http://www.bjreview.com AUGUST 29, 2019 BEIJING REVIEW 37
BUSINESS
Copyedited by Sudeshna Sarkar
Comments to [email protected]gation into 54 medicines said to be in short
supply.
Shi Lichen, founder of Beijing Dingchen
Management Consulting, attributed the
shortage mainly to unreasonably low
prices, which dampened the enthusiasm of
these medicine producers.
“Many medicines in short supply are
lowly priced on the government procure-
ment list. The procurement prices remain
unchanged for several years after the
items are put on the list, while the market
environment has been changing fast, with
labor, raw material and financial costs ris-
ing,” Shi told ThePaper.cn news website.
As the prices of raw materials and labor
costs surge, producers of cheap medicines are
finding their profits dropping and some may
even be suffering losses. This has affected their
enthusiasm to produce those medicines and
subsequently, caused a scarcity of these drugs.
Price discretion
The State Council meeting also decided
to expand the pilot program of centralized
procurement and utilization of medicines.
In addition, drug producers will be allowed
to adjust the prices of medicines on the
national and provincial-level lists that are in
short supply. However, the price hike must
be reasonable, the State Council reiterated.
Shi said the prices of many medicines
in short supply have not been readjusted
for many years, or have been only slightly
adjusted. If their producers raise their
prices once or twice the original price to
cover the rising costs, it will be considered
reasonable. But if the new price is dozens
of times the original price, then it will be
subject to government investigation.
The authorities said they will also
ensure adequate drug supplies through
measures such as large-scale procurement
and the increasing of bases for large-scale
production.
Shi said once allowed to revise drug
prices, the companies will be able to bet-
ter cover their costs and with a reasonable
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produce these medicines. In addition, the
large amount of medicines bought under
the government’s procurement system will
ensure steady supplies and stable prices.Crux of the problem
Although the government has issued a
number of policies to address the shortage
of some drugs, the fundamental solution
involves the manufacturing of crude drugs,
also known as active pharmaceutical ingre-
dients (API), Shi said.
In China, to produce a medicine, includ-
ing pharmaceuticals and API, a company
must have an approval number issued by
the authorities and a Good Manufacturing
Practice (GMP) certificate, which makes
the process more complicated and time-
consuming compared to the international
practice, where a company has to only reg-
ister to be allowed to produce API, Shi said.
This stringent approval system, com-
bined with environmental protection
measures, has resulted in only a few enter-
prises producing API in China, leading to
monopoly and a remarkable hike in crude
drug prices. If a registration system is ad-
opted, Shi said more producers will qualify
to produce these crude drugs and the
shortage can be fundamentally alleviated.
According to Shi, relaxing the API pro-
duction process will be the most effective
way to solve the shortage. “The prices of
drugs on the government procurement
list keep decreasing, while API prices keep
rising, making medicine producers unable
to cover costs. As a result, medicines, espe-
cially cheap medicines, will disappear from
the market,” Shi told 21st Century Business
Herald.
Over the years, the government has
issued several policies to address the short-
age of medicines. A guideline issued in
2017 included creating the national and
provincial-level lists of medicines in short
supply, and establishing a national informa-
tion collection and coordination platform
for medicines in short supply.
In 2018, the authorities announced
collective production bases will be built for
medicines in short supply.
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network and an early-warning system at
different levels, from the national to county
levels, were set up to discover potential
problems; and a long-term mechanism
will be established to coordinate different
departments to ensure a steady supply of
medicines. QWorkers check the
quality of medicines
in a Nanjing-based
pharmaceutical
company’s factory
in Beijing on June 24XINHUA