Cheap medicines disappearing from China market despite reform efforts

Cheap drugs in the Chinese medical system are a money-losing proposition, and as a result hospitals across the country are reporting shortages of essential medicines used to treat widespread and common complaints, according to a story by the state-owned news agency Xinhua.

Officials blamed alleged monopolies on the raw materials used to make the medicines, the report said, adding that the monopolistic companies were low-balling bids to win business and increase their market share. Once that's accomplished, the companies start to reduce their production of cheaper drugs--the prices of which are often state-controlled--and then turn their focus to higher-priced and more profitable medicines, the report said.

The Beijing News surveyed 40 major hospitals across China and found that 342 of more than 500 types of essential medicines were in short supply, Xinhua reported.

Officials in the industry said hospitals themselves were also to blame even after Beijing moved to eliminate their practice of a 15% profit on drugs sold on site.

In May, the State Council scrapped a 15% markup on drug sales in major hospitals nationwide in a pilot that aims to transform pharmaceutical cost and quality problems over a two-year horizon as part of a major health system overhaul. It also cuts a key source of revenue for the "superhospitals."

China Premier Li Keqiang

In March, China Premier Li Keqiang said the government will lift price controls on pharmaceuticals, which would mark a dramatic change of tack in efforts to both widen access to medicines from the cities into the countryside while keeping spending in check.

Just last week the country's Ministry of Finance said it would spend $1.54 billion to subsidize public hospital reform efforts in 2016, according to a Reuters report.

An official with the National Health and Family Planning Commission said in the Xinhua report that hospitals and drugmakers should come up with "a more reasonable drug price" and that pharmaceutical companies and hospitals should coordinate more to help keep drug prices down.

- here's the story from Xinhua and one from Reuters