Li Keqiang Highlights Drug Price Reduction as Key to Deepening Medical Reform

At the State Council executive meeting on April 6, Li Keqiang explicitly stated that “drug prices” should serve as the “breakthrough point” for deepening healthcare reform.

At the meeting held that day, the key priorities for deepening healthcare system reform in 2016 were established, aiming to ensure that the benefits of healthcare reform reach more people. Premier Li Keqiang stated that the new round of healthcare reform had achieved positive results, with further improvements in the population’s health status and average life expectancy.

“Healthcare reform has entered the deep-water zone; measures must be taken to overcome critical challenges, with ‘drug prices’ serving as the breakthrough point,” said the Premier.

He emphasized the need to accelerate the establishment of a traceability mechanism for drug prices. On one hand, this involves tracking and management to ensure drug quality; on the other, it promotes the disclosure of drug pricing information to achieve “transparency” in drug prices.

“This issue can no longer just be ‘under study’; we must accelerate progress,” Premier Li Keqiang explicitly instructed the relevant departments.

A key task for deepening healthcare reform in 2016, as determined at the meeting that day, was to comprehensively promote centralized procurement of pharmaceuticals in public hospitals, establish a traceability mechanism for ex-factory drug pricing information, and implement the “Two-Invoice System,” under which one invoice is issued from the manufacturer to the distributor and another from the distributor to the medical institution, thereby making markups in intermediate links transparent. Patients may freely choose to purchase medications either at hospitals or at retail pharmacies. A routine reserve system for frequently scarce drugs shall be established, the free supply of special medications such as those for HIV/AIDS shall be increased, and supervision over the quality of medical services and pharmaceuticals shall be strengthened.

Li Keqiang emphasized that, while reducing drug prices, it is also necessary to improve the performance-based salary system in primary healthcare institutions by raising medical service fees and other measures, establish a distribution and incentive mechanism linked to job responsibilities and performance, and highlight the value of medical personnel’s technical and labor services.

Two weeks ago, during an inspection of the Hainan Cancer Hospital in Boao, Hainan, Premier Li Keqiang learned that obstacles such as “refusal by original employers to release personnel” still hindered the implementation of policies like multi-site practice. He explicitly required governments at all levels to adopt multiple measures to ensure the effective implementation of the multi-site practice policy. Another key task for deepening healthcare reform in 2016, as determined at the State Council’s executive meeting on April 6, was to launch pilot programs for tiered diagnosis and treatment in approximately 70% of prefecture-level cities across China, and to initiate pilots allowing attending physicians and above—either currently employed or retired from public hospitals—to practice or establish studios at grassroots medical institutions.

“Policies such as ‘multi-site practice’ can, to a certain extent, unleash the ‘catfish effect,’ and further facilitate the advancement of tiered diagnosis and treatment. Greater efforts must be made to ensure the effective implementation of these policies,” said the Premier.

Li Keqiang finally stated that “drug prices” should be used as a breakthrough point to lower drug prices and improve the performance-based salary system in medical institutions, thereby forcing reforms in public hospitals and the drug distribution mechanism, and promoting the deepening of healthcare system reform.

Source: The Chinese Government Website