Transcript Essential medicines and health reform in China

Essential medicines and health
reform in China
Ye Lu Ph.D
Dept. of Health Economics
Fudan University
2011-05-30 Geneva
What is the main problem we are trying
to resolve?
Problems in China’s Health System
• China’s health system is “sick” and the diagnosis is
clear:
– “Kan Bing Nan, Kan Bing Gui”
– Healthcare is available but not affordable and not accessible
• The problems have been detected:
– Insufficient Government funding for public health/essential
care;
– Distorted provider payment system relying on fee-for-service;
– Wide-spread exposure to health-related financial risk;
– Weak quality/safety management and cost control systems;
– Unclear and insufficient role of government
3
Rapid increase in health care
expenditure （1978-2009）
THE per capita
THE as % of GDP
6
1400
1200
5
1000
4
Yuan
%
800
3
600
2
400
1
200
Source: Health Statistic Yearbook
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
0
1978
0
Decreased share of govt. exp. and increased
share of out-of-pocket（1990-2009）
% of total health expenditure
70
60
50
Govt. Exp.
Soc. Exp.
Out-of-Pocket
40
30
20
10
0
1980 1990 1995 2000 2002 2003 2004 2005 2006 2007 2008 2009
Source: Health Statistic Yearbook, 2010
The Issue of Pharmaceutical Expenditure in
China
• Drug revenue is the main source of reimbursement
for hospitals
• High proportion of pharmaceutical expenditure in
total health expenditure
• High economic burden for the patient is caused by
drugs
• Irrational price setting on drugs
6
Pharmaceutical expenditure in China, 1997-2006
Year
Pharmaceutical expenditure(billion )
1997
% GDP
%total health expenditure
2.02
46.88
2.11
46.87
2.22
45.91
2.23
45.40
2.10
43.83
2.23
46.01
2.14
44.80
2.27
45.55
2.25
45.00
2.13
43.51
1.85
40.74
1.98
41.56
2.19
40.35
159.90
1998
178.34
1999
198.87
2000
221.11
2001
230.30
2002
267.67
2003
290.39
2004
362.13
2005
414.21
2006
448.61
2007
490.32
2008
620.24
2009
745.77
Source: China National Health Accounts Report 2010
OECD as well as China TPE as % of GDP
How did we get started?
New Health Care Reform Planned
Announced in April 2009
Five Core Tasks(2009-2011)
• The Healthcare Financing
-Universal Basic medical insurance system
-Equal public Health system
• Health care Delivery
-Sound public community facilities
-Essential medicine policy system
-Public hospital reform
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National Essential Medicine System
• Improve drug supply
• Central Government sets "guiding retail prices "of
essential medicines
• “Based on the result of tender, provincial governments set
the unified purchasing prices within the range of the
government purchasing price”
• “government run health care institutions at grass-roots
levels shall sell drugs with zero mark up”
• Essential medicines will be insured, “with the
reimbursing rate much higher than that of non-essential
medicines”
The timeline of promoting National
essential medicines
• 2009, each province (autonomous regions and
municipalities) in 30% of the government-run urban
community health center and county implementation
of the system
• 2010, 60%
• 2011 initial establishment of a national essential
medicines system
• Full implementation the national essential medicines
system
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what is the process we are using?
National essential medicines list
• 2009 version of EML for Community based health
center (Aug, 2009)
– 205 kinds chemical drugs and biological products
– 102 varieties Chinese medicines
• coupled with policy of “0 mark-up” for sales and
public subsidy for losses, aiming to control
overprescribing in community and rural public
facilities
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Pricing
• National Development and Reform
Commission(NDRC) Set the retail price for the
national essential medicines 296, 2349 formulation
• Involving more than 3,000 pharmaceutical enterprises
• 49% of drug prices are not adjusted, 45% of drug
price cuts, the average decline of 12%, 6% of drugs to
raise prices
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Bidding and purchasing of essential drugs
• the government-led centralized drug
purchasing
• Online procurement, price transparency
• direct delivery
• Drug prices are not higher than 15% of exfactory price
16
Medicine Supply and Procurement
• Single tender, volume-price negotiation and
unified distribution is to be used for procurement, with
an emphasis on reducing intermediaries in the
distribution chain
Rational use of medicine
• The government's primary health care and health
institutions all the equipment and the use of
national essential medicines
• Other types of medical institutions have to choice
to use a certain percentage of essential medicines
• Establish an effective management system of
essential medicines
18
Current situation
• Implemented in 60% of community health center in
the provinces.
• The price of medicines are reduced 20-30%
• Patients would like to visit secondary hospitals for
available medicines
• Cost of Community health centers cannot be fully
reimbursement by the government after implementing
the zero mark-up policy
• Pharmaceutical manufactories would not like to
produce the EM due to the low price
EM Policy implemented in 2778 counties
June, 2010 Sept. 2010
Percentage of EMP with Zero-mark
up in Gov. Running Community
health centers (%)
38.4
65.7
Dec. 2010
69.3
57.2
Percentage of EMP with Zero-mark
up in township hospital (%)
Percentage of Counties which EM
reimbursement by the NCMS (%)
82.9
86.3
94.7
Percentage of Counties which EM
reimbursement by the UBEMI and
UBRMI (%)
75.8
82.3
94.7
What are the key future policy
issues?
Key issues
• 307 medicines in EML cannot meet the needs of urban
residents. (children, chronic disease, antibiotics)
• Main challenges in financing schemes (Compensation
mechanism needs to be further improved)
• Mechanism to incentive doctor rational prescribe of
medicines
• Price regulation for EM need to be improved.
• How to balance the quality and price of the EM (The
lower price is the better?)
• How to implement the EMP in non- government running
health facilities and village clinics.
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The Variation of Drug Items in Essential Medicine List
Areas
No. of EM supplemented by the
Province
National EML
Total No. in EML
307
NIngxia
53
360
fujian
148
455
zhejiang
150
457
Anhui
276
583
shandong
216
523
Tianjing
230
537
Beijing
241
548
Guangdong
244
551
Jiangsu
292
599
Shanghai
381
688
Prioritize the national essential drug
system 2011
• consolidate and expand the scope of the essential
medicine system and implement the system in
county and regional medical institutions
• consider adjusting the national essential drug list;
• improve essential drug procurement, distribution,
management, and use;
• improve drug payment policies;
• encourage high-level hospitals to guide grassroots
medical institutions on the use of medicines
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