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China price caps on drugs to go

May 5, 2015

China's planning agency has announced it will largely do away with price caps on most medicines in the country. It said the move was aimed at letting the market have a greater say in controlling spiraling health costs.

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Shanghai drug store (ddp images/AP Photo)
Image: AP

China's National Development and Reform Commission (NDRC) said on Tuesday it would remove price caps for most drugs from June 1 to give the market a larger role in setting prices according to demand in the world's second biggest pharmaceutical hub.

The economic planning agency said the change would encourage reasonable pricing of medicines and help control costs in the nation's state medical insurance schemes.

"We have decided to cancel government-set prices on most drugs to improve purchasing mechanisms and allow the trade price of medicines to be set by market competition," the NDRC said in a statement on its website.

Few exceptions

The agency added the planned move would affect all drugs apart from anaesthetics and grade-one psychiatric medications.

Removing caps on drugs is essential in a country that has been a magnet for drug makers, medical device companies and hospital operators, with nationwide spending on medicines expected to hit as much as $185 billion (166 billion euros) by 2018.

Diagnosis: Unaffordable - Two-tier Health Care in China

Chinese President Xi Jinpeng has frequently stated the government's intention to assist in providing affordable and accessible healthcare in a nation struggling with spiraling costs and long waits for treatment.

hg/ng (dpa, Reuters)