Defects in the medical system and distortion in drug pricing

摘要

“” Through an analysis of China's healthcare system and the regulatory model of pharmaceutical pricing, the paper concludes that the prime cause of pharmaceutical pricing inflation is the two-directional monopoly of public healthcare institutions on pharmaceutical retailing. The low cost of medical services means that public hospitals can legitimately use the sale of pharmaceuticals to subsidize the provision of services. Moreover, the policy of controlling the rate of return gives public hospitals a further incentive to buy and sell high-cost pharmaceuticals. In addition, the policy of independent pricing together with the laxity of the system for approving new drugs allows the makers of pharmaceutical products to charge higher prices and facilitates public hospitals' sale of high-priced drugs. All of these problems result from inappropriate government controls. Therefore, the basic strategy for solving the problem of inflated pharmaceutical prices should be to lessen government controls on healthcare, open up retail sales of prescription medicines, and reform the public healthcare system and medical insurance reimbursement, breaking the monopoly of public hospitals.