China Medical News

Beijing Municipal Commission of Health and Family Planning announced on March 22nd that all medical institutions involved in the reform will abolish price markups, usually at a rate of 15%, on the drugs they sell to patients. The reform covers more than 3,600 medical institutions in Beijing, including all public hospitals, as well as some private medical institutions. In addition, all medical institutions will purchase drugs from pharmaceutical manufacturers through open and competitive public bidding, so drug prices will be further reduced. With these measures, the price of drugs sold at these hospitals is expected to be reduced by about 20%.

Abolishing drug price markups, which has been a key source of income for public hospitals, has been a major, but thorny, task of China's ongoing healthcare reform that is aimed at a universal coverage of basic healthcare services. The practice has been adopted by most public hospitals in China since the 1950s to make up for a deficiency in healthcare funding from the government, authorities said. They've mentioned that drug price markups result in serious problems such as "encouraging medical institutions to use more drugs and more expensive drugs, which results in a rapid rise of medical costs and increased burdens for both the government's medical insurance fund and patients".

Beijing started to pilot abolishing drug price markups in five public hospitals in 2012, and the income from drug sales accounted for about 33% of the total income for those hospitals last year, compared with 43% in 2012, according to the commission. To make up for revenue losses in drug sales, hospitals involved in the reform will increase the prices of some of the services they provide, such as surgery and nursing as well as traditional Chinese techniques such as acupuncture. Meanwhile, fees for checkups that involve the use of expensive machinery will be reduced.

According to the Beijing Municipal Commission of Development and Reform, overall, it is estimated that the cost of treatment per outpatient will be reduced by about 5%, while there will be an increase in price of 2.5% for inpatient treatment.

All public hospitals in China will abolish price markups by the end of this year, the National Health and Family Planning Commission, China's top health authority, said earlier this month. (Source: China Daily)