A recent string of messages from the government seems to indicate that medicine prices will come down soon.

Barely a week ago the Ministry of Health expressed its determination to wean off hospitals from profits they make from medicine sales. For a long time hospitals have been allowed to sell medicines at 15 per cent more than the price at which they purchase them.

Then came the news last Wednesday that the National Development and Reform Commission will slash the prices of 22 types of medicines by an average of 60 per cent.

In a country where complaints about exorbitant medical expenses are common, one might wonder whether this government action can really drive down medicine prices, and how much benefit there will be for patients once medicine prices fall.

Based on past experiences, a rational question to ask seems to be: Will the benefits be real for patients?

Statutory price slashing has taken place many times over many years. But the on-the-paper fall has not really translated into benefits for patients.

The current situation is that for the majority of Chinese people, going to the hospital means two things; a heavy medical bill, and difficulty in beating the crowds to see the doctor.

The medical service is one of the few sectors that is yet to open up to market competition and that may explain the above-mentioned phenomena.

Patients tend to have an almost superstitious belief in the healing powers of State-owned hospitals, especially the big ones where the best resources are pooled.

As a result, patients flood into these big hospitals, straining their already limited medical resources. How can these hospitals be expected to lower prices? Meanwhile, private hospitals remain in limbo and hardly put up any competition.

As medicine sales are a cash cow for hospitals, making up anything up to 60 per cent of their revenue, hospitals have every incentive to find ways to not let this situation change. And they can do this easily by prescribing less of the medicines on the list of ones that have had their prices reduced, and dishing out more medicines not on the list.

As for the cancellation of the 15-per cent margin, it may help cut medicine prices, but medical bills are very likely to remain heavy.

While medicines take up a huge part of medical expenses, the charges for doctors and nurses account for another part. It's not unusual to hear doctors and nurses complain about not getting their worth, and some have turned to evidence from Western countries to claim that they must get more for what they do.

If medicine prices really come down, such demands will definitely grow stronger, leading hospitals to call for more money to offset losses from medicine sales.

So to really soothe people's complaints about medical services, forcing down prices of certain types of medicines alone is not enough. Other co-ordinated reforms in the sector are badly needed.

Providing equitable access to healthcare services is the main focus of China's healthcare policies. And two things need to be done: One, we need to cultivate and expand the number of community clinics. Community clinics should be where all people, especially the underprivileged, have their not-so serious illness cured. Second, we need to establish an effective medical welfare system, which will lessen the burden on patients, regardless of their medical bills.

In the long term, the government should introduce controlled market competition into the medical sector by redefining different types of hospitals. If State-sponsored ones can take care of basic needs, let private ones work for patients' other needs. This should result in increased choice for patients.

Medicine price tempering has proved to be of little impact. Why not take a stronger pill?

(China Daily June 6, 2005)