Candidate Number: 30571 China’s Pharmaceutical Price Policies and Practices Contents Abbreviations ........................................................................................................................................3 Abstract .................................................................................................................................................4 1. Introduction ...................................................................................................................................5 2. Methodology .................................................................................................................................8 3. Background ...................................................................................................................................9 3.1. Health System ...................................................................................................................9 3.1.1. Financing Hospitals and Doctors ..........................................................................9 3.1.2. Medical Insurance ...............................................................................................10 3.1.3. Generic Policy ..................................................................................................... 11 3.2. Pharmaceutical Industry and Commerce ........................................................................13 3.2.1. Pharmaceutical Industry ......................................................................................13 3.2.2. Pharmaceutical Commerce..................................................................................14 3.2.3. Medicines Procurement through Central Bidding ...............................................14 3.3. Pharmaceutical Pricing Policies ......................................................................................16 3.4. High Level Forum on Developing NMP to Secure the Essential Medicine System .......18 4. Pricing Surveys ...........................................................................................................................19 4.1. Availability ......................................................................................................................19 4.2. Prices for Core Drugs......................................................................................................20 4.3. Affordability ...................................................................................................................21 4.4. Price Components ...........................................................................................................23 4.5. Comparison with India’s Surveys ...................................................................................24 5. Summary of China’s Medicines Price and Availability Problems ..............................................25 5.1. Complexity and Bureaucratic Structures.........................................................................25 5.2. Lack of Access ................................................................................................................25 5.3. Price and Affordability ....................................................................................................26 5.4. Generic Policy.................................................................................................................27 5.5. Price Components ...........................................................................................................27 5.6. Financing Hospitals ........................................................................................................27 5.7. Drug Use Patterns ...........................................................................................................28 5.8. Conflicts of Interests .......................................................................................................28 5.9. Corruption .......................................................................................................................29 6. Policy Options.............................................................................................................................30 6.1. Selection of Essential Drugs ...........................................................................................30 6.2. Drug Pricing ....................................................................................................................30 6.3. Generic Policy.................................................................................................................31 6.4. Supply and Distribution ..................................................................................................32 6.5. Affordability ...................................................................................................................33 6.6. Rational Reimbursement to Hospitals and to Doctors ....................................................33 6.7. Research ..........................................................................................................................33 August 31, 2007 1 Candidate Number: 30571 7. Conclusion ..................................................................................................................................34 Annex 1-8 ...........................................................................................................................................35 References...........................................................................................................................................45 August 31, 2007 2 Candidate Number: 30571 Abbreviations BMI CNHEI Basic Medical Insurance China National Health Economics Institute EDL Essential Drug List GDP Gross Domestic Product GMP Good Manufacture Practice HAI Health Action International IB Innovator Branded drugs IDA International Dispensary Association INN International Non-proprietary Names IRP International Reference Price LPG Lowest-Priced Generics Equivalent MOH Ministry of Health MHS Management Science of Health MOSSL Ministry of Labour and Social Security MPR Median Price Ratio NDRC National Development and Reform Commission NMP National Medicine Policy OECD Organization for Economic Co-operation and Development R&D Research and Development SC State Council SFDA State Food and Drug Administration SPDC State Planning and Development Commission (after 2003 became NDRC) THE Total Health Expenditure WHO World Health Organization August 31, 2007 3 Candidate Number: 30571 Abstract This paper describes China’s complex pharmaceutical sector, covering the overall health system, the pharmaceutical industry and commerce, and the drug pricing system. I have tried to collect all current relevant drug-related policies in China and the literature to evaluate these policies. Also, I have interviewed some key informants in the Chinese Government and academia. Problems in China’s pharmaceutical sector include lack of access, irrational reimbursement to hospitals/doctors and consequent irrational drug use patterns, disorganized supply and distribution systems and conflicts of interest among different stakeholders. Possible policy options to address these problems include generic promotion, rational reimbursement of hospitals and doctors, the promotion of regular supply and distribution systems, reasonable pricing, and encouragement of more research on all aspects of the pharmaceutical sector. A comprehensive and balanced National Medicine Policy (NMP), reconciling the varied interests of the many stakeholders, needs to be established to guide the whole process of drug production, selection, distribution, consumption and