New procedures to clean up drug pricing

CHINA'S top pricing authority will tighten medicine pricing procedures in drug manufacturing from March 1 to raise transparency and as an anti-corruption measure in an industry widely considered to be riddled with rampant bribery.

The National Development and Reform Commission issued an interim regulation yesterday that sets out a five-step drug pricing procedure to be followed before setting drug prices:

1. Product cost investigation. Drug price regulators visit drug companies to check the cost of the raw materials for the drug;

2. Expert evaluation. Randomly pick up experts from the drug pricing experts group. The experts evaluate the price under the supervision of the commission's disciplinary unit;

3. Hearing opinions from the public;

4. Group discussion;

5. Group examinations.

Medicine pricing is a sensitive issue because many interest groups are involved, such as drug companies, hospitals, pharmacies and the public. Because the manufacturers and retailers seek larger profits, some inexpensive medicines with beneficial effects have been gradually phased out of the market.

The commission has cut the retail price of thousands of drugs to lower people's medical burdens. However, many drug makers stopped the production of affected drugs and launched new medicines with similar ingredients but at higher prices.

Regulations issued in January mean that drug companies paying bribes can be barred from doing business with Chinese medical institutions. This followed the corruption probe into Zheng Xiaoyu, the former director of the State Food and Drug Administration.

The new rules require at least two medicine price regulators to be present during cost investigations by drug companies. All members of the investigation group must sign off on the investigation result.

All foreigner-related meetings should be arranged through foreign affaires office of the commission.

Medicine price regulators are forbidden from taking money and gifts in any form or receiving invitations for banquets or traveling abroad from drug companies.

Regulators will rotate positions regularly and any leader or staff member who works in the same main position for five years or more will have a rotation.

Before re-pricing, medicine price regulators will communicate with drug companies. The re-pricing plan will seek out public's opinion through the media if possible.