As Drug Costs Rise, How Far is China from a Unified Pharmaceutical Market? (AI Translation)
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文｜财新周刊 周信达 赵今朝
By Caixin Weekly's Zhou Xinda and Zhao Jinzhao
55岁的湖北人胡丹（化名）是一名高血脂患者，需每天服用阿托伐他汀钙片（商品名：立普妥）。2024年年初在经历一次复诊后，医生告诉她可以直接到药店买药，同样能享受到医保报销，还省去排队挂号的麻烦。但来到社区附近一家连锁药房后，她犯起了嘀咕：一盒20mg*7片规格的立普妥，武汉市中心医院价格38.49元，药店却卖45.7元。“我每天都要吃一片，一年算下来贵了300多元。”
Hu Dan (a pseudonym), a 55-year-old resident of Hubei Province, is a high cholesterol patient who needs to take atorvastatin calcium tablets (brand name: Lipitor) daily. After a check-up in early 2024, her doctor told her she could buy the medication directly from a pharmacy and still enjoy insurance coverage, sparing her the hassle of waiting in line to register at the hospital. However, when she visited a nearby chain pharmacy, she had second thoughts: a box of Lipitor with a dosage of 20mg*7 tablets costs 38.49 yuan at Wuhan Central Hospital, but the pharmacy price was 45.7 yuan. "I need to take one tablet every day, which means it will cost me over 300 yuan more annually," she remarked.
这样的药品差价屡见不鲜。一盒5mg*28片品规的降压药苯磺酸氨氯地平片，由辉瑞制药有限公司生产，辽宁一医院挂网价91.28元，电商平台稍降为89元，在零售药店却最高129元；在河北，一瓶10ml的葡萄糖酸钙锌口服溶液，定点药店售价最大值竟达到其他医院和网购价格的10倍。
Such price discrepancies for medications are not uncommon. A box of 5mg*28 tablets of the antihypertensive drug Amlodipine Besylate Tablets, produced by Pfizer Pharmaceuticals Ltd., is listed at RMB 91.28 at a hospital in Liaoning, slightly lower at RMB 89 on e-commerce platforms, but can reach up to RMB 129 at retail pharmacies. In Hebei, a 10ml bottle of Calcium Gluconate and Zinc Oral Solution can be priced up to ten times higher at designated pharmacies compared to hospitals and online prices.
药品价格与每个人的“钱袋子”息息相关，更考问着中国新医改多年来“纾解看病贵”这一使命的落实效果。经过“两票制”、“零加成”、集中带量采购等一系列改革，公立医院价格的“水分”被挤出。但抛开市场规模、运输距离、回款效率等客观因素，同一药品在省际间仍存在不可忽略的差距。而在医院之外，零售市场渠道细碎，参与主体多元，信息封闭程度高，线下药店由于房租、人力、水电设备成本，价格通常比医院高出15%左右；线上电商平台以吸睛的促销补贴作为获客手段，低价竞争愈演愈烈。
Drug prices are closely tied to everyone's wallet, challenging the effectiveness of China's years-long healthcare reform mission to alleviate the burden of high medical costs. Reforms such as the "two-invoice system," "zero markup policy," and centralized bulk procurement have squeezed out the "inflated prices" within public hospitals. However, despite these efforts, significant price disparities for the same medication remain across different provinces, even when accounting for factors such as market size, transportation distance, and payment efficiency. Beyond hospitals, the retail market is fragmented, with multiple participants and high levels of information opacity. Offline pharmacies, burdened by costs related to rent, labor, utilities, and equipment, typically price medications about 15% higher than hospitals. Meanwhile, online e-commerce platforms increasingly engage in cutthroat price competition, using attractive promotional subsidies to attract customers.
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- **Price Discrepancies:** Medications like Lipitor and Amlodipine show significant price differences between hospitals, pharmacies, and e-commerce platforms, often resulting in higher costs for consumers.
- **Regulatory Efforts:** China's National Healthcare Security Administration is intensifying efforts to standardize and regulate drug prices nationwide through policies that promote transparency and eliminate inflated prices in various channels.
- **Market Impact:** Regulatory oversight is expanding to include online platforms, forcing a recalibration of pricing strategies by pharmaceutical companies, pharmacies, and e-commerce platforms to ensure fair competition and consumer access to affordable drugs.
Hu Dan, a 55-year-old resident of Hubei Province, is a high cholesterol patient who requires daily atorvastatin calcium tablets (Lipitor). She learned from her doctor in early 2024 that she could purchase her medication directly from a pharmacy and still enjoy insurance coverage. However, during a visit to a nearby chain pharmacy, she noticed a significant price difference: a box of Lipitor at Wuhan Central Hospital cost 38.49 yuan, whereas at the pharmacy it was priced at 45.7 yuan, implying an over 300 yuan annual increase [para. 1].
Such discrepancies in drug prices are common. For example, 5mg*28 tablets of Amlodipine Besylate Tablets from Pfizer are listed at 91.28 RMB in a Liaoning hospital, compared to 89 RMB on e-commerce platforms and up to 129 RMB at retail pharmacies in Hebei [para. 2]. Additionally, a 10ml bottle of Calcium Gluconate and Zinc Oral Solution is priced ten times higher in some designated pharmacies compared to hospitals and online prices [para. 3]. These price differences challenge the efficacy of China's healthcare reforms aimed at reducing medical costs, despite policies like the "two-invoice system," "zero markup policy," and centralized bulk procurement [para. 4].
