health Department announced on October 17 that the program will expand from its current scope of 2,600 clinics to one of 3,300 in the near future.


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