Pharmaceutical pricing policies in China

Abstract

This chapter describes China’s drug pricing system, which affects the overall health system, pharmaceutical industry, and drug price setting and regulation. China’s thousands of domestic drug companies account for approximately 70 % of the market. However, the Chinese pharmaceutical industry is characterized as having a low market concentration, weak international trading competitiveness, and a lack of domestically developed patented pharmaceuticals. Between 1998 and 2013, the government intervened to directly set prices on 32 occasions. Each time, the average price reduction across therapeutic categories was approximately 20 %. These cuts have had a significant impact on the Chinese pharmaceutical industry. The number of drugs subject to price controls in China rose to 2,700 in 2013; these drugs only account for 20 % of all medicines, but represent 60 % of the total value of all drugs sold. Although the government has substantially improved drug price management, further steps are required to make the pricing system more scientific, rational, and transparent.