pricing, to promote a pharmaceutical industry that would ensure access by the Chinese population to essential medicines that are used rationally. August 31, 2007 4 Candidate Number: 30571 1. Introduction In 2005, China spent 4.73% of its Gross Domestic Product (GDP) on Total Health Expenditure (THE) {Ministry of Health (Statistic Information Centre), 2007 #41}. Drug expenses accounted for 50.5% of medical expenses for out patients and 42.7% for in patients in 2006 {Ministry of Health (Statistic Information Centre), 2007 #41}. China spends over 2.26% of GDP on pharmaceuticals which is more than most OECD countries, as shown in Figure 1. Figure 1. Pharmaceutical Expenditure/GDP in OECD Countries and China (2005) August 31, 2007 5 Candidate Number: 30571 Source: OECD 2007 and MOH, China, 2007 Although medicine retail price indexes have continually decreased since 1995 {National Bureau of Statistics of China, 1995-2006 #31} (See Annex 1), patients still regard drug prices as unaffordable and their out-of-pocket expenses accounted for 52.21% of THE {China National Health Economics Institute, 2006 #32}. The pharmaceutical sector in China is very complicated, involving many stakeholders with different and sometimes contradictory interests. In this paper, I describe the whole pharmaceutical sector. Although the focus is on pharmaceutical pricing polices, all the other policies described in the sector impact on prices, including: policies which impact on access to drugs; reimbursement to hospitals/doctors; and drug use patterns; supply and distribution systems; and the functions of different stakeholders, etc. No articles were found which collected all drug policy related documents involving all the stakeholders to analyse pharmaceutical price issues systematically. Therefore, I present information on all related policies to show their influence on drug prices. An annotated bibliography and the text of policy documents and related articles will be produced and made available on request to WHO. Also, as there is a lack of in-depth surveys on drug prices, this paper will synthesize existing drug price survey data between China’s provinces. August 31, 2007 6 Candidate Number: 30571 The first part of the paper describes current drug policies and their application. The second part presents the methodology and the third provides background. The fourth part compares two medicine pricing surveys in Shandong Province and Shanghai City on the availability of drugs, drug prices, affordability and price components. Comparison is also made with surveys done in six Indian states. The fifth part summarizes China’s medicines price and consequent availability problems, while the sixth part provides some policy options for Chinese decision-makers to consider. The paper concludes that a comprehensive NMP should be established to address pharmaceutical sector issues due to the complexity of the sector. August 31, 2007 7 Candidate Number: 30571 2. Methodology Drug policy documents were collected from all relevant Government websites, including SFDA, MOH, NDRC, MOSSL and from individual informants. They were sorted into the following categories: financing hospitals/doctors, medical insurance, generic policies, pharmaceutical industry/commerce and pharmaceutical pricing. Practical evaluations were mainly from VIP-database (a Chinese academic database); websites with the titles of specific policies as keywords, and other articles were provided by interviewees and from Pubmed searches. Interviews were undertaken in Beijing and Shanghai in July 2007. I interviewed key informants, 12 of whom were from the Chinese Government, who either have been or are involved in drug price-related policy-making, and 2 were from top academic institutions, who are all key experts in China doing research on pharmaceutical sector and also involved in the process of drug policy-making. For each informant, I prepared a list of questions which depended on their specific roles. See Annex 2. All citations in this paper are confirmed and authorized by interviewees. August 31, 2007 8 Candidate Number: 30571 3. Background 3.1. Health System 3.1.1. Financing Hospitals and Doctors China’s health facilities have experienced a transformation from planned management by Central Government to market-oriented management instigated since China’s economic reform. The percentage of Government financial support to hospitals decreased from about 60% at the beginning of the 1980s to 8.2% in 2003 {Ying XH, 2007 #18}. As a result, hospitals regard pharmaceutical sales revenues as their main financial sources. They accounted for nearly 80% of total drug sales {China National Health Economics Institute, 2006 #32}. Due to information asymmetry, patients have no power to control the quality and amount of medical services, and have to rely on physicians to make decisions on their behalf. So, hospitals and physicians can boost drug sales. In 2005, hospitals’ margins were over 50 billion Yuan (US$ 6.75 billion), which accounted for 42% of the procurement price (Zhu CH, 2007, Interview). To resolve this issue, NDRC {National Development and Reform Commission, 2006 #57} required retail prices to equal “the procurement price plus margin” with the profit rate fixed at 15%, while this gives hospitals incentives to procure higher-priced drugs (Li XF, 2007, Interview). The irrational salary system for doctors (Lu J, 2007, Interview) and pharmaceutical companies’ marketing (Wei JG, 2007, Interview) encourages them to prescribe expensive drugs to obtain higher rebates to compensate for their low salaries. The monthly salary and allowances of a county hospital doctor are between 1000 and 1500 Yuan ($US125 to $US187.5), while the monthly rebates from prescriptions are between approximately 3000 and 5000 Yuan (US $375 to US $625) {Liang, 2005 #52}. August 31, 2007 9 Candidate Number: 30571 MOH {Ministry of Health, 2000 #56} piloted instituting two-line management in Anhui Province to separate drug revenues and expenses in medical facilities, and expenses and revenues from medical services and drug sales. Net drug revenues are pooled and used to support medical services. An evaluation showed that this policy had failed to limit the growth in drug expenditure {Wang, 2006 #55}. Community health services have been encouraged to promote proper distribution of health resources with more government financial support since the beginning of 2006 {State Council, 2006 #60}. 3.1.2. Medical Insurance China provides free medicine services to a limited number of individuals, such as Government officials, most of whom could afford medical expenses (Wu YP, 2007, Interview). Five years after Zhenjiang Province and Jiujiang City’s pilots in 1993, the BMI system for urban employees (compulsory), which include employees of state-owned enterprises, collective-owned enterprises, foreign enterprises and private enterprises, government offices, institutions, and social groups, was officially established by the Chinese Government with the premiums paid by both employers and employees. Also, publication of a national BMI drug list followed {State Council, 1998 #58}. Drugs on the A-list could not be altered, while drugs on the B-list could be adjusted by the provincial government. The most recent 2004 edition includes 1027 western medicines, far more than the 300 drugs on the WHO Model List of Essential Medicines {World Health Organisation, 2007 #59}. At the end of 2006, 150.732 million urban employees were covered. Revenues from medical insurance funds were 174.7 billion Yuan (21.84 billion US$) and the expenditure was 127.7 billion Yuan (15.96 billion US$) in 2006, 24.3% and 18.3% higher respectively than in 2005. August 31, 2007 10 Candidate Number: 30571 In 