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China’s National Health and Family Planning Commission and State Council have been working to reform the health care sector, which faces excessive dependence on drug sales for income, low pay for doctors, insufficient support from local governments, and low interest in private hospitals. Some ways in which officials are tackling health care reform include addressing drug sales in hospitals, reducing price controls on drugs, promoting the growth of private hospitals, and improving the quality of health care staff.

The State Council laid out health care reform objectives in a May 9 Circular, including the objective to eliminate drug markups as well as plans to make medical services of public hospitals more affordable and improve the quality of the staff. Implementation of performance assessments in hospitals is to help ensure that medical staff who do a better job will be paid accordingly.

The elimination of drug markups is to address the problem of excessive dependence on pharmaceutical income faced by hospitals. China’s leadership has committed to eliminate the mark-up on drug sales in hospitals over the next two years. County-level pilot programs eliminating the markup have faced losses, as an important source of income has been cut, even in the face of increased government subsidies and reduced price controls to hospitals in the initial pilot program. Prefecture-level cities are next as test regions before the reform becomes widespread. Government spending on hospitals is encouraged; currently, government expenditure in the area accounts for 5 percent of GDP.

Price controls on drugs also present a problem for both patients and pharmaceutical companies. China is the third-largest consumer of . . . . . read more

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