China's medical reform supports traditional Chinese medicine


By Hepeng Jia/Beijing, China

After debates lasting half a decade, China formally released its medical reform guidelines and three-year implementation plan on 6 April.

The plan will extend medical insurance to all Chinese citizens over the coming three years, a provision most Chinese residents do not currently enjoy. 

The Chinese government will invest 850 billion yuan (US$125 billion) over the three-year period to complete tasks in medical reform. The money is an extra sum of investment on top of current healthcare spending, said vice finance minister Wang Jun. Currently, around 200 billion yuan of public money is spent on healthcare annually. 

Grassroots medical institutions, particularly 2,000 county-level hospitals, will be heavily funded to offer improved services. 



There will be a national essential medicine catalogue, with drugs listed within it purchased by provincial governments and distributed to hospitals for sale at the same price. The current profit-based hospital approach to medication, which has provoked widespread patient complaints, will be abolished.

Losses incurred by hospitals will be subsidised by the government, though hospitals themselves may increase their service charges slightly. Besides the conventional drugs in the catalogue, major hospitals can sell higher-quality drugs - including innovative new drugs - at a price that takes into account not only manufacturing costs but also research and development expenditure. 

While the pharmaceutical industry will benefit from the increased government spending and expanded medical insurance coverage, most of China’s 5000 drugmakers - dominated by generics production - will be washed out with the wholesale government purchases, concludes a report released by Shanghai-based Donghai Securities on 14 April. 

’It is true that innovative drug developers can benefit from the more flexible pricing, but corresponding policies on this have to be worked out to ensure this,’ says Han Bei, editor of the Chinese Journal of New Drugs.

Officials also revealed that half of the drugs in the essential catalogue will be traditional Chinese 

medicines (TCM) to boost the TCM industry.  

But this has led to worries that TCM - whose sales were roughly 50 per cent of chemical drugs’ approximately 400 billion yuan (US$58.8 billion) sales in 2008 - could be improperly prioritised. ’But TCM - based on combination of herbs - has many more types than chemical drugs featured on clear chemical structure, so the percentage of TCM in the catalogues does not mean it will topple the dominant chemical drugs,’ Han told Chemistry World.

The policy on the catalogue composition offers a chance for doctors to use chemical and herbal drugs equally when treating common diseases, she adds.