Medicine reform triggers price hike fears

There is concern that reforms will trigger price hikes for drugs after the central government said it will lift controls on the price of about 2,700 medicines from June 1, accounting for about 23 percent of medications available.

Only in the United States are medicine prices decided by the market as the US has the most developed medical insurance system with the ability to negotiate prices with pharmaceutical companies and medical institutions.

Lessons have been learned from previous medicine price reforms and if well implemented the new rules will benefit both pharmaceutical enterprises and consumers, the Beijing News reported.

The government continues to play a leading role in influencing the pricing of most medicines covered by basic medical insurance. The pricing administration department, hospitals and pharmaceutical companies will negotiate to settle the price of some patented medicines that are produced exclusively by certain companies. The price of some special medicines, outside the medical insurance drug list, can be fixed through bidding.

Flexible price reforms can effectively reduce the government’s involvement, inspire enterprises to pursue innovation and realize an equilibrium between market and public interests.

Lifting controls over medicine prices can also curb corruption and lower external costs for drug makers and suppliers. A clean market environment will allow enterprises to focus more on business and promote healthy competition. 

Drug prices will not surge if the reform is enforced correctly. High medicine prices come from irrational price controls and corruption.

The government also needs to strengthen supervision of the safety of medicine and anti-trust investigations in the market.

Releasing the control over prices does not mean relaxing supervision of other fields the government is responsible for.