The price mechanisms for non-procurement drugs generally place e-commerce platforms as the cheapest, followed by hospitals, with retail pharmacies being the most expensive. This ranking changes for procurement drugs, where public hospitals offer the lowest prices due to volume negotiations [para. 6]. Issues arise as offline pharmacies, burdened by operational costs, often charge about 15% more for medications. Meanwhile, e-commerce platforms engage in fierce price competition through promotional subsidies [para. 5].
A nationwide drug price regulation initiative led by the National Healthcare Security Administration began in early 2024, aimed at creating a unified national pharmaceutical market. The initiative includes comparing drug prices listed nationwide to form a monitoring price and inspecting drugs with the same generic name across provinces [para. 8][para. 9]. Additionally, a "Notice on Carrying Out Special Actions to 'Go to Online Stores, Check Drug Prices, Compare Data, and Conduct Governance'" was issued, using "instant delivery price" from online platforms as a reference point. This aims to address abnormally high prices and encourage pharmaceutical companies to adjust their prices accordingly [para. 10][para. 11].
Regulations now include monitoring the prices of medications on popular platforms like Meituan, Ele.me, and JD.com. This transparency requires offline pharmacies to align their prices closer to those of online platforms, causing shifts in the retail industry [para. 12][para. 13]. Industry insiders admit that the rapid rollout of these measures has led to a period of adjustment [para. 14].
Choosing "instant delivery price" is based on the transparency, comparability, and competitive dynamics of online drug sales platforms, providing a valuable reference for drug price monitoring [para. 15]. The aim is to curb price discrepancies caused by market manipulation and ensure fair competition [para. 16]. This regulation landscape has placed varying tensions on pharmacies, e-commerce platforms, and companies, often pressuring high-priced pharmacies to lower their prices to retain customers and maintain regulated business practices [para. 17].
Pharmaceutical companies and online platforms face pressures to adapt their pricing strategies and maintain transparency and comparability in their prices. The goal is to balance fair pricing with business sustainability while ensuring consumer access to affordable medications. This challenge underscores the broader objective of constructing a unified national pharmaceutical market amidst numerous obstacles [para. 18].
The Caixin Weekly article provides an in-depth look at the ongoing efforts, challenges, and regulatory measures to address drug pricing disparities in China, aiming to force drug prices down and establish a more equitable pharmaceutical market [para. 19].
- Pfizer Inc.
辉瑞制药有限公司 - Pfizer Inc. produces the 5mg*28 tablets of Amlodipine Besylate, a hypertension medication. In Liaoning, the hospital network price is 91.28 yuan, e-commerce platforms reduce it to 89 yuan, and retail pharmacies sell it for up to 129 yuan. This price discrepancy is cited as an illustration of the broader issue of varying drug prices between different sales channels.
- Meituan
美团 - Meituan is a prominent O2O (Online to Offline) platform in China that has expanded into the pharmaceutical market. It offers "instant delivery" services for medications and has implemented a "lowest price" strategy to compete. Meituan has also embraced the new pricing policies by adding price comparison features on its platform.
- Ele.me
饿了么 - Ele.me is mentioned in the article as one of the well-known delivery and e-commerce platforms in China. The platform's drug prices have been used as a reference in the new regulatory measures aimed at normalizing drug pricing across various retail channels, both online and offline. This initiative is part of broader efforts to create a unified national pharmaceutical market.
- JD.com
京东 - JD.com, a major e-commerce platform, plays a significant role in the online pharmaceutical market. It is known for offering competitive prices and promotions, including free shipping during events like "618." However, as part of recent policy changes, JD.com and other platforms are being closely monitored for drug pricing to ensure transparency and prevent manipulation.
- Bristol-Myers Squibb (China)
中美上海施贵宝制药有限公司 - The article did not mention Bristol-Myers Squibb (China). Instead, it focused on various pharmaceutical pricing issues in China, healthcare reforms, and regulatory actions for different channels such as hospitals, retail pharmacies, and online platforms.
- YiXinTang
一心堂 - YiXinTang is a leading chain in the retail pharmacy sector and was recently called out for Medicare fund misappropriation, highlighting increased scrutiny in the industry. Despite opening outpatient pooling services, prescription transfers from medical institutions to pharmacies remain minimal. YiXinTang reported a performance decline in 2023, indicating ongoing challenges in the pharmacy sector.
- October 2021：
- Suqian Medical Insurance Bureau of Jiangsu Province conducted price monitoring of six designated pharmacies.
- June 2023：
- Leading chain Yi Xintang was summoned for discussions by the National Healthcare Security Administration due to fraudulent claims.
- August 2023：
- There were 484,000 designated retail pharmacies nationwide, accounting for over 70%.
- Beginning of 2024：
- A notification titled 'On Promoting Fair, Honest, Transparent, and Balanced Pricing of Inter-Provincial Goods with the Same Generic Name and Brand' was issued to kick off a new round of drug price regulatory actions.
- First Quarter of 2024：
- The National Healthcare Security Administration issued another notice titled 'Notice on Carrying Out Inspection and Disposal of Risky Drug Price Varieties at Designated Medical Insurance Retail Pharmacies'.
- Early 2024：
- Hu Dan's doctor informed her that she could buy atorvastatin calcium tablets directly from a pharmacy with insurance coverage.
- April 2024：
- The market size of the O2O direct delivery pharmacy sector exceeded 3.3 billion yuan, representing a year-on-year sales growth of 31%.
- End of May 2024：
- The National Healthcare Security Administration issued a 'Notice on Carrying Out Special Actions to 'Go to Online Stores, Check Drug Prices, Compare Data, and Conduct Governance'.
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