2003, a new rural co-operative medical system was implemented mainly covering severe diseases. The rural population is expected to participate voluntarily and funds from individuals, collectives, central and local government. By the end of 2006, 508 million farmers were covered. The Government suggested establishing practical drug supply, distribution and monitoring systems; promoting drug procurement through centralized bidding or by county or township health centres on behalf of village clinics; and encouraging chain enterprises to supply drugs though a centralized supply system to grassroots-level medical facilities {Ministry of Health, 2003 #14; Ministry of Health, 2006 #13}. For drugs consumed in both urban communities and rural areas, Government-designated manufacturers are encouraged to assure the quality of drugs, print the retail price on even the smallest retail package, and reduce drug costs and prices by simplifying packaging, and centralizing supply. These drugs’ prices are set by the Government separately with more flexible mark-ups. Community and rural medical facilities should give priority to procuring and consuming drugs produced by designated manufacturers, not through a central bidding system and they should be procured by medical facilities directly and supplied centrally {State Food and Drug Administration, 1999 #63}. As a result, drug prices were reduced by 19% in Dongcheng District (Beijing) compared to hospital prices and the cost per prescription was reduced by 50%{Liu, 2006 #4}. 3.1.3. Generic Policy No generic substitution policies exist in China. However, MOH {Ministry of Health (Statistic Information Centre), 2007 #41} suggested that doctors should prescribe with INN, patented drug names for new-active compounds, and names of combination August 31, 2007 11 Candidate Number: 30571 preparations authorized and published by the SFDA. August 31, 2007 12 Candidate Number: 30571 3.2. Pharmaceutical Industry and Commerce 3.2.1. Pharmaceutical Industry The 2006 production and sales revenues, profits and export delivery values of the pharmaceutical industry are shown in Table 1. See Annex 3 also. Table 1. Chinese Pharmaceutical Industry’s Production and Sales Revenues, Profits and Export Delivery Values and Pharmaceutical Commerce’s Net Sales and Profits in 2006 2006 Compared to 2005 (%) Pharmaceutical Total Medical and 520/65 +17.53 Industry Pharmaceutical Product sales total profits 41.51/8.13 +11.01 Export Delivery Values 67.059/8.38 +25.51 Pharmaceutical Net Sales 280/35 +16.7 Commerce Net Profits 68/21 +6.1 revenues Source: NDRC, 2007 Note: in column 3, figures are first given in billion Yuan and then in billion US$ equivalent. There are over 4000 pharmaceutical manufacturers in China {Wei JG, 2007 #65}, most are small scale and produce the same drugs (Wu YP, 2007, Interview). For example, Compound Sulfamethoxazole are produced by over 1000 manufacturers {Wei JG, 2007 #65}. R&D capacity is very weak and financing for R&D is also low, only accounting for about 1% of the sales value {Wei JG, 2007 #65}. In 1994, GMP Certification began in China, but drug production is still not regulated effectively, with no established regulatory procedures for approving a drug. In 2006, 10386 “new” drugs were approved for the market by SFDA (Wu YP, 2007, Interview). August 31, 2007 13 Candidate Number: 30571 Competition among pharmaceutical manufacturers is based on price, not on quality. NDRC has reduced drug prices 24 times since 2000. Therefore, manufacturers aim to produce more “new” drugs, usually branded generics, to increase profits by only changing the name, formula, or packaging, while effective, “old” drugs were removed from the market because of their low profit margins. NDRC {National Development and Reform Commission, 2005 #61} issued “Regulation on Drug Price Differences Ratio” to verify drug prices for different dosages or weights of selected sample drugs, and the trend to create “new” drug are expected to be controlled. 3.2.2. Pharmaceutical Commerce The 2006 net sale values and profits of China’s medical and pharmaceutical industry are shown in Table 1 {National Development and Reform Commission (Department of Price), 2007 #29}. With the intense competition, whether health facilities procure or prescribe a drug is extremely important for manufacturers, making marketing essential. Therefore, manufacturers try to decrease production costs and increase marketing costs to ensure their viability, so adversely affecting drug quality (Wu YP, 2007, Interview). This makes the drug supply chain another important factor influencing prices. There are usually 6 to 9 links from production to sale in the pharmaceutical sector. The final retail prices reflect the margins deducted by each link, distributors’ competition, information asymmetry, the relationship among consecutive links and related policies (Wei JG, 2007, Interview), which are normally 5 to 10 times higher than actual factory prices {Liang, 2005 #52}. Assuming the retail price of a drug is 100 Yuan, 23 Yuan is given to the manufacturer, 20 to the the hospital, 10-12 to doctors as rebates and the rest, 45 to 47 Yuan, to the wholesaler {Zuo, 2006 #54}. 3.2.3. Medicines Procurement through Central Bidding August 31, 2007 14 Candidate Number: 30571 Drug procurement through centralized bidding has been implemented since 1998. The savings made from the bidding system compared with Government set prices or market prices were required to be redistributed rationally between patients and medical facilities, with the majority transferred to patients {State Council, 2001 #62}. Communities in Beijing are implementing central bidding procurement {Xin Hua Net, 2007 #25}, centralized supply and cancellation of the previous 15 % mark up rate for 312 common drugs. After implementing central bidding procurement, drug prices in the first half of 2007 were 21.1% less than in 2006. In practice, however, some local governments are responsible only for the procurement of drugs and the contracts signed are usually ambiguous, so the companies which submit bids have to renegotiate with hospitals after the bidding process to ensure that hospitals procure their drugs. The bidding procurement system is not well coordinated and the companies have to take part in several bids per year, wasting financial and human resources (Zhuang N, 2007, Interview). August 31, 2007 15 Candidate Number: 30571 3.3. Pharmaceutical Pricing Policies Since 2000, new price-setting policies {State Planning and Development Commission, 2000 #21; State Planning and Development Commission, 2000 #22; State Planning and Development Commission, 2001 #23} have come into effect. Central Government (SPDC/NDRC) sets maximum retail prices for A-list medicines on the national BMI drug lists, and for patented innovator and first-class new drugs (i.e. the active ingredient and its preparation materials extracted from plants, animals or minerals, etc), which have not previously been on sale in China and for second-class new drugs (i.e. newly discovered drugs or preparations) {State Food and Drug Administration, 2007 #26}. Central Government also sets the factory price/landed price of first-class drugs used in mental health, anesthetics, immunization medicines, and family planning medicines, leaving retail pharmacies and public hospitals to set their own retail price – which cannot be higher than the maximum retail price. Provincial governments set prices for B-list drugs, and the wholesale prices and retail prices of first-class drugs used in mental health and anesthetics. Since 2000, NDRC has only set the prices of prescription drugs and provincial price bureaus set OTC medicine prices {State Food and Drug Administration, 1999 #63}. NDRC {National Development and Reform Commission, 2005 #27} began to set factory prices and maximum retail prices for selected samples of drugs. Prices are based both on declared costs by manufacturers and calculated as factory or import prices with duty/taxes and retail distributional profits incorporated (Annex 4). Manufacturers can apply for special pricing permission for higher prices if their drugs have greater efficacy and safety or if the treatment cycle and expenses are much lower than those of other manufacturers producing the same drug. No international drug price information is currently referred to (Xu WM, 2007, Interview). August 31, 2007 16 Candidate Number: 30571 The price of off-patent innovators could be set up to be 35% higher for injections and 30% higher for other formula than generics produced by GMP certified manufacturers. For patented drugs, manufacturers or distributors can set prices themselves in the year after they received their import registration license, but after one year, SPDC/NDRC makes an official assessment of the price. However, all prices not set by Central Government have to be registered with the Government pricing authority. Drugs with GMP Certification could be priced up to 40% higher for injections and 30% higher for other dosage forms than non-GMP certified products. In practice, the factory price set by manufacturers is usually much higher than the actual production cost, because the Government pricing authority does not have enough capacity to check these costs (Wu YP, 2007, Interview). Different prices for the same drug exist in different areas because of local competition, procurement transparency and local protection (Xu WM, 2007, Interview). For medicines with market pricing, the retail price is set based on production costs, market supply and demand. Wholesalers, retail pharmacies and hospitals can set the actual selling price but cannot exceed the retail price set by the manufacturer. August 31, 2007 17 Candidate Number: 30571 3.4. High Level Forum on Developing NMP to Secure the Essential Medicine System in China On 14 June, 2007, a High Level Forum on Developing NMP to Secure the Essential Medicine System in China was held in Beijing. Some international experts were invited to suggest policy options as part of China’s health system reform. WHO presented a strategic framework to achieve reforms in the pharmaceutical sector, including suggestions on improving affordability, supply, distribution, selection of essential medicines, regulation and quality assurance, rational use, management, R&D, together with the relevant implementation procedures {World Health Organisation, 2007 #17}. Also, WHO background paper {Tang, 2007 #11} for this meeting examined and described the main problems existing in pharmaceutical sector, critically analyzed the main socio-economic and institutional factors associated with these key problems and made recommendations. See Annex 5. August 31, 2007 18 Candidate Number: 30571 4. Pricing Surveys In 2004 and 2006, WHO/HAI supported two surveys in Shandong Province and Shanghai City, China {Ye, 2006 #3; Sun, 2005 #2}. The study design of both was based on the standardized methodology developed by WHO/HAI using a standard list of medicines, plus additional locally important medicines (supplementary medicines) to compare the prices and availability of medicines in different sectors and regions in the provinces {World Health Organisation, 2006 #24}. Sectors surveyed included public hospital clinics (procurement prices, prices paid by patients and availability) and private retail pharmacies (prices paid by patients and availability). In Shandong, 39 core and supplementary medicines were surveyed in 4 areas; in Shanghai 41 core and supplementary medicines were surveyed in 4 districts (See Annex 6). In the survey, price data is expressed as MPR, which is the median unit price of the medicine across the facilities surveyed, divided by the median IRP from MSH {Management Science of Health, 2003/2005 #10; Management Science of Health, 2005 #67}. Key findings from these two surveys showed availability of drugs, prices for core medicines, affordability and price components. 4.1. Availability In both surveys, availability of medicines surveyed was very poor in the public and private sectors. This may have been due to the selection of medicines. But even for life-saving medicines, such as Amoxicillin, Glibenclamide, Omeprazole and Salbutamol inhaler, the availability ranged from 5% to 90%. August 31, 2007 19 Candidate Number: 30571 Table 2. Median of Availability of Medicines in the Public and Private Sectors Shandong Shanghai Public Private Public Private IB 0.0% 0.0% 13.3% 10.0% LPG 7.5% 10.0% 33.3% 15.0% Source: HAI, 2007 Note: “median %” of medicines found in at least 4 facilities; for examples of the top 5 drugs see Annex 7. 4.2. Prices for Core Drugs MPRs ranged from 0.62 in Shandong for public sector procurement to 9.85 for private sector innovator products in Shanghai. Comparing patient prices between the public and private sectors, the MPR was the same or higher in the public sector --- an unusual situation in which the public sector can charge a price premium. Table 3. MPRs of Core Medicines Shandong Shanghai Public IB LPG Private procurement patient 6.30 4.09 (9) (6) 0.62 0.93 (15) (10) August 31, 2007 Public Private procurement patient 7.14 (9) 7.63 (8) 9.83 (9) 9.85 (8) 0.51 (11) 1.44 (10) 1.84 1.43 (9) (12) 20 Candidate Number: 30571 Source: HAI, 2007 Note: MPRs were reported of medicines found in at least 4 facilities; the number in brackets represents the number of drugs which were found in the survey; Annex 8 provides the MPRs for some selected drugs. Within provinces and sectors, there was considerable price variation for the same product, e.g. Amoxicillin price varied in Shandong’s private sector from 0.96 to 4.28. Table 4. Variations of MPR Among Different Areas for Selected Drugs LPG Shandong Public Sector Aciclovir 1.25-1.59 Beclometasone inhaler 1.89-1.93 Hydrochlorothiazide Private Sector Shanghai 0.52-0.77 Ranitidine 0.87 Aciclovir 0.88-1.58 Amoxicillin 0.96-4.28 Beclometasone inhaler 1.83-1.89 Captopril 0.12-0.18 Hydrochlorothiazide 0.33-0.83 Ranitidine 0.39-0.65 0.42-0.96 Source: HAI, 2007 4.3. Affordability In terms of affordability measured in day’s wages of the lowest paid unskilled government worker, major differences existed between innovator and generic equivalents. For example, in Shanghai, a month’s diabetes treatment with Metformin, would cost 3.9 day’s wages for the innovator and 0.8 day’s wages for the generic. August 31, 2007 21 Candidate Number: 30571 Table 5. Affordability of Treating Sample Conditions in the Public and Private Sectors Shandong Shanghai Public Private Private Median Day’s Median Day’s Median Day’s Median Day’s price wages price wages price wages price wages (Yuan) Diabetes: Public (Yuan) IB 144 (Yuan) 10.8 (Yuan) 98.40 3.9 90.90 3.6 LPG 19.16 0.8 IB 203.14 8.1 203.14 8.1 LPG 117.43 4.7 106.28 4.3 Metformin 500mg per tab, 3 times daily for 30 days Hypertension: Amlodipine 5mg per cap, once daily for 30 days Adult resp. infects IB Amoxicillin 250mg per cap, 3 LPG 4.20 0.3 7.98 0.6 22.31 0.9 22.31 0.9 IB 59.4 4.5 54.4 4.1 59.40 2.4 59.40 2.4 0.72 0.1 IB 360.99 14.4 354.64 14.2 LPG 155.00 6.0 150.00 6.0 times daily for 7 Days Arthritis: Diclofenac 25mg per cap, twice LPG daily for 30 days Depression Fluoxetine 20mg per cap, once daily for 30 days Asthma: IB 36.45 2.7 37.50 2.8 35.30 1.4 35.65 1.4 4.75 0.4 22.40 0.9 18.55 0.7 Salbutamol inhaler 0.1mg per dos for 200 LPG doses August 31, 2007 22 Candidate Number: 30571 Peptic ulcer: IB Ranitidine 150mg per cap, twice LPG 8.6 0.6 5.9 0.4 9.00 0.4 8.80 0.4 daily for 30 days Note: the dosage listed in the first column is based on the Shandong data; however, there are some variation in Shanghai data, i.e. Metformin, twice a day; Amoxicillin, 500mg per tablet. 