| How control of the rapidly increasing medical expenditure and high drug costs has been a major challenge for China’s healthcare system reform.The high drug cost is an obstacle to the accessibility of healthcare in China,not only increasing the financial burden of drug utilization on patients but also putting pressure on the sustainability of healthcare insurance funding.In addition,high drug costs contribute to distortions in the pharmaceutical market and medical services,resulting in high drug prices and a huge waste of medical resources,including irrational/overuse of drugs.Drug prices,as a major component of drug costs,are also one of the objectives of the optimal allocation of resources in the pharmaceutical market.Drug price regulation,especially price regulatory policy,is usually used as the main instrument of drug regulation.China’s drug price regulatory policy is not set in stone,but with the development of the social and economic environment to adjust accordingly.From the implementation of strict price management during the planned economy to the implementation of price market exploration after the reform and opening up to the mid-1990 s to regulate drug prices again.In 2009,the deepening of the healthcare system reform(new healthcare reform)was launched,and it was proposed to "introduce a scientific and reasonable drug pricing mechanism",of which "reforming the drug pricing mechanism" was an important element that helped to optimize the efficiency of medical resources allocation.It can break the distortion of medical service behavior caused by "Yi Yao Yang Yi"(support medical cost with medicine),reduce the personal medical burden,and improve the accessibility of drugs.So,the government has introduced a series of price regulatory policies: the elimination of drug ceiling price(EDCP),the elimination of the drug markups(also called zero-markup policy,ZMDP),and the national drug centralized procurement(NDCP).These policies,on the one hand,reduce the negative effect of previous policies(such as ceiling price,drug markup,and provincial centralized procurement)on the price and utilization of medicine;on the other hand,explore the introduction of a new drug pricing mechanism.The drug price regulation implemented since China’s new healthcare reform has attracted attention and discussion,but the literature on drug price regulatory policy is mainly qualitative analysis,and there is less literature on quantitative assessment of the implementation effect of price regulatory policy.Issues such as how effective the implementation of China’s drug price regulatory policy is needed to be further analyzed.As one of the components of health care service,drugs are not only closely related to clinical efficacy,but also influenced by the policies,the healthcare system,and the behavior of participating actors.The drug price regulatory policy is also one of the difficult topics in the field of health economics.As far as the macro objectives of the new healthcare reform are concerned,reducing the individual medical burden and increasing the accessibility of drugs are ultimately aimed at improving health outcomes and public satisfaction.To achieve the goals,the new healthcare reform will introduce a new drug pricing mechanism as the main content,which includes reforming the drug pricing mechanism.The reason why price regulation is the main policy tool of the drug pricing mechanism is that price regulatory policy achieves optimal resource allocation through the price mechanism.Therefore,the effect of price regulatory policy is to achieve changes in drug prices or drug costs through the policy to reduce the individual medical burden and improve the accessibility of drugs.The evaluation of the effect of price regulatory policy can be based on the changes in drug prices or drug costs,and the effect of the policy on other indicators related to drug prices can also be analyzed.This paper was based on the framework of the healthcare system under China’s new healthcare reform.Firstly,the paper summarized the government regulation theory as the theoretical foundation of price regulation and then put forward the hypothesis of this paper through the analysis of behavior under direct price regulation and price formation under indirect price regulation,and then further reviews the background and content of three drug price regulatory policies,namely,EDCP,ZMDP,and NCDP,respectively.Then,the evaluation of the effects of three drug price regulatory policies was conducted using macro-and micro-data such as the "2013-2017 pharmaceutical market statistics","2012-2018 monthly statistics of medical institutions in Sichuan Province" and "2018-2019 hospital drug procurement data in Beijing and Zhejiang" to provide empirical evidence for the supplementation of regulation theory and the improvement of regulatory policies.The main contents and results of this paper are as follows.First,evaluating the effect of EDCP through interrupted time series analysisAccording to the policy,the goal is to achieve a reasonable level of drug prices,which means that the overall drug prices will not fluctuate significantly due to the EDCP.In addition,drug prices are the result of market behaviors of both supply and demand sides,and the changes in the behavior of the main players in the market after the policy also provide empirical evidence.Considering the policy was implemented nationwide,the comparative analysis of different samples is not applicable due to the lack of a control group.This paper examined the changes in macro price indices in the pharmaceutical and health sectors through an interrupted time series analysis,firstly analyzing the changes in the consumer price index(CPI)for pharmaceuticals and healthcare.To assess the indirect effect of the policy on the supply side of pharmaceuticals,the operations of the pharmaceutical industry and pharmaceutical imports and exports were included in the analysis.This paper found that the policy not only had an effect on drug prices but also indirectly affected the supply side of pharmaceuticals through the analysis of the pharmaceutical industry and pharmaceutical imports and exports.Specifically,after the EDCP,there was no significant change in the CPI of Western medicine,and the CPI of Chinese medicine increased by 0.200%(p=0.026).In the short term,the production of chemical raw materials increased by 11.880%(p=0.013)while the production of proprietary Chinese medicines decreased by 12.040%(p=0.004).The production of chemical raw materials decreased by 1.270% per month after the EDCP compared to the growth before the intervention,with a significant downward trend(p<0.001);the effect on the import and export of pharmaceuticals: in the short term,the import and export volume and export amount were significantly decreased,import prices increased by 21.180%(p=0.003);the change in imports volume was not significant,and exports decreased by 6.430%(p=0.085);after the policy,imports showed a trend growth of 1.130%(p=0.010).Second,evaluating