Retail prices of 22 kinds of medicine were reduced yesterday by Chinese authorities, but pharmaceutical industry observers say the move will do little to make healthcare more affordable.

The price reduction was announced by the National Development and Reform Commission, the department that oversees the macro-adjustment of the economy.

The average reduction in price of the medicines, which are widely used in hospitals, was 40 per cent.

According to the present sales volume of the medicines, the reduction totals around 4 billion yuan (US$490 million).

However, many officials and experts believe the campaign, as well as others in past years, cannot solve the long-standing problem of over priced medicines.

Currently, people have to buy medicines at too high a price, generally dozens of times more than they cost to produce. The reason for this is obvious in China: The price set when the medicine leaves the factory is already inflated, and becomes ever more so as it reaches consumers.

In the past eight years, China has held at least 16 such reduction campaigns involving more than 1,500 kinds of medicine.

"History tells us that a medicine whose price is cut will eventually die in the market," said a Ministry of Health official who declined to be identified.

Factories will stop or reduce the production of cut-price medicines, he said, then produce other medicines that have the same effect but are more expensive. Hospitals, which sell the majority of the country's medicines, also often refuse to prescribe cut-price medicines, he added.

Amoxicillin, which was on last year's list of price-reduced medicines, is a prime example. Its ranking among medicines used by hospitals fell from 58th in 2003 to 105th after its price was cut.

A commission statement tried to counteract the lower usage.

The pharmaceutical market is huge, and its management is quite chaotic, leaving big loopholes for businesses and hospitals to make colossal profits without caring about people's interests, one expert said.

"Without taking more measures to tackle problems at the root, such as caring more about the patients as the policymakers decide the medicines' prices, the price reduction is empty talk," said Niu Wenyi, a public health expert at Peking University.

At the end of last year, China had at least 5,000 pharmaceutical factories, 12,000 wholesale drug companies and 120,000 retail outlets.

Most of the factories are small and do not make unique products. They have to engage in illegal practices, such as bribing hospitals or doctors to sell their medicines.

Another cause of high prices, Niu said, is bad co-ordination of responsibilities among various departments under the State Council. The prices of medicines are fixed according to commission guidelines, but approval to produce new medicines is given by the drug administration department, and hospital supervision is the Ministry of Health's jurisdiction.

(China Daily 09/29/2005 page2)