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Better Control of Drug Prices
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A thorough reflection on the past drug price control policies is needed, says a signed article in Guangzhou Daily. An excerpt follows:

The National Development and Reform Commission issued a circular recently to adjust the retail prices of 354 drugs. About 70 percent of them will drop from their highest retailing prices by an average of 20 percent.

This is the 20th price cut in China since 1996. But the previous cuts did not receive much public reaction. Some officials have voiced disappointment over the lack of reaction. Will the adjustments this time satisfy both the government and the public?

High drug prices have become a thorny issue in the country's medical reform. Though the government has taken some administrative measures to curb price increases, the result is not obvious. This is the background for the 20th adjustment.

Unless we first look at the previous 19 adjustments, the new adjustments will continue to produce unsatisfactory results.

The past adjustments failed for the following reasons: pharmaceutical companies changed the ingredients, packaging and names of the government set-price drugs to avoid price cuts; the government set-price drugs gradually disappeared from prescriptions; fewer low-priced drugs are used by hospitals.

These factors have led to the current problem with drug price controls.

High drug prices are a natural result of current institutional conditions as different groups of pharmaceutical companies, hospitals, medical insurance companies, drug sale companies and supervisory departments are fighting for their own interests. Game theory holds that only when all parties have equal opportunities and abilities in bargaining will there be an institutional balance. Without the participation of the public, the government's price control policy will not be effective.

(China Daily March 1, 2007)

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