1. A MEDICINE PRICES SURVEY IN CHINA Presentation by Dr Xiaoxia Hu Research by Dr Sun Qiang and Dr Xiaoxia Hu June, 2006

2. Sectors and facilities surveyed 5 private pharmacies Private sector 2 secondary hosp 3 township hosp 2 secondary hosp 3 township hosp 2 secondary hosp 3 township hosp 1 Pharm Centralized Bidding Office 2 tertiary hosp 3 secondary hosp Public sector LowMiddleHighCapital cityEconomic development ChipingJinxiangZhangqiuJinanCity/county studied

3. Availability of the 50 surveyed drugs Private SectorPublic Sector # of drugs found in % of outlets 7 2 12 18 LPG(39) 1 8 8 22 IB(39) 0 6 10 23 drugs IB (39) 8Over 50% 321 - 50% 101- 20% 18Not Found LPG Private SectorPublic Sector Sample of drugs with good availability 60% 0 85% 80% LPG 25% 30% 20% 0 IB 25% 20% 0 IB 80%Omeprazole 0Losartan 70%Ceftriaxone injection 85%Amoxicillin LPG

4. Prices 9 6 # of Meds. in Both Sectors 0.680.520.77LPG 1.014.154.09IB Private Public Ratio Private Sector MPR Public Sector MPR [average] 0.51 7.98 4.13 NA 0.19 5.95 Private [MPR] 0.471.09LPG 1.037.74IBOmeprazole 0.924.51LPG NAIBNifedipine Retard 0.580.33LPG 1.015.89IBCeftriaxone Private Public Ratio Public [MPR] Medicine name

5. Price components 4752.71615.1The retail price not dividable N/A Import duty, VAT, port fee etc 3% N/A 3% N/A National tax 4.5%17.11%25.69%14.05%Hospital /retailer markup 3%6.16%3%10.33%Wholesaler markup 42.39 12 Wholesaler procurement price PrivatePublicPrivatePublic IB Losartan Generic Amoxicillin

6. Final prices in Public and Private sectors Same base price Markups generally higher in public sector

7. Key issues identified Prices of drugs are much higher than the international reference price Drugs of innovator brand are much more expensive than generic equivalent. Drugs obtained from the public sector are more expensive than those from the private sector, especially for generic drugs Availability of surveyed drugs is low in China The mark-up in the distribution chain contributes greatly to the price of drugs. The mark-ups are higher in the public sector than in the private sector

8. Follow on activities planned Advocate government to further develop the medicine pricing policy Promote the use of generic drugs to both the providers and the public Develop provider behavior restraining mechanisms on the use of non-generic drugs Strengthen the monitoring of the medicine distribution channels, and control of the procurement process