China Medical News

At the beginning of this year, China’s National Health and Family Planning Commission, along with seven other ministries, issued a new policy designed to streamline pharmaceutical distribution channels.

Previous distribution chains were typically comprised of manufacturers who sold to multiple distributors, which then goes through multiple tiers of distributors before reaching the hospitals, thus the price becoming high with margins at each tier.

This new policy, originally introduced in December 2016, is called ‘two invoice system’ where, during the distribution process from drug manufacturer to the hospital, only two invoices can be issued. The manufacturer issues a first invoice to the distributor, while the distributor issues a second invoice to the hospital or medical service provider. This aims to reduce the cost of pharmaceuticals (by eliminating the margin of multiple tiers of distributors) and to prevent possible corruption.

The system is currently being piloted in a number of provinces, and is expected to be fully implemented nationwide by the end of 2018. (Source: China Briefing / China Business Review)