4.4. Price Components In Shandong, cumulative mark-ups (from the manufacturer’s price to the patient price) were 24-35% in the public sector, and 11-33% in the private sector. In the public sector, hospital mark-ups were the greatest contributor (hospital mark-ups of up to 26% were seen). Business tax is applied in the private sector. Table 6. Medicine Price Composition in the Public and Private Sectors Only Generic Innovator and Generic Equivalent Medicine Name Only Innovator Brand in China Amoxicillin Losec Omeprazole Losartan (Generic) (Innovator brand) (Generic) (Innovator Brand) 12 140.72 48 42.39 12 140.72 48 42.39 10.33% 13.70% 0.58% 6.16% 13.24 160 48.28 45 Hospitals’ Mark-up 14.05% 18.75% 26.14% 17.11% Hospitals’ Retail Price 15.10 190 60.9 52.7 3% 2% 3% 3% 12.36 143.53 49.44 43.66 Manufacturer’s Selling Price / Landed Price (set by manufacturer) Wholesalers’ Procurement Price Public Sector Wholesalers’ Mark-up to Hospital Hospitals’ Procurement Price Private Sector Wholesalers’ Mark-up to Pharmacies Pharmacies August 31, 2007 23 Candidate Number: 30571 Procurement Price excluding Tax Regional Tax Paid by 3% 3% 3% 3% 12.73 147.84 50.92 44.97 Pharmacies’ Mark-up 25.69% 22.30 17.83% 4.51% Retail Price Charged by 16 180.81 60 47 16.1 217 64.7 56.4 Pharmacies Pharmacies Procurement Price including Tax the Pharmacies The Maximum Retail Price Set by Government Source: HAI, 2007 4.5. Comparison with India’s Surveys These surveys reflect similar findings to those done in India {Kotwani, 2007 #28}, using the same methodology. Availability in the public and private sectors was generally poor, with Shanghai an exception, which may reflect the choice of medicines surveyed. In terms of price ratios, public sector procurement was generally efficient being less than IRP, except in Shanghai where price ratios were 44% more than IRP. In India, public sector procurement price ratios ranged from 0.27 to 0.48 in different states and private patient prices were substantially higher than public sector patient prices. Table 6. Comparisons between China and India in terms of Availability of Drugs and Drug Prices in Both Public and Private Sectors Shandong Shanghai Indian (6 states) IB 0.0% 13.3% 0 LPG 7.5% 33.3% 0.0%-30.0% IB 0.0% 10.0% 0.0%-22.9% Medicine Availability Public Procurement Private August 31, 2007 24 Candidate Number: 30571 LPG 10.0% 15.0% 51.0%-95.0% IB 6.30 7.63 - LPG 0.62 1.44 0.27-0.48 IB 7.14 9.85 1.74-4.38 LPG 0.51 1.43 1.30-1.84 MPRs for core drugs Public Procurement Private Source: HAI, 2007; Kotwani, 2007 5. Summary of China’s Medicines Price and Availability Problems 5.1. Complexity and Bureaucratic Structures At Central Government level, SFDA, MOSSL, NDRC and MOH are responsible for different aspects of medicine policies: registration, selection, pricing and procurement of medicines, and at provincial level, similar devolutions of responsibilities occur. Also, MOSSL and the Department of Rural Health of MOH are responsible for urban and rural population separately. Different parties tend to act in their own interests without mutual monitor, leaving the pharmaceutical market with the problems of a lack of accurate information and ineffective price regulation (Lu J, 2007, Interview). Manufacturers, wholesalers, hospitals and pharmacies all play a role in drug distribution, and each will obtain a profit commensurate with their activity. 5.2. Lack of Access August 31, 2007 25 Candidate Number: 30571 Most key informants said that there are enough medicines available to ensure access in China. However, although there are thousands of pharmaceutical manufacturers, access to essential medicines as measured in WHO/HAI surveys was not as good as Government officials expected due to the production structure, procurement, pricing policies and prescribing habits. According to the surveys, even the availability of commonly used drugs is very poor. 5.3. Price and Affordability In-depth research on medicine prices is scarce in China. It would be more appropriate to compare China’s drug prices with other developing countries, e.g. India, Thailand and Brazil, and inappropriate to compare with developed countries, such as the USA, UK, Japan, Germany and Australia, as was done by IMS {National Development and Reform Commission (Department of Price), 2007 #34}. So, although the results showed overall drug prices were lower than in these developed countries, and that generally great price differences exist between branded innovators and generics, it may not reflect the reality. The WHO/HAI surveys showed that innovator drugs prices were frequently higher than MSH IRP. This might be due partly to the over protection of innovator products, for example by the Drug Pricing Measures, which allow for off-patent innovator prices higher than domestically produced equivalent generic drugs {State Planning and Development Commission, 2000 #21}. Also, most drugs with frequent and wide ranging reductions on the NDRC reduced-price lists were generics, while the reduction level for innovators was only 5% (Zhu CH, 2007, Interview). August 31, 2007 26 Candidate Number: 30571 Although the lowest paid government workers’ incomes have improved rapidly, out-of-pocket expenses for buying medicines are still high for patients. Medicines are unaffordable to many of them. 5.4. Generic Policy In China, generic medicines are usually sold as branded generics {IMS Health, 2007 #66}, which are pharmaceutically identical to the innovator and INN generic (generic generic), and may be sold at close to the innovator medicine price and actively marketed. There are no requirements for generic substitution, or favorable terms for registering generics and there is no policy to promote the prescription of INN generics in China. However, in the prescription management strategies issued by MOH {Ministry of Health (Statistic Information Centre), 2007 #41}, the Government suggested that doctors should prescribe using the INNs, but this is not a requirement. 5.5. Price Components Drug prices are calculated based on the costs declared by manufacturers themselves, and there are insufficient human resources to check their figures, which might cause some discrepancies. Import duty and tax contribute to the final high prices of imported drugs as does the regional tax on drug prices in pharmacies. There are too many links in the drug distribution process. The WHO/HAI surveys, only revealed end user prices but from other literature, there is evidence that private rebates exist in the whole process, which benefit wholesalers, retailers and hospitals {Liang Y, 2005 #52}. 5.6. Financing Hospitals August 31, 2007 27 Candidate Number: 30571 The Government does not provide adequate funds to support hospitals. The percentage Government financial input to hospitals at the beginning of the 1980s was about 60%, while in 2003, it was only 8.2% {Ying XH, 2007 #18}. Increasingly hospitals have to rely on revenues generated from drug sales, which are considerable as drug expenditure accounted for nearly a half of total health expenditure in 2006 {Ministry of Health (Statistic Information Centre), 2007 #41}. Overprescribing of medicines by doctors and overpaying for medicines by hospitals is common. 