The effect of the implementation of low price medicine policy on medicine price in China: A retrospective study

Deregulation on branded and generic drugs price and its effect: a study of Chinese pharmaceutical market

Purpose

This research studies the effect of deregulation of price cap in pharmaceutical market. Price regulation (either through price cap or reference price) is common practice in the pharmaceutical market but recently there are increasing voices calling for deregulation claiming that deregulation could help in lowering drug price and increase revenue of pharmaceutical firms. Upon those callings, Chinese government removed the price cap regulation in June 2015. The author uses this natural policy experiment to study this effect.

Design/methodology/approach

In this study, the author applied the interrupted time series analysis (ITSA) on the revenue data of nine categories of both generic and branded drugs in China from March 2011 to August 2016 (the time frame includes both before and after of the initialization of the deregulation) and analyzed the effect of deregulation.

Findings

The results showed that, whether the revenue of drugs will increase or decrease after the deregulation of price cap depends on the level of competition and the change of patterns of the branded and generic drugs are different. When HHI (Herfindahl–Hirschman index) is sufficiently low (competition is high), revenue does not change as a result of deregulation, when HHI is moderately low (moderate competition), revenue from generic drugs will decrease significantly and revenue from branded drugs will increase significantly, and when HHI is high (low competition), revenue from generic drugs will increase significantly and revenue from branded drugs will decrease significantly.

Originality/value

This is a unique study with a unique data set. Most previous studies focus on regulation of drug price and analyze how this may affect drug revenue; however, this is a natural policy experiment of de-regulation. Moreover, previously most studies focus on reference pricing regulation and this is price-cap, a different mechanism that is rarely studied. The originality/value is high of this article.

The impact of policy on availability and price of low-price medicines in public healthcare institutions: A retrospective survey in Nanjing, China

In an effort to promote rational drug pricing and relieve the pressure of drug shortages, the Chinese government implemented a low-price medicine (LPM) policy in July 2014, and abolished price regulations for most medications in June 2015. This study examines trends in the availability and pricing of LPMs since policy implementation. Data on price and availability of 752 LPMs during 2013-2017 were obtained from the Jiangsu Institute of Medicine Information. Availability was defined as the proportion of facilities in which a medicine was in inventory during each survey period. A price index was constructed based on purchasing prices in 40 public healthcare facilities, using a standard method developed by the International Labour Organization. Mean availability fluctuated slightly but held at low levels (<15%). Levels were conspicuously lower in primary hospitals than in secondary and tertiary hospitals. Our logistic regression model showed that the essential medicine designation was the main factor facilitating availability. The overall price index remained static before implementation of the policy, while there was a marked upward trend after implementation of the policy. Further efforts are needed to improve the pharmaceutical supply system, and simultaneously curb unreasonable inflation in medicine costs.

Impact of the Low-Price Medicine Policy on Medicine Supply in China: An Interrupted Time-Series Analysis

Objectives: The primary objective of the study was to assess the impact of the Low-Price Medicine Policy (LPMP) on the supply of low-price medicines (LPMs) in China. The secondary objective of the study was to describe the supply situation of LPMs from 2005 to 2018.

Methods: The LPMP was launched in the third quarter of 2014 (2014Q3). An interrupted time series analysis was used to evaluate the impact of LPMP on the supply of LPMs in China. Ordinary least squares and Poisson regression models were utilized to estimate the effect of LPMP on LPMs’ supply growth rate and the number of supplied LPMs. All the LPMs were divided into two subgroups: intermittent supply and continuous supply. The trend and level changes of the quarterly average growth rate and number of quarterly supplies for different LPM groups were analyzed from 2005 to 2018.

Findings: For the quarterly average growth rate, before the intervention, a significant increasing trend was observed in the total group and the continuous supply subgroup; after the introduction of LPMP, the increasing trend was ceased and a significant decrease in the trend and level was noted for both the total group (trend coefficient: β₃= −0.0132, p < 0.01; level coefficient: β₂ = −0.1510, p < 0.05) and the continuous supply subgroup (trend coefficient: β₃ = −0.0133, p < 0.01; level coefficient: β₂ = −0.1520, p < 0.05); whereas it had no significant effect for intermittent supply subgroup. For the number of quarterly supplies, after the intervention of LPMP, decline of the supply number was observed (trend coefficient: β₃ = −0.0027, p < 0.001; level coefficient: β₂ = −0.0584, p < 0.001); whereas the LPMP was associated with an upward trend and level (trend coefficient: β₃ = 0.0715, p < 0.001; level coefficient: β₂ = 0.174) for the intermittent supply subgroup.

