Does the leading pharmaceutical reform in China really solve the issue of overly expensive healthcare services? Evidence from an empirical study

Abstract

BackgroundHealthcare system reform of Sanming city has become a leading healthcare reform model in China. It has developed a rigorous pharmaceutical reform consisted of the Zero Mark-up Drug Policy and the Centralized Procurement of Medicine Policy to bring down drug expenses and total health expenditures. However, despite the credit and much attention have been given to Sanming’s pharmaceutical reform, its impact still remains unclear. Therefore, the purpose of this study was to explore the impact of the pharmaceutical reform of Sanming on both drug and total health expenditures.MethodsInterrupted time series analysis with three segments divided by two intervention points was employed to evaluate the impact of the pharmaceutical reform. Segment 1 was the pre-reform period which captured the baseline information. Segment 2 occurred after the first intervention point when the Zero Mark-up Drug Policy was implemented, whereas Segment 3 was after the implementation of the Centralized Procurement of Medicine Policy. Primary outcomes are outpatient drug expenditure, outpatient total health expenditure, inpatient drug expenditure, and inpatient total health expenditure. Data spanning from May 2012 to May 2014 are included.ResultsBoth drug and total health expenditures exhibited rising trends before any policy was carried out. The launch of Zero Mark-up Drug Policy led to significant instant reductions in levels of outpatient drug expenditure (coefficient = -6,602.99, p<0.01), outpatient total health expenditure (coefficient = -9,958.58, p<0.05), inpatient drug expenditure (coefficient = -7,520.90, p<0.01), and inpatient total health expenditure (coefficient = -16,737, p<0.01). Moreover, the previous upward trends were changed into downward trends for inpatient drug expenditure (coefficient = -2,747.02, p = 0.00) and total health expenditure (coefficient = -3,069.29, p = 0.12). However, after the implementation of Centralized Procurement of Medicine Policy, we observed no significant instant level changes and also, the inpatient drug expenditure (coefficient = 372.95, p = 0.01) and total health expenditure (coefficient = 788.76, p = 0.06) resumed upward trends again.ConclusionsAlthough the pharmaceutical reform could control or reduced drug expenditure and total health expenditure in short term, expenditures gradually resumed growing again and reached or even exceeded their baseline levels of pre-reform period, indicating the effect became weakened or even faded out in long term. In all, the pharmaceutical reform as a whole failed to meet its goal of combating sharp growth of drug and total health expenditure.

Effects of different mark-up drug policies on drug-related expenditures in tertiary public hospitals: an interrupted time series study in Shanghai, China, 2015-2018

“…use, unnecessary drug use is serious in China (8)(9)(10). A close interest relationship between drug sales and prescriptions made unnecessary prescriptions and drug rebates prevail in the long term (11). Physicians in China tend to rely heavily on drug revenue due to the existence of profit margins on drugs (12).…”

“…There are two typical mark-up drug policies, one is Fixed Percent Mark-up Drug (FPM) policy, which allows drugs to be sold on fixed mark-up percent based on the purchase price; the other is Zero Mark-up Drug (ZMD) policy, which requires all public hospitals to prescribe drugs at purchase price without including a mark-up (23). Previous studies mostly presented positive effects on healthcare expenditures shortly after implementing ZMD policy, but showed mixed results regarding long-term effects (11,14,24). Regarding FPM policy, hospitals were found to show more preference for expensive drugs, which led to increasing healthcare expenditures and high drug revenue proportion in both outpatient and inpatient healthcare revenue (9,25).…”

A Systematic Review of Zero-markup Policy for Essential Drugs Effect on Medical Treatment

“…We excluded 25 records that did not meet our inclusion criteria. Nine studies (included time series study, retrospective cohort study, and quasi-experimental study) were included in this systematic review [1][2][3][4][6][7][8][9][10]. The characteristics of the included studies are summarized in Table 3.…”

“…Fu et al (2018) showed that a rise in expenditures for medical services and no changes in total health expenditures [8]. In addition, He et al (2018) showed the results that pharmaceutical reform could not reduce total health expenditure in long term [3]. There was a statistical significantly positive correlation between the rate of services compensation and the proportion of medical service revenue [1].…”

“…The solution of rest payment would be deemed a ridiculous way that diagnosis costs would be raised to cover 80% of original markup. The rest was subject to medical institutions themselves [3].…”