China to Peel off Drugstore from Hospital, Essential to Medical Reform

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Last updated at: (Beijing Time) Friday, July 05, 2002

China to Peel off Drugstore from Hospital, Essential to Medical Reform

In the latter half of this year three or four pilot cities would be selected to detach drugstores from hospitals for setting up independent drug retailing enterprises responsible for their own management decisions, profits and losses, according to drug official with the State Trade and Economic Commission.

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As a major task of the current three system reforms of pharmaceutical industry, separating medicine purchasing and selling from hospital service has been formally put on government agenda.

In the latter half of this year three or four pilot cities would be selected to detach drugstores from hospitals for setting up independent drug retailing enterprises responsible for their own management decisions, profits and losses, according to drug official with the State Trade and Economic Commission.

Related departments are now pondering over reform plans and Xining, Liuzhou and Qingdao have been selected as pilot cities.

Cut off economic links between drug retailers and hospitals

The reform is to fundamentally change the long-standing situation that hospitals are taken as terminal markets in medicine distribution, making most profits through drug selling instead of clinical treatment and services, the Commission official said.

The defects of current system are obvious. Hospitals have long been targeted by drug retailers as terminal seller, which gives rise to rampant insider trading. On the other hand the doctors, in order to earn more, deliberately prescribe expensive drugs to patients, which leads to high price of medicine.

To regulate and standardize hospitals' medicine purchasing, the state began to try public bidding in September 1999, but the prices didn't drop therefore bring almost no benefits to consumers.

Only by separating drug selling from hospital services can we lower the medicine prices and root out corruption in drug purchasing and distribution, the official said.

Difficulties still ahead

There are still many difficulties ahead of the reform since it touches the economic interests of many sides. The local government is still waiting for a state guidance to begin pondering its own plan, a Qingdao official said.

Now reformers are facing headaches as following. First, how to set up a system of financial input and compensation to guarantee hospital's income? Second, how to improve the already much strained doctor-patient relations and guarantee correct carrying out of prescription and drug safety? Third, how to tell drugstore of prescription medicine from that of non-prescription medicine? And would the drugstore, detached from hospital, become an "appointed" one only from there one can find the medicine prescribed?

Higher prices for clinical services unavoidable

What common people concern is whether the reform would bring benefits to them. Will the treatment fee soar and offset the money saved from medicine buying?

Raised treatment fee is unavoidable, related official said, which demands hospital services of higher quality and eventually benefits the consumers.

By PD Online Staff Member Li Heng

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