Profits vs. patients

By Xiang Bin
0 CommentsPrint E-mail, May 19, 2010
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How the profit is distributed?

"At some big hospitals, a doctor can get a kick-back of 80 yuan ($ 11.76) for prescribing a bottle of asparagus tablets,"Wang Weijun, sales manager at Sichuan Chuan Da West China Pharmaceutical Co.Ltd., said.

Wang has been in charge of the open bidding for asparagus tablets in Hunan for many years and is familiar with the profit distribution.

According to Wang, Xiangya No. 2 Hospital sells about 1,100 bottles of asparagus tablets every month. The monthly profit from selling the pills is over 100,000 yuan ($14,706). Pharmaceutical companies, sales managers, and doctors all take a share of the profit.

"It's a profit chain; doctors get the lion's share,"Wang noted.

Doctors from Xiangya No. 2 Hospital refused to respond to Wang's comments.

Who is driving up the prices?

Currently, hospitals sell 80 percent of all drugs. Medicine like asparagus tablets belong to the clinical drug category, which can only be sold at hospitals. Hospitals earn a significant profit from this.

Yu Mingde, president of China Pharmaceutical Enterprise Association, attributed the high cost of drugs to market prices.

"Hospitals purchase medicines from pharmaceutical enterprises at market prices, however, the current law allows hospitals to raise the price by 15 percent at most, which has made hospitals prefer drugs with higher prices, because the higher the market price, the more profit hospitals receive,"Yu explained, "Pharmaceutical factories, pharmaceutical enterprises, and hospitals have formed a profit chain, all of them benefit from the high price of drugs."

The government has adopted many measures since 1996 to lower drug costs, but the results have been limited.

The profit margin for milk is about 20 percent. For luxury goods, it's anywhere between 100-500 percent. For a medicine like asparagus tablets, the profit margin is 1,300 percent. Medicine is intended to save lives, yet high prices make that goal more difficult to attain.


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