Shenzhen:Hospitals to drop 15% drug markup

Published on November 17, 2008 by admin

SHENZHEN is among the three cities the provincial government has designated to spearhead public-hospital reform by scrapping a 15 percent markup on drug prices on a trial basis, which will be gradually expanded across the province, according to a circular issued by the provincial health department Tuesday.

Public hospitals in China were allowed to raise drug prices by 15 percent on the purchase prices since the nation’s first health care reform in the early 1980s. That reform was intended to move the health care to a more market-oriented system, subsidized more by patients than the government. Hospitals were expected to make money by selling medicine to support their daily operations.

It is not clear when the new measure will become effective. The circular did not provide a timetable for the expansion either, only saying that a detailed reform proposal will be announced by the end of this year.

A 15-percent cut is estimated to cost a public hospital up to 10 million yuan (US$1.4 million) in lost revenue. The loss will be jointly compensated by government subsidies from both the provincial and municipal levels, according to the circular.

The move is an important part of the province’s public health care reform, showing the government’s determination of changing the system in which hospitals were dependent on drug sales, according to an official with the health department.

The official was quoted by Thursday’s Shenzhen Special Zone Daily as saying that the issue of over-priced drugs and its close relation to the viability of public hospitals is a key problem, the solution of which is fundamental to a successful reform.

The health care reform has been one of the government’s priorities for the past years, with wide discussions on the provision of an efficient and affordable medical system. The current medicare system has drawn public criticism in recent years over soaring medical fees, lack of access to affordable medical service, patient-doctor distrust and inadequate medical insurance coverage

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