The bad side-effects of China’s campaign to cut drug costs
ANAESTHETICS THAT don’t put patients to sleep. Laxatives that fail to clear bowels. Blood-pressure medication with little effect. These are some of the problems that doctors have encountered in China’s public hospitals. They have been speaking out in recent weeks, questioning the quality of the country’s drugs and urging reform of the government’s procurement programme. The public has chimed in, too. “Medicine that doesn’t work, no matter how cheap, is useless,” wrote one user of Weibo, a social-media platform.
The government set up the procurement scheme in 2018 with the goal of lowering costs. Public hospitals had been negotiating individually with drug-makers; now there would be a central bidding system run by the National Health-Care Security Administration (NHSA). Because it was offering higher-volume contracts, the state insisted on better deals. (Public health-care institutions account for about 70% of drug sales in China.) It was hoped that foreign firms would compete with domestic drug manufacturers, driving down prices. At the same time, the space for kickbacks to doctors and hospitals would narrow.
The plan worked in one important regard. To secure contracts, drug-makers have cut prices by as much as 95%. All but a small fraction of the drugs procured through the programme are generics made by Chinese firms, which have undercut their foreign counterparts. The government says that since 2018 the scheme has saved China’s medical-insurance fund about 440bn yuan ($61bn)—much-needed relief for a health-care system that must cope with an ageing population. The NHSA claims that 80% of those savings have been used to buy innovative drugs. Many Chinese credit the programme with making care more affordable.
But the quality of the drugs bought under the programme has long been a concern. In 2021 the Shanghai Health Development Research Centre, a government think-tank, warned that smaller companies, facing pressure on margins, might adopt strategies that affect drug quality. Medical professionals have questioned whether firms cut corners to compete. Recently some doctors dug into the trials of generic drugs. They found that the data looked suspiciously similar to trials of the original versions. A unit of the state drugs regulator blamed “editing errors”.
In January, 20 doctors who are part of an official advisory body in Shanghai called for better monitoring of domestic drugs and for patients to be allowed to get an original branded medication, even if it was not on the government’s procurement list. Insurance reimbursements could be adjusted based on the drug selected, they wrote in their proposal, but doctors and patients should have a choice. Lu Changlin, a cardiologist at Beijing Chaoyang Hospital, has presented a similar plan in that city. The NHSA, for its part, has vowed to investigate the quality problems and hold firms accountable.
The government has also made clear that there is no regulation banning the purchase or use of imported and branded drugs. At private clinics patients have a wider choice of medication. But most of the population relies on public hospitals and, therefore, Chinese-made generics. That makes many people nervous. One patient took to social media to air her concerns about anaesthetics and share her fear of an upcoming operation. “I’m so scared of waking up in the middle of it!”
© 2025, The Economist Newspaper Limited. All rights reserved. From The Economist, published under licence. The original content can be found on www.economist.com
Post Comment