China kicks press into high gear to knock down talk on higher drug prices

Within days after China announced an upcoming end to controls on most drug prices, whispers were heard of concerns the move set for June 1 would lead to higher prices at the consumer level. Government information outlets went into high gear to dampen the doubts.

China Daily and CCTV, both state-run media outlets, took pains to debunk the concerns, noting that procurement by hospitals and pharmacies would continue to be made at the provincial level where prices are fixed through the bidding process.

State media also noted that China's laws governing competition and business behavior would remain in place to protect the consumers from outrageous price hikes. They echoed a new release by the State Council insisting "prices will remain under government control."

Earlier, as if to make doubly sure prices would not rise after controls, the National Development and Reform Commission (NDRC) urged local agencies "to organize a six-month check on the medicine market," according to Xinhua, the state-run news agency. The NDRC said the intent was to curb illegal practices, such as price fixing and artificial changes to increase the cost of a drug.

The China Daily also suggested the vast majority of drugs marketed in China would remain under price controls. It said the lifting of price caps affected only 2,700 drugs, only 23% of medicines on the market.

An NDRC spokesman called the China pharma market "genuinely competitive with increasingly strong supervision." The agency also rolled out various experts to confirm assertions that prices would not increase. One said they actually would be cheaper at the retail level than those sold by hospitals that use their leverage to negotiate lower prices from drug makers. Others said prices would remain unchanged.

Yet, the NDRC also urged involved agencies at all levels to strengthen their supervision of medical costs and prices to ensure fair competition. It also urged local authorities to set up online systems so they can better monitor prices.

The agency said that in addition to control of prices at the local procurement level, most of the freed drugs would still be controlled somewhat by various medical insurance plans even before they reach the hospitals where 80% of drugs are sold in China.

CCTV cited one drug currently capped at $4.87 at the retail level. It said an insurance company capped the price at $4.77, but a city bidding system earned a price of $4.16 at the hospital.

Under the government plan, prices would remain controlled for certain drugs, such as narcotics, anesthetics and grade-one psychiatric medicines.

Consequences in either direction could be huge. China's drug market boasted $180 billion in sales in 2013, up by nearly 36% from two years earlier. During the same period, hospital sales totaled nearly $138 million, a 38.2% increase. By 2018, China is forecast by IMS Health to reach the $185 million mark.

- here's the release from China's State Council
- and stories from China Daily, CCTV and Xinhua