China Medical News

On May 8^th, China's economic planning body, National Development and Reform Commission (NDRC) announced that they will scrap caps on retail prices for low-cost medicine. Price caps 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, said the NDRC.
This move towards free-market pricing comes after strict price controls leading to drug quality problems and shortages in the country. For example, many pharmaceutical companies registered to sell the thyroid medication Tapazole have halted production in recent years after pricing restrictions squeezed out profits, experts say, creating a shortage. Also in 2012, some drug-capsule manufacturers were found to be using industrial gelatin to cut production costs. The industrial gelatin contained the chemical chromium, which can be carcinogenic with frequent exposure, according to the U.S. Centers for Disease Control and Prevention.
However, according to experts, the pricing reversal may not necessarily alleviate pricing pressure for these drugs. According to Justin Wang, a partner at L.E.K. consulting, "To get drugs into hospitals, companies must compete in a tendering process at the provincial level, and it's still unclear how the provinces will react to this new national list". (Source: The Wall Street Journal)