5.7. Drug Use Patterns Total pharmaceutical expenditures are determined not only by drug prices but by another important element --- the amounts consumed, which is decided by the behaviors of doctors (Chen V, 2007, Interview). Drug prescription patterns are influenced by the rebates doctors and hospitals receive from distributors, rather than by patients’ needs. Branded generics are marketed irrationally. The higher the drug price, the more the incentives to procure and prescribe it. This is linked to the irrational salary structure for doctors and the irrational financial reimbursement structure for hospitals {Liang, 2005 #52; Lian, 2004 #51}. 5.8. Conflicts of Interests Conflicts exist between hospitals’ public service role and their ways of funding in order to survive, between the ways doctors treat patients and their ways of gaining revenues, and between wholesalers’ distribution systems and their ways of promoting their products. All parties are acting in their own interests and frequently what makes sense personally or institutionally may be contrary to the interests of patients and public health. August 31, 2007 28 Candidate Number: 30571 5.9. Corruption Rebates exist at every stage of the distribution chain including wholesalers, hospital directors, hospital pharmaceutical department directors and doctors. Different drug lists exist at the same time: the EDL, BMI Drug List, New Rural Medical Cooperation Drug List and Procurement Drug List. Local governments can change the drugs included in the lists. Inclusion of a drug on the lists can be critical for a manufacturer’s survival and these factors increase the likelihood of corruption (Lu J, 2007, Interview). Although China has a Drug Management Law {State Food and Drug Administration, 2001 #47}, stating that manufacturers, wholesalers or medical facilities would be punished if they receive rebates, enforcement of the law is not rigorous enough in practice (Wu YP, 2007, Interview). August 31, 2007 29 Candidate Number: 30571 6. Policy Options Above all, the pharmaceutical sector is very complex, with many players and different often conflicting interests involved. Therefore, a comprehensive and balanced NMP should first be developed, followed by adaptions at provincial level, in order to integrate policies across whole sector, and to guide drug production, distribution and consumption. This would promote the development of the pharmaceutical industry and ensure access to essential medicines for most of the population. This NMP should include the following components. 6.1. Selection of Essential Drugs Smaller essential drug lists should be established for medicines to treat common diseases according to evidence-based medicine and cost-effective analysis, which should favour generic drugs. The drug list should be updated regularly using a transparent consultative process involving all relevant parties and it should be used as a basis to develop all reimbursement drug lists, including the medical insurance reimbursement list. Both the essential drug list and medical insurance reimbursement drug list should be established jointly by MOSSL, MOH, SFDA and regional health authorities. 6.2. Drug Pricing Since there are usually a sufficient number of competing products in China, NDRC should consider removing price controls on generic drugs to increase competition among manufacturers (Zhu CH & Zhou Y, 2007, Interview). Free pricing could be implemented with enough public information provided to ensure price transparency at all stages of the public sector medicine supply chain, i.e. manufacturers’ selling prices, August 31, 2007 30 Candidate Number: 30571 wholesale mark-ups, distribution charges; hospitals’ mark-ups, pharmacies’ mark-ups, taxes and duties, and other related charges. In the private sector, end user prices need to be reported in such a way that consumers can make informed choices. Such as in Jordan, a mobile service allowing citizens to obtain information on medicines (prices, formulation and dosage) via mobile telephones was implemented {Jordan Food and Drug Administration, 2006 #64}. The maximum retail price of drugs on the BMI Reimbursement List should be set by MOSSL not NDRC (Chen W, 2007, Interview) and the opinions by representatives from patient groups, other government departments, medical facilities and the pharmaceutical industry and commerce should be heard (Wei JG, 2007, Interview). Where drug prices are regulated, the relevant authorities should invest in more human and technical resources to improve verification of manufacturer-declared production costs and international reference pricing index should be considered. There seems to be a lack of sufficient national price information for Government pricing of drugs. This reference procurement price information could be found in MSH Drug Price Indicator Guide {Management Science of Health, 2003/2005 #10}, IDA Price Indicator {IDA Foundation, 2007 #42}, AFRO Essential Medicines Price Indicator {World Health Organization Regional Office for Africa, 2003 #43}, Generic Pharmaceuticals Electronic Market Information Tool (eMIT) {National Health Service of United Kingdom, 2007 #40}, Pharmaceutical Schedule of New Zealand {Pharmaceutical Management Agency of New Zealand, 2007 #36}, or from the WHO website {World Health Organisation, 2007 #35}. 6.3. Generic Policy The SFDA should concentrate on ensuring the quality of medicines in China. Policies to promote the production of INN generic drugs should be established. Permission given in August 31, 2007 31 Candidate Number: 30571 the Drug Registration Management Regulation for generic registration two years prior to patent expiry is a positive development {State Food and Drug Administration, 1999 #63}. MOSSL should give priority to generic equivalent prescribing and require generic substitution for reimbursement. A fixed dispensing fee with regressive mark up rates should be used to create incentives to use lower-price generics, as in the USA {Department of Health and Mental Hygiene of United States, 2006 #49}. The use of generics could be promoted by requiring the use of INN for all procurement, reimbursement, prescribing and dispensing in public facilities. Generic substitution should be allowed or required even in the private sector. Regulations rather than suggestions are needed to promote a generic policy. 6.4. Supply and Distribution The number of small- and medium-sized manufacturers, wholesalers and pharmacies should be rationalized by tightening the criteria for license applications and renewal. Taxes and duty for the production and distribution of medicines should be removed (Zhou Y, 2007, Interview), especially for essential medicines. A policy should be developed to encourage pharmaceutical manufacturers to export finished generic medicines, not just pharmaceutical raw materials. A central bidding procurement system should be further encouraged and the Government should monitor the whole procurement process including contract, payments and drug delivery details, where possible, using internet procurement (Li XF, 2007, Interview). Supply chains should be shortened by reducing the number of irrational distribution levels between manufacturers and patients. (Wei JG, 2007, Interview). The Government should ensure the use of WTO/TRIPS flexibilities, such as Sweden’s use of parallel import {Ganslandt, 2004 #39} and compulsory licenses for government use as Thailand has done {Washington College of Law, 2007 #46}. August 31, 2007 32 Candidate Number: 30571 6.5. Affordability The drugs to treat and prevent chronic diseases should be procured and supplied directly by the Government to registered patients and the reimbursement rates should be increased. Health insurance or financial assistance schemes should cover more of the poor and vulnerable groups, and reimbursement rates should also be increased for these people to create incentives for them to seek treatments. 