The retail price cap of low-cost medicines in China will be scrapped to revive dampened production caused by weak profits and ensure supply of essential drugs, the country's top economic planner and regulator announced Thursday.
Restriction on maximum prices of 280 Western medicines and 250 Chinese patent drugs, previously priced low by the government to relieve patients' medical burden, will be lifted, allowing producers to set prices according to their production costs, according to the National Development and Reform Commission (NDRC).
Chang Feng, director of the medicine price research department under China Medical University, said that the move, allowing the market to play a bigger role in deciding prices, will help motivate low-price medicine production and guarantee necessary supply.
The supply of low-price drugs has decreased as rising costs and shrinking demand made producers shift their attention to more profitable medicines, causing production of some first-aid medication including digoxin to be suspended.
The NDRC has asked local authorities to release a list of low-cost medicines to the public by July 1 and strengthen monitoring over unreasonable price lifting.
Policy to give low-cost drugs a boost
Restriction on maximum prices of 280 Western medicines and 250 Chinese patent drugs, previously priced low by the government to relieve patients' medical burden, will be lifted, allowing producers to set prices according to their production costs, according to the National Development and Reform Commission (NDRC).
Chang Feng, director of the medicine price research department under China Medical University, said that the move, allowing the market to play a bigger role in deciding prices, will help motivate low-price medicine production and guarantee necessary supply.
The supply of low-price drugs has decreased as rising costs and shrinking demand made producers shift their attention to more profitable medicines, causing production of some first-aid medication including digoxin to be suspended.
The NDRC has asked local authorities to release a list of low-cost medicines to the public by July 1 and strengthen monitoring over unreasonable price lifting.
Policy to give low-cost drugs a boost
China's National Development and Reform Commission said it will scrap caps on the retail prices of 530 types of low-cost medicines.
The new measure will allow the market to set prices for each medicine. This is certainly good news for the pharmaceutical companies manufacturing these drugs. But thanks to fierce competition in the low-cost medicine market, I don't think actual prices will increase dramatically.
With the rising cost of raw materials and labor, earlier price limits have made profit margins for these medicines extremely low. Lacking incentives, many companies stopped manufacturing these medicines, resulting in sharp supply drop-offs. Some pharmaceutical makers even renamed and repackaged these drugs as new products in order to charge higher prices. A study of 42 hospitals found a shortage of over 342 types of low-cost medicines in these institutions. Over 130 of the medicines were priced below 10 yuan ($1.61).
Apart from this new measure, the government needs to expand and improve coverage of health insurance to allow more people to afford better medication.
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