The prices of some drugs have surged up recently with a cardiac medicine, for instance, costing 10 times more. Some consumers are linking it to the latest reform in China's drug regulation history. In May, the National Development and Reform Commission (NDRC), China's top economic regulator, announced the price ceiling imposed by the government on over 2,700 pharmaceutical drugs would be removed from June 1 onward. The aim was to encourage market competition, thereby reducing medical costs. The reform covers most drugs in China except narcotics and some listed psychotropic medicines.

To reduce the cost of medicines in the past two decades, the government had announced more than 30 rounds of price cuts. The June reform has sparked criticism after some drug prices went up. Some consumers are worried that the reform will be taken as an excuse by some pharmaceutical companies to further raise prices. However, its advocates argue that the hike is just a temporary phenomenon, and the market mechanism will eventually play a regulatory role.

Pro

Zhang Debi

Columnist

While talking about removing the price ceiling since last year, the NDRC, however, had mandated that the average daily medicine cost must be less than 3 yuan ($0.5). The cardiac drug, even at a 10-fold higher price, is still below par and affordable for most Chinese patients. No one likes a price hike but it's still better than drugs disappearing. With raw material and operational costs greatly increasing in the past decade, and yet drug prices having to be kept stable, pharmaceutical companies were under too much pressure.

Pro

Qing Chengzi

Columnist

When there was a price ceiling, many pharmaceutical companies found business unprofitable and either decreased or stopped production. We have seen this happen with many different medicines. People have been complaining that many specialty drugs are disappearing from the market. Before people buy the medicine they need, many spend a lot of time on searching for the right medicine. The value of the time they spend and sometimes the money they spend on the search is enormous, usually hundreds of times more than the drug's price. The price ceiling was supposed to maintain a stable price to help the poor but it was eventually making it harder for them. Removing the ceiling can lead to the cost of the search decreasing as more medicines will be available. Besides, pharmaceutical companies will be motivated to increase production and those that have stopped production will reopen. Then the increasing competition will hold back prices from rising. As supply increases, it can be expected that prices will fall. There's no need to worry.

Con

Hu Xiaoxiang

Jiangsu Health Law Society

Drugs are a special product. The market law, generally speaking, does not apply to drug prices. Market adjusts price through competition, playing a critical role in deciding the final price. However, there has to be a correlation between supply and demand before reaching the market-adjusted final price. The premise here is that there is a direct correlation between supply and demand. But in the case of drugs, this premise does not hold. Most nonprescription medicines have to go through a third party - medical institutions - to reach patients. As a life-saving product, a drug follows a production license system and its price is fixed. Therefore, pricing, especially for over-the-counter medicines, should follow government guidelines.

Pro

Beijing News editorial

Those, who believe removing price control will push up prices, are confusing cause with effect. The reason behind high prices is mismanagement. Admittedly, removing price control does not necessarily mean there is a mature market competition mechanism with enterprises willing to give up high profits. What we need is to maintain a balance between state control and the free market. The focus should be on after-event supervision rather than government pricing at the very beginning. In other words, the government should work on a regulation mechanism for the circulation of drugs, intellectual property rights and batch numbers. It should also guard against possible monopoly and improve the price supervision system rather than simply controlling pricing.

Pro

Bi Xiaozhe

Legal Daily

Even though there are negative effects like price surging, the final result will be positive and promising. The Third Plenary Session of the 18th Communist Party of China Central Committee set the goal of improving the market price mechanism. The new reform is consistent with this goal. For drug market reform, market price mechanism is the main tool. From the perspectives of both history and reality, liberalizing drug market is a necessity and has to be done immediately. Of course, every significant reform is accompanied by risks, but it will succeed if we stick to the right direction.

Con

Yang Linhua

Doctor

Unfair competition can become a problem. Due to low profit margins, not many pharmaceutical companies are producing inexpensive basic drugs such as anti-hypertensive and hypoglycemic drugs. The number will get smaller now that the price ceiling has been removed. All pharmaceutical companies will be in the fray to produce drugs that generate high profit.

Pro

Zhu Hengpeng and Yu Hui

Chinese Academy of Social Sciences

Many European countries impose strict control measures on drug prices with different methods such as pricing on cost and pricing on margin. However, the results prove that these measures are not effective in reducing medical costs. In countries with tighter price control, the growth of medical costs is not lower than other countries. Apparently, drug price control is not a solution to high medical cost. Instead, it has negative effects on resource allocation and production in the pharmaceutical industry, which has been proven in China's drug price control practice. In the last 10 years, the NDRC has mandated more than 30 rounds of price cuts covering thousands of medicines but failed to achieve the goal of reducing medical costs and it even led to a phenomenon of cheap basic medicines disappearing from the market.

Con

Li Jie

Southern Daily

Ideally, there should be fair competition but the reality is something else. The reform will be advantageous only to the big pharmaceutical enterprises. With the ceiling removed, won't there be monopoly pricing and malignant competition? We all know that drugs are not average goods, so drug price reform cannot be achieved in one go. Drug prices are like a baby. It's ok to have the baby learn to walk independently, but it does not mean letting go all at once because there are so many unpredictable problems and dangers around.