China moves away from market prices

China's government has announced a more interventionist approach to drug prices, in an attempt to curb what it considers to be profiteering by hospitals and doctors. The moves were welcomed by global behemoth Pfizer's local representatives, however, subsequent reports of major retail price cuts for 67 drugs were unlikely to be welcomed.

The initial announcement involved the issuing of eight guidelines to regulate drug prices and crack down on corruption as part of a national campaign to promote "affordable medical services for the people," according to local media reports. The guidelines were published by the National Development and Reform Commission.

In future, drug prices will be set by government inspection and ratification of manufacturing costs, with a pilot program on selected drugs. Drugmakers will then be obliged to display suggested retail prices based on a set formula for dividing mark-ups. Manufacturers get 20% of the mark-up, distributors 40% and retailers the remaining 40%. In related news, the NDRC has imposed retail price cuts for 67 anticancer drugs in a range from 23%-57%: 23 of the products were previously priced in the marketplace.