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China to set up essential medicine system to curb rising drug prices

The Chinese government Tuesday announced it will institute an essential medicine system within three years to drive down prescription costs and quell public complaints of limited accessibility of medicines.

The system includes a list of essential medicines that would be produced and distributed under government control and supervision, according to an action plan (2009-2011) on China's health-care reform.

The list will be issued this year, according to the plan.

It did not say how many drugs would be included in the list, but sources with the Ministry of Health said the list could be compiled on the basis of 300 to 400 drugs recommended by the World Health Organization (WHO).

Essential medicines are those that satisfy priority health-care needs, according to the definition of the World Health Organization.

"Essential medicines do not mean cheap medicines," Liu Xinming, director general of the department of policy and regulations of the Ministry of Health, told Xinhua.

They were selected with due regard to disease prevalence, evidence on efficacy and safety, and comparative cost-effectiveness, he said.

The WHO model Lists of Essential Medicines has been updated every two years since 1977. The current version, the 15th list, dates from March 2007.

The action plan states essential medicines should be used at all public health facilities at grassroots levels from 2009. They should also be available at all retail drugstores and medical institutions.

In China, drugs are also sold at hospitals.

Prices of the essential drugs will be under government control. The central government will set reference prices, based on which, provincial governments set the purchase prices of the drugs in their jurisdiction.

Public medical and health facilities at the grassroots levels should sell the drugs at the purchase prices, according to the plan.

Drug pricing in China currently falls with the jurisdiction of several departments, including the National Development and Reform Commission (NDRC) and the State Food and Drug Administration.

In the 1980s, China launched market-oriented reforms. Public hospitals were encouraged to make their own incomes with the aim of mobilizing medical workers and improving hospital efficiency.

Less government funding resulted in deficits for public health institutions, which forced hospitals to generate their own revenue by aggressively selling drugs.

To stem the tide of rising public complaints about high medical costs, the NDRC has capped the cost of hundreds of drugs over the years.

However, critics argue the price cuts have not been the cure since drug manufacturers often change the name and packaging of their drugs to escape price controls.

Some hospitals and clinics have also turned a blind eye to government price caps and refuse to prescribe lower priced alternative drugs.

To ensure the quality of the drugs and prevent corruption in drug purchasing and distribution, the plan also said all essential medicines used in public medical and health institutions can only be purchased from enterprises selected through public tender.

Drug safety regulators should regularly conduct quality inspections of drugs on the list and open the results to the public, the plan states.

"A system that ensures transparent bidding, reasonable pricing, standard drug use is key to addressing public complaints of limited accessibility of medical services," Liu said.

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