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In China, Rare Dissent Over a Program to Save on Drug Costs

by New Edge Times Report
January 25, 2025
in Business
In China, Rare Dissent Over a Program to Save on Drug Costs
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A rare display of public anger is unfolding in China over the quality of domestically produced drugs.

A prominent Shanghai surgeon pointed to anesthetics that do not put patients to sleep. A respected Beijing cardiologist questioned blood pressure medication that failed to regulate. A former editor at a leading online health platform went as far as to accuse domestic drugmakers of fraud.

The concerns spilled out into public discussions this week when some top doctors and hospital leaders called on the government to change how it buys drugs for its public hospitals.

The outburst of scrutiny, unusual in a country where the authorities keep a tight grip on public criticism of the government, was a rebuke of Beijing’s campaign to lower medical costs. Officials are working to shore up China’s national health care system, which is under financial pressure in part because of a rapidly aging population.

The policy, which was put in place in 2018, encourages fierce competition between drug manufacturers and has been successful at sharply driving down drug prices. But this year, foreign-branded drugs were largely absent from the government list of medicines that are covered under China’s national health insurance and offered at public hospitals.

The change has effectively pushed out many foreign pharmaceutical companies that do not want to compete against Chinese companies willing to sell their drugs at rock-bottom prices.

Now, doctors are sounding the alarm about the efficacy of some of the domestic drugs. The doctors are seeking changes to give patients the choice to pay more for alternatives.

“There have always been grumblings that if you cut the price, manufacturers will cut corners,” said Helen Chen, a managing partner and health care expert at L.E.K Consulting in Shanghai. “Now there are some public voices saying it is happening.”

After years of failing to reduce costs, the government created a central bidding system that favored cheaper drugs, which in most cases have been generics made by Chinese companies. In exchange, the government guaranteed to purchase more from each supplier.

Public hospitals account for about 70 percent of China’s drug market. Patients who use private clinics have easier access to a wider choice of medication, including foreign brands.

The annual bidding system, known as volume-based procurement, has more than halved the price of most drugs and saved Beijing over $50 billion its first five years, according to the most recent available government data.

“The national procurement system does keep prices down,” said Zheng Minhua, the director of surgery and the prestigious Ruijin Hospital in Shanghai, in a video interview by a local state media outlet.

But, he added, “at such a low price, the quality of the drug may be unreliable,” citing several examples including antibiotics that have caused allergies, blood pressure medication that did not lower blood pressure and laxatives that failed to do their job.

Dr. Zheng was among more than 20 doctors and Communist Party members who submitted a proposal this week to the government that would allow patients to get an original branded drug even if it was not on the approved procurement list. Insurance reimbursement would be adjusted depending on whether the drug was from an original branded drug or a generic.

The head of cardiology at Beijing Chaoyang Hospital, Lu Changlin, submitted a similar proposal suggesting that doctors and patients should not be forced to use the drugs on the procurement list.

The growing pushback from the medical community has been so strong that China’s National Healthcare Security Administration, which is responsible for national medical insurance, dispatched officials to Shanghai to speak to doctors and examine clinical data for the drugs.

“There is no regulation banning the purchasing or use of imported and branded drugs,” it said in a statement this week.

After the public outcry, some medical professionals have begun to examine the trials for some generic drugs. In a post on social media, Xia Zhimin, a doctor at Hangzhou Hospital of Traditional Chinese Medicine, compared data from the trials of original drugs with those of the same drugs in generic form and found too many similarities, raising questions about whether the data was fraudulent, Dr. Xia said.

“The numbers are exactly the same down even to two decimal places,” wrote Dr. Xia, the former deputy editor in chief of Ding Xiang Doctor, a popular online forum for medical professionals.

“It’s Chinese generic drugs that have bad quality,” he said.

In a statement on Friday, a unit of China’s National Medical Products Administration acknowledged the duplicated data, saying it was the result of “editing errors when the relevant product information was disclosed.”

The issue has hit a raw nerve when many people are feeling a sense of insecurity from China’s real estate downturn and sputtering consumer economy.

“If this isn’t a bottom line, I don’t know what is,” wrote Meng Chang, a journalist and host of a popular podcast, in a social media post that was later taken down.

“The vast majority of good doctors are in the public system,” Mr. Meng wrote. “But now, when you want to have imported drugs and surgery equipment, you have to go to the private sector.”

Most Chinese families see doctors in a hospital when they are sick. National medical insurance, which varies from province to province, typically covers, on average, nearly three quarters of the cost of any drug that is prescribed.

On social media, some patients and doctors have said that the rise of generic brands in hospitals has made it difficult to even find original foreign branded drugs like Bayer’s Avelox antibiotic medicine.

Li Xiang, a doctor from northeastern China, shared a story about how one of her family members needed an imported drug that was no longer available in public hospitals. But when she tried to contact a representative for the manufacturer, she was told the drug was out of stock.

Dr. Li criticized the government’s procurement system, saying it resulted in an oversupply of drugs people do not want to use and too few alternatives.

“You say that medical insurance is running out and you can’t use it to buy imported medicines. I get that,” Dr. Li wrote. But, she added, she was willing to do anything, even sell her house, to secure the imported drug.

“I won’t risk switching to other substitutes for fear that the medicine won’t work and the condition will come back,” she wrote. “This involves the life of a family member.”

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