July 05, 2012 05:08 ET

Series of Mandated Price Cuts Not Effective in Stemming Chinese Healthcare Expenditures

ROCKVILLE, MD--(Marketwire - Jul 5, 2012) - has announced the addition of the new report "Pharmaceutical Pricing and Reimbursement in China - Series of Mandated Price Cuts Not Effective in Stemming Healthcare Expenditures," to their collection of Pharmaceuticals market reports. For more information, visit:

Pricing and reimbursement is of paramount importance in China because of the rapidly rising expenditure on drugs. These issues become more acute because of the large population in China, and its associated effects on expenditure on drugs. Although the rapidly growing population and shift towards urbanization offer a large market for drug manufacturers, the market is tempered by the pricing and reimbursement system in China. Challenges faced by companies entering the Chinese pharmaceutical market include government price controls, extensive retail mark-ups, and wide regional variations in insurance.

Pharmaceutical price and pharmaceutical quantity are major factors contributing to healthcare expenditure. The control of retail prices alone is not effective in containing healthcare expenditures; it is also essential to prescribe efficient pharmaceutical utilization. Efficient pharmaceutical utilization is achieved by the use of appropriate reimbursement mechanisms, and a prospective payment system. This cost-driving reimbursement mechanism is incompatible with the goal of containing health-care costs. The reform of the reimbursement mechanism therefore plays a vital role in the changing incentives to the providers. The new reimbursement mechanism provides incentives to healthcare professionals, encouraging efficiency and cost savings when using all health resources, including drugs. The new reimbursement mechanism is an effective countermeasure for the Chinese healthcare system, which is plagued by over-prescription, abuse of quality technology services and cost shifting. A large part of the pharmaceutical market growth is propelled by the expansion of the public sector health insurance coverage, which also includes a greater reimbursement of drugs.

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