the effect of ZMDP through a difference-indifference(DID)modelAccording to the contents of Sichuan Province’s zero-markup policies,the policy means that hospitals no longer take drug revenue as the main revenue,while the price of medical services is adjusted to reduce the loss of drug revenue to achieve a balance between hospital revenues and expenditures.In addition,there are differences not only in implementation time but also in the implementation geographical scope of the policy in public medical institutions from pilot to fullscale promotion.This paper selected Sichuan as the sample and analyzed the effect of the two ZMDP in different types of public hospitals at the county level and urban level respectively through the DID model.The differences in revenue structure and medical service utilization between county-level public hospitals and urban public hospitals before and after the policy were first compared,and then the differences in revenue structure and medical service utilization between urban public hospitals and urban non-public hospitals were compared.This paper found that after the ZMDP,both county-level public hospitals and urban public hospitals experienced a reduction in their drug revenues,and policy spillover effects also affected the changes in non-drug revenue,but both had no effect on medical service utilization.Specifically,after the ZMDP,the per capita inpatient drug revenue decreased by 9.480%(p<0.001)in county-level public hospitals,and the per capita outpatient and inpatient drug revenue decreased by 8.490%(p<0.001)and 1.460%(p<0.001),respectively,in urban public hospitals.There was no significant effect on the volume of medical services(total number of consultations and discharges)after the ZMDP in either county-level public hospitals or urban public hospitals.The results suggested that public hospitals partially offset the effect of reduced revenue due to lower drug revenue by increasing the revenue of non-drug medical services after the ZMDP.Third,evaluating the effect of NCDP through a DID modelBy realizing the scale effect of buyer procurement,NCDP decreases drug procurement prices while also ensuring the procurement volumes are implemented.Although seven rounds of NCDP have been implemented,and both drug varieties and implementation geography have increased,few empirical studies use large samples of empirical data to assess the policy effects.Based on the data on public hospital drug procurement,this paper selected Beijing municipality,one of the first round of pilot cities,as the pilot group,and Zhejiang Province,which was geographically distant and had little difference in economic development from Beijing,as the control group.The effect of NCDP in public hospitals was analyzed through the DID model.Firstly,the difference in the procurement of the selected species between the two groups was analyzed,and then the effect of the policy on the procurement of non-selected drugs was further analyzed as a spillover effect.This paper found that NCDP changed the procurement price and volume of the selected specifications,while it had little effect on the procurement amount.Specifically,the procurement volume of selected drugs in public hospitals in the pilot group increased significantly by 93.400%(p<0.001)compared with public hospitals in the control group,and the procurement price decreased significantly,while the change in procurement amount was not significant;in addition,the policy also affected non-selected drugs,especially on drugs with the same generic name,with the greatest effect,and the procurement volume decreased by 98.300%(p< 0.001)and a decrease of 104.100% in procurement amount(p<0.001).For the selected specifications,the greater the price reduction,the more the procurement volume;the changes of non-selected drugs were close to but still differed;the changes of other specifications of selected varieties were consistent with the selected specifications,and the procurement price decreased significantly,the procurement quantity increased significantly,and the changes of procurement amount were not significant.The variation in drugs with the same generic name might be related to the degree of substitution.The variation in the procurement of the selected drugs in different types and levels of hospitals was inconsistent.Combined with the above analysis and conclusions,the recommendations for the future improvement of drug price regulation include the following: First,for the policy-maker,the policy should be evaluated on time,paying attention not only to the effect on the objects but also to the spillover effects of the policy.Second,drug prices can be regulated in the future according to the changes in the regulatory environment and regulatory subjects,through a wider variety of regulatory policy tools to provide price regulation for different types of drugs.Finally,although price regulation is only one of the policy tools of healthcare reform,its policy logic should be patient-centered and start from institutional adjustment to establish an institutional environment without moral hazard to better achieve the macroeconomic goal of improving the population health.In conclusion,this paper evaluates the policy effects of three drug price regulations under the new health care reform and finds that although price regulation affects drug prices/costs,it also affects non-policy objectives through spillover effects.This paper helps policymakers to adjust and improve drug price regulatory policies on time,and also helps to consider policy effects systematically and comprehensively.More studies are needed in the future on issues such as rational drug use in medical institutions,exploring the effects of drug price regulatory policies on generic substitution,supplier-induced demand,pharmaceutical companies’ market strategies,and introducing a new drug pricing mechanism.This paper has the following three innovations: First,it incorporates the behavior of pharmaceutical firms into the analysis of behavioral decision models under perfect market competition,which complements the theory of the effect of drug price regulation on the pharmaceutical market.Second,this paper review the history of three price regulatory policies and their policy implications under the health insurance payment reform since the new health care reform,which helps to understand and explain the drug price regulatory policy logic and provide ideas for further improvement of price regulation.Finally,the effects of the three price regulatory policies are evaluated separately through econometric methods,this paper provides the first quantitative study of the elimination of the drugs ceiling price,and this paper also complements the quantitative study of the drug zero markups for provincial-level evaluation and the comparative effects of national drug centralized procurement in different regions.The results of these evaluations provide empirical evidence for further policy refinement. |
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