China is to cut the prices of more than 2,300 medicines by an average of 12% on October 22, the government has announced.

These products account for about 45% of the country’s essential drugs list. The prices of 49% of medicines on the list will remain unchanged, while the remaining 6%, which are currently in short supply, are to receive moderate price increases in order to encourage production, the National Development and Reform Commission (NDRC) announced last Friday (October 2).

The price cuts, which will affect 2,349 medicines in total, have been imposed both to help people afford essential drugs and encourage manufacturers to produce quality products, said an agency official. The measure will affect around 3,000 drugmakers, which will be able to base the prices of essential medicines on demand in the market, although these cannot be higher than the reference retail prices.

The Commission also announced that state-run basic medical and health care facilities will no longer be able to sell medicines at a 15% market-up, which will reduce prices by nearly 30% overall, and that local authorities will be requires to strengthen their supervision of retail drug prices.

The pricing measures are part of China’s massive three-year, $124 billion health care reform programme, which was unveiled by the government in April and aims to establish the infrastructure to ensure equitable and universal access to essential health care for the entire population by 2010. The country’s first-ever list of heavily-subsidised essential medicines was published recently, and last week Vice Premier Li Keqiang discussed other major features of the programme which are due to be carried out by year-end.

These include, he said: - expansion of basic medical insurance coverage to 72 million more urban workers and unemployed people, and ensuring at least 90% of the rural population are covered; - support for the vaccination of 23 million children aged under 15 against hepatitis B and the provision of free folic acid supplements for 11.8 million rural women; - improving primary health care facilities, including county and township-level hospitals, village clinics and community health centers; - ensuring about 30% of government-owned community health institutes and county-level hospitals use medicines on the essential list and sell them at controlled low prices; and - a pilot to be conducted in about 100 state-run hospitals by the year-end, to draw experience from trial projects and push the reforms forward across the nation.

China’s annual drugs bill is currently around $73 billion and accounts for more than 45% of its entire healthcare expenditure, which is much higher than the international average of 20%-30%. In a recent report, Business Monitor International (BMI) forecast that combined sales of patented, generic and over-the-counter (OTC) drugs in China will reach a value of $74.14 billion by 2013, representing a compound annual growth rate (CAGR) of just under 15%.