Conclusion: For most of the LPMs, LPMP did not meet the goal of stimulating LPM production. However, for severely shortage medicines (the intermittent supply subgroup), the effect of LPMP was positive. Comprehensive policies rather than just deregulating medicine price should be introduced to alleviate the situation of medicine shortage in China.

The effects of pricing policy on the prices and supply of low-cost medicines in Shandong, China: evidence from an interrupted time series analysis

Background

In China, some medicines had a supply problem. In 2015, to address this problem, the Chinese government issued a policy to raise the price cap for some shorted low-cost medicines (LCMs). The objective was to assess the effects on medicine prices and supply of medicines from a medicine pricing policy reform point of view.

Methods

This study was conducted in Shandong, an eastern province of China with a population of 99.4 million. We collected procurement data of all (n = 1494) LCM medicines available between April 2014 and February 2017 from the web-based Provincial Drug Centralized Bidding Procurement System. This study used the Drug Price index and the average price to reveal the price change of LCMs and used the interrupted time series to evaluate the effects of LCM policy on medicine supply by measuring the change of monthly procurement volume, the number of products, and the average delivery time of LCMs.

Results

After the policy implementation in October 2015, the quarterly average price of all LCM products, especially traditional Chinese medicines, showed a sudden growth trend. Then after two-quarter implementation of policy, the price recovered to the same trend before policy intervention, which is consistent with the trend of the Drug price index. There were 466 of LCM products available in October 2015. After the policy intervention, the number of products available increased by 109.87% (n = 978) in February 2017, at a growth rate of 6.44% per month (Value = 30.02, P < 0.001). Besides after the intervention in October 2015, the monthly procurement volumes of LCMs increased rapidly, on average, at a rate of 28.93% per month (Value = 474,000, P < 0.001) for all LCMs. The average delivery time of LCMs kept on decreasing from 33.37 days to 10.69 days at a reduced rate of 3.63% (Value = − 1.21, P < 0.001) per month before the policy, while no significant changes were noted. Also, average monthly delivery time was stable at 9 days after the intervention.

Conclusions

The policy promoted the supply of low-cost medicines, which is beneficial for the Universal Health Coverage. However, future policies should focus on monitoring price change and reducing the delivery time of generic medicines.

Impact of China's healthcare price reforms on traditional Chinese medicine public hospitals in Beijing: an interrupted time-series study

OBJECTIVE

To evaluate the 2017 implementation of China's 2009 healthcare price reforms on Beijing's secondary and tertiary traditional Chinese medicine (TCM) hospitals.

DESIGN

We employed a panel-interrupted time-series model with hospital fixed effects to estimate the impact of the price reforms.

SETTING

Beijing, April 2014 to April 2018.

PARTICIPANTS

All TCM hospitals in Beijing.

OUTCOME MEASURES

Our dependent variables comprised the monthly outpatient and inpatient revenues, the number of monthly outpatient visits and inpatient admissions, the average total expenditures per outpatient visit and per inpatient admission, the average drug expenditures (except herbal medicines) per outpatient visit and per inpatient admission and the average medical service expenditures per outpatient visit and per inpatient admission.

RESULTS

In tertiary hospitals, the price reforms led to significant reductions in the number of outpatient visits (23.1%), inpatients admission (4.6%) and drug expenditures (except herbal medicines) per inpatient admission (14.0%), and an instant raise in average total expenditure per outpatient (22.0%), medical service expenditures per outpatient visit (58.2%) and inpatient admission (19.0%). There was no significant association between the price reforms and the monthly outpatient and inpatient revenues. After the price reforms, the previous upward trend in medical service expenditures per outpatient visit rose more sharply (from 0.5% to 1.6%). In secondary hospitals, the price reforms decreased the level of drug expenditures (except herbal medicines) per outpatient visit (13.0%) and per inpatient admission (20.8%), but increased medical service expenditures per inpatient admission by 19.0%.

CONCLUSION

The Beijing price reforms adjusted the cost structures in secondary and tertiary TCM hospitals without negatively impacting the operation of the hospitals, and through the increased hierarchical medical service fee, shifted patient choices away from tertiary to other health facilities, especially for patients with minor illnesses.