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Drug price markups ending in China’s public hospitals

China continues its medical reforms by ending the decades-long policy of drug markups in public hospitals. The National Health and Family Planning Commission said all public hospitals are required to sell drugs at cost starting in September. Many public hospitals are already doing so. At the same time, medical fees have been raised to encourage better service.

Since July 1st, drug price markups of 15 percent have all been eliminated in all public hospitals in North China’s Shanxi province.

Many patients are pleased. Those who have to take medicine on daily basis say they are the biggest beneficiaries. Zhu Xiaohui’s father had a stroke in February and needs to take medicine every day. Zhu says as the drug prices were lowered, it can save them about 1,500 yuan a month.

Pharmacists in Shanxi provincial people’s hospital also feel the change. Li Yuanping, chief pharmacist in the hospital, says the new policy can save at least hundreds of yuan a month for those with chronic diseases like diabetes, high blood pressure or high cholesterol. She’s also seen more patients choosing to buy drugs in the hospital now.

Also lowered are prices of medical examinations and tests. What’s gone up are diagnostic and surgical fees, which have been too low for too long. Li Rongshan, director of Shanxi Provincial People’s Hospital, says they got good feedback from the patients after the price adjustments for drugs and medical services. They’ve raised the prices of medical services because doctors need to be encouraged to enhance their skills and services.

Chinese hospitals traditionally relied on drug sales for revenue, which resulted in excessive treatments and patient dissatisfaction. It’s estimated to save patients 60 billion yuan this year.

Wu Junhua, deputy director in the system office of Shanxi Health Bureau, says the local government will provide more subsidies, and public hospitals also have to work more efficiently to save some costs. More importantly, they should raise the medical service fees to ensure better service.

Experts say the end of drug price markups is only the beginning of China’s medical reform. The measure still won’t prevent doctors from receiving kickbacks from drug companies or curb excessive prescriptions and unnecessary medical treatment. More reforms in related systems are needed to solve all these problems completely.