May 11, 2017 07:58 PM

China Prescribes Subsidies to Offset Drug-Price Limits at Public Hospitals

(Beijing) — China will spend billions of yuan to help public hospitals offset a potential shortfall in funding resulting from a national reform plan that will ban them from marking up the prices of prescription medicines.

This year, the central government will dole out 20 million yuan ($2.9 million) to each of 338 cities to launch pilot reform programs at their respective public hospitals, said Song Qi, deputy head of the ministry department overseeing social security.

District governments in the 300 cities will also receive an additional 1 million yuan, Song said at a news conference in Beijing on Thursday.

The medicine surcharge, as high as 15% and given the government’s blessing in 2006, has been a flashpoint in China, with patients complaining about drug prices. To help compensate for the loss of revenue when the surcharge is banned, hospitals will be allowed to charge in-patients more for doctors according to their capability to pay, in addition to receiving the government subsidy.

Last month, Beijing became the first city to ban public hospitals from such markups. A nationwide ban on drug markups at public hospitals goes into effect at the end of September, said Liang Wannian, head of a department in charge of policy and reform at the National Health and Family Planning Commission.

Some critics of the drug-pricing plan are concerned it will leave public hospitals strapped for cash. Public hospitals get only about 10% of their funding from the government, leaving them to come up with the rest, according to government statistics.

“With the funding, the government wants to make sure that doctors will have more incentive to provide better service at public hospitals, while medical expenses for patients will not go up in general,” said Liang, who also spoke at the news conference.

Liang did not say how long the trial program — and the government funding — will last, nor whether the subsidy will be enough to make up to the deficit left by banning the markups.

Fiscal spending on medical care this year rose by more than 5%, or by 1.4 trillion yuan from a year ago, Song said.

Contact reporter Li Rongde (


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