6.6. Rational Reimbursement to Hospitals and to Doctors It is crucial to increase Government input to hospitals. Appropriate mechanisms for direct government financing hospitals must be developed (Zhu CH & Lu J, 2007, Interview). Doctors’ salaries should be increased and unethical rebates banned. Standard treatment protocols should be developed by the Government, not pharmaceutical companies, using an evidence-based medicines approach (Lu J, 2007, Interview). Legislation should be strengthened to monitor doctors’ and hospitals’ behavior. For example, the US Federal Government recovered US$3.89 billion for fraud by drug manufacturers against Medicaid between 2001 and 30 September, 2006, e.g. TAP Pharmaceuticals was fined US$875 million for marketing frauds {Schneider A., 2007 #44}. 6.7. Research Research on implementation of all aspects of pharmaceutical pricing policies should be actively encouraged. The Government should co-ordinate and direct surveys, including, as a minimum, those on the availability of drugs, drug prices and price components. August 31, 2007 33 Candidate Number: 30571 7. Conclusion The problems existing in China’s pharmaceutical sector are complicated, involving the national health system, the pharmaceutical industry and commerce, and drug pricing. In China, 2.26% of GDP was spent on pharmaceutical expenses and patient’s out-of-pocket expenses were almost 50% of total pharmaceutical expenditure. Although there are thousands of manufacturers in China, many people still lack access even to essential drugs. This is due to irrational supply and distribution systems, ineffective pricing regulation, irrational reimbursement to hospitals and doctors (corruption issues involved) and a lack of promotion of generics. The solution is to establish a comprehensive and balanced NMP which reconciles the interests of different players in the pharmaceutical sector and guides the whole process: drug production, distribution, consumption and pricing. It is critical to for government to regulate industry with patient’s-need- oriented production, not profit-oriented, and increase financial support to hospitals to break the present incentive system and increase salaries for doctors to prevent rebates. Also, improving transparency and providing adequate price and quality information to empower patients are crucial. These actions are not easy to implement simultaneously, but as China develops rapidly as a world power and a potential member of OECD, the national health system must reflect this reality. To do this, China must inevitably increase Total Health Expenditure while decreasing pharmaceutical expenditure as a percentage of GDP from the present 2.26% to less than 2%. This can only be done through major policy changes and the starting point is development of a NMP. August 31, 2007 34 Candidate Number: 30571 Annex 1 Medicine Retail Price Index Price indices compilation is implemented by the department of urban social and economic survey, national bureau of statistics of China every year. The survey selected business sites with large scale and wide assortment of drugs in sample small, middle and large cities or counties which divided by economic regions and rational regional distribution. There are 226 cities or counties taken the surveys at present. In additional, the price information were investigated and recorded directly in every site by the investigators and assistant investigators. Price Index of western medicines was 93.1 for Shanghai and 96.9 for Shandong in 2004. 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Traditional Chinese and NI 111.5 108.8 104.4 102.8 101.0 100.2 98.5 96.5 98.4 96.7 97.6 Western Medicines and UI 111.2 108.4 104.2 102.8 101.3 100.1 97.8 96.2 98.2 96.7 97.7 Health Apparatus and Articles RI 112.1 109.3 104.6 102.7 100.6 100.4 99.7 97.0 98.8 96.7 97.4 NI 111.6 112.8 108.4 108.1 105.6 104.6 102.3 97.5 104.4 98.4 96.5 UI 111.2 113.1 108.4 108.7 106.3 104.7 101.7 97.1 104.0 98.7 96.6 RI 112.2 112.5 108.4 107.1 104.4 104.5 103.3 98.3 105.2 97.9 96.3 NI 111.0 106.2 101.6 99.1 97.9 97.3 95.8 95.4 94.3 94.5 97.8 UI 110.6 105.3 101.2 98.7 97.9 97.0 95.0 95.1 94.2 94.3 97.8 RI 111.6 107.3 102.1 99.8 97.9 97.7 97.0 96.0 94.4 95.0 97.8 NI 114.9 106.8 103.5 101.0 100.1 99.6 98.8 99.0 100.6 101.9 98.4 UI 114.8 106.7 103.5 100.8 100.0 99.7 98.0 99.2 100.5 102.0 98.6 RI 115.0 107.1 103.6 101.6 100.4 99.5 100.5 98.7 100.7 101.7 98.0 Traditional Chinese Medicinal Materials and Medicines Western Medicines Medical Apparatus and Articles Notes: the values are on the basis of previous year’s value, which is assumed as 100. RI = Rural Indices; UI = Urban Indices; NI = National Indices August 31, 2007 35 Candidate Number: 30571 Annex 2 Interviews conducted in Beijing and Shanghai between 16 and 25 July 2007 1. Chen Vivian Director of Healthcare Economics, China Association of Enterprises with Foreign Investment, R&D-based Pharmaceutical Association Committee Main topics discussed: the factors impacting pharmaceutical expenditure; protection of Intellectual Property Rights 2. Chen Wei Deputy Director of Division of Health Insurance, Department of Health Insurance, Ministry of Labour and Social Security of China Main topics discussed: how do they set reimbursement prices and make agreements with health care providers or hospitals; alternative policies for financing especially for hospitals; how do they select drugs in positive or negative drug lists; 3. Hu Shanlian Prof. of Epidemiology and Health Economics, School of Public Health, Fudan University, Shanghai, China Main topics discussed: the ways of manufacturers to cope with the reduced drug prices; comments on the methodology of WHO/HAI surveys 4. Hu Yin Secretary General of Development Center of Science and Technology of Chinese Pharmaceutical Association / China Pharmaceutical Database Services Main topics discussed: the existing national medical economic information network 5. Li Xianfa Expert in Drug Procurement through Central Bidding Main topics discussed: evolvement of China’s drug procurement through centralized bidding, its pros and cons and development trends 6. Lu Jun Deputy Secretary General of Chinese Medical Doctor Association Main topics discussed: reasons for high pharmaceutical expenditure in China; development of Standard Treatment Guidelines; doctors’ salary 7. Wei Jigang Senior Research Fellow of Industrial Economics Research Department, Development Research Center, The State Council of P.R.China Main topics discussed: possibility for general policies to remove tax and duties on medicine at both national and local levels considering the regressive nature of medicine taxes; drug supply chain 8. Wu Yongpei Director of Department of Pharmacy Regulation/National Institue of Hospital Administration Main topics discussed: reasons for high pharmaceutical expenditure in China August 31, 2007 36 Candidate Number: 30571 9. Xu Weimin Director of Division 1, Evaluation Center of Drug Pricing, NDRC Main topics discussed: Criteria, data sources and methods used to price single source patent protected innovator medicines, multi source existing generic medicines, new innovator medicines and new generic medicines including those which have just changed patent status; what the process is; if international reference pricing used when pricing drugs 10. Ye Lu Associate Prof. Department of Health Economics, School of Public Health, Fudan University, Shanghai, China 11. Zhou Yan Secretary-General of China Pharmaceutical Industry Association Main topics discussed: reasons for high pharmaceutical expenditure in China; reasons for increasing production costs; quality of drugs 12. Zhu Changhao Routine Vice-President of China Association of Pharmaceutical Commerce Main topics discussed: the process of producing prices including single-source product, multi-source drugs; if they think price controls