China moves to curb health costs

 Financial Times:

China has moved to control healthcare costs for its citizens from Beijing, setting plans to purchase and distribute hundreds of essential medicines that are now mostly sold at huge mark-up prices through hospital pharmacies.

The measures are part of an Rmb850bn ($124bn, €88bn, £75bn) overhaul of the country’s ailing health system, aimed at securing basic medical services for every citizen and increasing efficiency and transparency in drug use.

When Beijing began reforming its communist economy 30 years ago it discontinued free healthcare for all and, by 2000, the majority of the population was uninsured. Although the authorities have since tried to build a new healthcare system, large numbers of rural residents and migrant workers still cannot afford healthcare.

“By 2003, 30 per cent of poor households in the government’s National Health Survey were reporting healthcare costs as the main cause of their poverty,” the World Bank said in a report on health reform in China this year.

The World Bank said misaligned incentives encouraged hospitals to make money from selling drugs. China’s share of pharmaceutical expenditure relative to total health expenditure was nearly 45 per cent in 2003, compared to an OECD average of about 15 per cent.

Posted via email from Jim Nichols