Medicine Pricing Policy in China Center for Medicine Price Setting National Development and Reform Committee, P.R. China Lu Fengxia Manila, Philippine 2-4 August 2006

Principles of the Policy 1、Offering good medical services with low cost 2、Government control combining with market mechanism

Foundation of the Policy 1、Drug Administration Law 2、Regulations for Implementation of the Drug Administration Law 3、Regulations on Medicine Price Setting by the Government 4、List for Medicines with price set by the Government

Scope of Medicines with Price set by the Government 1、Medicines on the Reimbursement List 2、Controlled medicines - Patented medicines - Narcotics - Psychological medicines - EPI vaccines

Medicine Pricing Forms Used by the Government Two forms: 1、Controlled medicines: - NDRC set factory price (or border price - Provincial price authorities set wholesale and retail price 2、Other medicines: - Setting maximum retail price

Jurisdiction of the Medicine Price Setting Two tiers: 1、Central price control authority 2、Provincial price authorities

Principles for Price Setting Basis Principles： ------Cost ------Supply and demand ------Affordability

Principles for Price Setting 1、Secure rational profit rate 2、Keep rational cost performance 3、Good quality with good price 4、Encourage R&D 5、Reflect market demand

Procedures for Medicine Price Setting 1、Cost assessment 2、Market price investigation 3、Regional coordination 4、Expert evaluation 5、Price publication

Medicine Price Setting Policy 1、Good quality with good price Quality, efficacy, safety and cost Quality examination Clinical validation Expert demonstration

Medicine Price Setting Policy 2、Differential Pricing Brand name medicines and generics Different dosages Different strengths Different packages

Medicine Price Setting Policy 3、Price for inviting bids Cost plus ratio for price of the bid winner Cost plus ratio is set by the provincial price authorities Price is checked by the party inviting tenders

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