have effects on price reduction of generics with quality assurance as precondition; 13. Zhuang Ning Department of Planning and Finance, Division of Planning and Price, MOH Main topics discussed: Are suppliers pre-qualified and how do the procurement officers monitor the procurement process and the performance of suppliers; whether international reference prices are considered when awarding tenders; how they monitor the bidding system August 31, 2007 37 Candidate Number: 30571 Annex 3 China’s Medical and Pharmaceutical Industry Sales Revenues, Profits and Export Delivery Values in 2006 Products revenues 2006 Pharmaceutical Raw Materials Pharmaceutical Finished Products Bio-tech Products Chinese medicine finished products Chinese Medicine raw materials Compared 2006 to 2005 (%) 13.41 41.51/ 5.19 14.78 11.51/ 1.44 Export Values Compared 2006 to 2005 (%) 11.01 29.781/ 3.72 2.34 5.889/ 0.74 39.06/ 4.88 114.01/ 14.25 25.50 4.13/ 0.52 10.42/ 1.30 14.06 19.02/ 2.38 29.44 10.37/ 1.30 24.58 125.85/ 15.73 138.25/ 17.28 sales Products sales profits 13.80 2.89 6.778/ 0.85 2.964/ 0.37 Delivery Compared to 2005 (%) 17.16 16.34 30.61 22.6 Note: in columns 2, 4 and 6, figures are first given in billion Yuan and then in US$ equivalent. August 31, 2007 38 Candidate Number: 30571 Annex 4 Formula to Calculate Drug Retail Price The formula to calculate drug retail price of domestic drugs is “retail price=factory price (inc. tax) *(1+distribution price differences)”; The formula to calculate drug retail price of imported drugs is “retail price= border price*(1+distribution price differences)”; The formula for the factory price of domestic and imported subpackage drug is “factory price = (manufacture costs + period expenses) / (1-sales profit rate) * (1+VAT)”; The formula for the border price of imported drugs is “border price = C.I.F. * (1+duty rate) * (1+VAT) + border expenses”. Note: C.I.F.= Cost, Insurance and Freight; VAT=Value-Added Tax August 31, 2007 39 Candidate Number: 30571 Annex 5 WHO Background Paper A background paper {Tang, 2007 #11} for this meeting described and examined the main problems existing in pharmaceutical registration, production, distribution, use and administration, and critically analyzed the main socio-economic and institutional factors associated with these key problems. It was pointed out that the Chinese medicine registration and pricing systems have not functioned well in pharmaceutical sector development; the medicine distribution system lacks effective government regulation and management; the number of pharmacies has increased significantly in recent years but there is serious concern about their adherence to regulatory standards , particularly in rural areas; irrational use of medicines, particularly in low level health facilities, has been increasing, chiefly because of perverse financial incentives. There is also a lack of co-ordination and communication between various government agencies. It was suggested that an indicator-based assessment should be followed by more detailed studies on individual drugs or specific diseases, and the availability/affordability of essential medicines, especially using time-series analysis. A comprehensive NMP should be developed. A balanced policy for promoting the development of the pharmaceutical industry should be drawn up which would also ensure access to essential medicines for most people. Perverse incentives (hospitals and doctors making money from selling medicines to maintain the running of their establishments) must be removed and incentives have to be changed in the alternative provider payment system to promote rational use of effective treatments. August 31, 2007 40 Candidate Number: 30571 Annex 6 The Lists of Core and Supplementary Medicines Surveyed Core medicines Shandong Aciclovir 200mg cap/tab Amitriptyline 25mg cap/tab Amoxicillin 250mg cap/tab Atenolol 50mg cap/tab Beclometasone 0.05mg/dose inhaler Captopril 25mg cap/tab Carbamazepine 200mg cap/tab Ceftriaxone 1g injection Ciprofloxacin 500mg cap/tab Co-trimoxazole 8+40mg/ml suspension Diazepam 5mg cap/tab Diclofenac 25mg cap/tab Fluconazole 200mg cap/tab Fluoxetine 20mg cap/tab Glibenclamide 5mg cap/tab Hydrochlorothiazide 25mg cap/tab Losartan 50mg cap/tab Lovastatin 20mg cap/tab Metformin 500mg cap/tab Nifedipine Retard 20mg tab Omeprazole 20mg cap/tab Phenytoin 100mg cap/tab Ranitidine 150mg cap/tab Salbutamol 0.1mg/dose inhaler Shanghai Aciclovir 200mg cap/tab Amitriptyline 25mg cap/tab Atenolol 50mg cap/tab Beclometasone 0.05mg/dose inhaler Captopril 25mg cap/tab Carbamazepine 200mg cap/tab Ceftriaxone 1g injection Diazepam 5mg cap/tab Diclofenac 25mg cap/tab Fluoxetine 20mg cap/tab Glibenclamide 5mg cap/tab Hydrochlorothiazide 25mg cap/tab Losartan 50mg cap/tab Lovastatin 20mg cap/tab Metformin 500mg cap/tab Omeprazole 20mg cap/tab Phenytoin 100mg cap/tab Ranitidine 150mg cap/tab Salbutamol 0.1mg/dose inhaler Supplementary medicines Shandong Amlodipine 5mg cap/tab Shanghai Albendazole 200mg cap/tab Alendronate 10mg cap/tab Amlodipine 5mg cap/tab Amoxicillin 500mg cap/tab Anastrozole1mg cap/tab Atorvastatin 10mg cap/tab Azathioprine 50mg cap/tab Azithromycin 500mg cap/tab Candesartan 4mg cap/tab August 31, 2007 41 Candidate Number: 30571 Cefiroxime 250mg cap/tab Cefradine 0.5g/vial Ceftazidime 1g/vial Celecoxib 200mg cap/tab Cimetidine 0.4g cap/tab Ciprofloxacin 250mg cap/tab Clarithromycin 250mg cap/tab Digoxin 0.25mg cap/tab Efavirenz 600mg cap/tab Erythromycin 250mg cap/tab Esomeprazole 20mg cap/tab Fluconazole 150mg cap/tab Ganciclovir 500mg injection Lisinopril 20mg cap/tab Gliclazide 80mg cap/tab Lisinopril 10mg cap/tab Loratadine 10mg cap/tab Ketoconazole 200mg cap/tab Nifedipine 30mg cap/tab Ofloxacin 200mg cap/tab Olanzapine 5mg cap/tab Rifampicin 150mg cap/tab Rosiglitazone 4mg cap/tab Simvastatin 20mg cap/tab Simvastatin 20mg cap/tab Sodium Chloride 0.9% 500ml Stavudine 40mg cap/tab August 31, 2007 42 Candidate Number: 30571 Annex 7 Top Five Drugs with High Availability in Both Public and Private Facilities in the Two Provinces Surveyed Public facilities Private facilities August 31, 2007 Shandong 1. Diclofenac (45%) 2. amlodipine, diclofenac, omeprazole, rosiglitazone, simvastatin beclometasone inhaler (21-50%) Shanghai IB 1. Losartan (76.7%) 2. Fluoxetine (63.3%) 3. Beclometasone inhaler (56.7%) 4. Ceftriaxone injection (56.7%) 5. Metformin (56.7%) LPG 1. hydrochlorothiazide (≥ 80%) 1. Omeprazole (90.0%) 2. ceftriaxone inj (≥ 80%) 2. Hydrochlorothiazide 3. captopril (≥ 80%) (86.7%) 4. amoxicillin (≥ 80%) 3. Phenytoin (80.0%) 5. ranitidine (51-79%) 4. Aciclovir (70.0%) 5. Ranitidine (60.0%) IB 1. Diclofenac (85%) 1. Omeprazole (85.0%) 2. amlodipine, beclometasone inhaler, 2. Beclometasone inhaler carbamazepine, celecoxib, (65.0%) losartan, omeprazole, rosiglitazone, 3. Carbamazepine simvastatin (21-50%) (60.0%) 4. Metformin (60.0%) 5. Losartan (55.0%) LPG 1. captopril (≥ 80%) 1. Ranitidine 150mg 2. ranitidine (≥ 80%) (95.0%) 3. hydrochlorothiazide (≥ 80%) 2. Aciclovir 200mg 4. amoxicillin (≥ 80%) (75.0%) 5. omeprazole, (≥ 80%) 3. Hydrochlorothiazide 25mg (70.0%) 4. Omeprazole 20mg (70.0%) 5. Phenytoin 100mg (60.0%) 43 Candidate Number: 30571 Annex 8 MPRs for some drugs in Shanghai and Shandong Shandong Public facilities (20) IB LPG Amoxicillin Beclometasone Ceftriaxone inj Clarithromycin Diclofenac Fluoxetine Metformin Nifedipine Omeprazole Salbutamol inh August 31, 2007 1.52 5.89 0.33 Shanghai Public Private facilities (30) facilities (20) Private facilities (20) IB LPG IB 2.69 5.95 0.19 9.83 LPG IB LPG 9.87 4.29 0.88 21.64 0.29 - 21.28 4.51 7.74 1.09 69.45 28.94 68.42 28.94 11.85 2.31 7.98 44 4.13 0.51 26.46 6.28 2.72 1.73 26.46 5.83 2.75 1.43 Candidate Number: 30571 References August 31, 2007 45