(Ecns.cn) –The high cost of medicine has been an ongoing problem in China, but a recent survey conducted by state-run China Central Television (CCTV) exposed a disturbingly large discrepancy between the cost of producing one particular drug and the prices charged for it in hospitals, raising the issue to a renewed level of public outrage.
A pharmaceutical Clindamycin Phosphate Injection product (2ml) that sells for 12.65 yuan ($1.96) in Beijing hospitals has a gross profit margin as high as 2,000%, since its factory-gate price is only 0.60 yuan ($0.09), claimed CCTV in its program Weekly Quality Report.
The story immediately fueled public anger towards doctors, who are believed to be chief among those raking off money to profit from an ailing medical industry. The doctors say they are just trying to survive.
Hospital: no motive to purchase cheap meds
CCTV did not uncover an isolated case, however, as nearly all pharmaceutical products are being sold for many times their factory prices in Beijing hospitals, according to a survey conducted by Southern Weekend.
Drugs are sometimes sold for ten times their market price. For instance, a Nefopam Hydrochloride Injection product (2ml) made by Shandong Fangming Pharmaceutical Group sells for 21.26 yuan ($3.29) in hospitals, but its factory price is only 0.32 yuan ($0.05), with bid price at 18.49 yuan ($2.86).
Judging from the figures, it is easy to see why hospitals usually add 15% of the bid price to the final retail price. A representative of the Pharmaceutical Procurement Center of Guangdong Province revealed that doctors who write prescriptions may get kickbacks as high as 40% of bidding prices.
Under such circumstances, there is little incentive for hospitals to choose inexpensive drugs, since the higher the prices, the more money the hospitals make.
But, according to the Guangdong representative, there are about 6,000 doctors in the province that participate in bargaining with pharmaceutical manufacturers, and a large number of them are fair and above board.
Are doctors the scapegoats?
Doctors have bristled at the recent finger-pointing, even though some admitted to a degree of self-interest and profit from writing prescriptions.
On China's Twitter-like Sina Weibo microblogging site, most complained that they have worked diligently and responsibly, but that fees for consultations, which cover diagnoses and treatments, have remained the same for more than ten years in China, despite accelerating inflation.
Mr. Zhang, a surgeon with over 15 years of experience in minimally invasive techniques of urology, said the cost of living is soaring, but hospital registration and operation fees have not changed for many years. Zhang asserted that the fees should be at least five times the current standards.
According to Zhuang Yiqiang, deputy head of the Chinese Hospital Association, it does not make sense to make doctors the scapegoats. The deep cause of this problem stems from the country's backward healthcare system, he said.
In China, most hospitals are state run, and are unable to get sufficient funding from governments at different levels. Usually, funds allocated from the government only account for about 10% of the operating costs of a hospital, while the other 90% must come from the hospital itself, including the doctors' salaries, added Zhuang.
The approach of "medicine supporting medical institutes" is a forced solution that has become a prevailing phenomenon in the country. Without profits made from drugs, it is argued, a hospital would not long survive its high operation costs.
Calls for reform
The National Development and Reform Commission (NDRC) announced a complete investigation and increased oversight of factory-gate prices for drugs starting on Dec.1, 2011.
Yet it is no easy task to unravel the problem without tackling the root cause first.
Transparency is needed to show how the whole drug mechanism operates, and reveal how many drug representatives are lubricating the channels so that certain drugs are sold in hospitals. If the tacit rules of participation and self-protection remain unchanged, the bid prices of medicines will never return to normal levels.
Zhuang Yiqiang pointed out there is now urgent need for the government to reform the country's healthcare system. In the first phase, the rate of state-run hospitals should be reduced to 50% to 60% of the total number of medical institutes in China. Moreover, the government must use every means to encourage different social powers, including charity organizations, to help set up more private or not-for-profit hospitals.
The interests of doctors should also be taken into consideration when making more state policies. It is no use blaming them for problems caused by a systemic deficiency, noted Zhuang.
