The National Development and Reform Commission (NDRC) announced to the local press on May 8 that it will adjust prices of 260 Western medicines (1,200 specifications) with effect from May 15, 2007.  These drugs are from ten therapeutic classes including digestive system, respiratory system, anti-parasitics, analgesics/antipyretics and non-steroid anti-inflammatory drugs.

Prices of 70% of these products will be reduced, with an average price cut of 19% and the highest cut of 62%.  It is estimated that the price cut will save CNY 5 billion in drug expenditures annually.

Prices of the rest of 30% of these products, most of them common drug products with low prices, will be maintained at the same level.  Prices of 18 drug products that are in short supply, however, will be raised.  

Following this price adjustment, NDRC completed, at least for now, its price adjustments of all drug products that are subject to government price control. 

According to NDRC, about 1,500 drug products are currently subject to central government price-setting and about 800 other drug products are subject to local government price-setting, together they account for about 20% of all drug products. Since 2006, NDRC has cut prices on more than 900 drug products in seven batches. 

Existing regulations require all drug products in the drug reimbursement list of the urban employee basic medical insurance program to be subject to government price-setting.

NDRC stated that it is considering to revise government-controlled drug prices every two years from now on, but the agency anticipates a rising number of drug products subject to government price-setting resulting from the future expansions of the drug reimbursement list.

In the post-major-price-cut era, NDRC is expected to adopt a differentiated price-setting policy for patented drugs, originator-drugs and generic drugs. It is likely to further control drug expenditures through regulating expense-ratios, drug sales margins and distribution margins. The agency said it would adopt an restraining pricing policy for generic drug products that are oversupplied. 

In addition, NDRC revealed that it would pay serious attention on the prices of about 900 drug products that only became regulated by the government recently.  The agency believes there are still a lot of "bubbles" in the prices of these products that should be "squeezed out".