Research on The Implementation of Essential Drug System in China

Rural Health Facilities

Zhang Zhenzhong, Wang Yunping

China National Health Development Research Center

Outlines

Background

Progress of EDS Implementation

Some preliminary findings and discussions

Summary

Background

Why the drug price is so high?

The more agents and distributors involved, the more mark-up taches, and thus the higher prices of drugs and heavier economic burden on patients.

Before the reform, the mark-up taches in China

50% 30%-50% 12%-15% 7%-15%

Manufacturer Sale agent Distribution enterprise Hospital Patients 。。。 。。。

Background

Surviving rational for rural grass-root health facilities:

compensate the cost of medical health services

through the profit via selling drugs

In 2009 for public township health centers:

• Revenue from selling drug income in its total business income:

55.03% (western areas ≥70%)

• Fiscal input in its total income: 18.98%

Background

Launch of National EDS: 2009

Objectives of National EDS: ensure the utilization of ED, alleviate the

economic burden of drugs for the population

Main tasks and features:1. NED list: 307, allow expansion in province, update every 3 years

2. Regulate the production and distribution, and tender for bidding at provincial level

3. Set national retail sales guiding price for ED

4. Equip and use EDs in public grass-root health facilities, and 0 mark-up for EDs

5. Facilitate the priority selection and rational use of EDs

6. Provide higher reimbursement rate for EDs in medical insurance schemes

7. Strengthen the supervision on EDs safety and quality

8. Improve the performance evaluation system on EDs

Progress of EDS Implementation

From 2010 – Apr. 2011: has covered 86% public grass-root health facilities

Data source: WHO Beijing office, Tongji Medical University , CNHDRC, Evaluation on Essential Drug System implementation Progress.

Financing the grass-root health facilities for the gaps after implementing the EDS

Financing Methods

“Replacing compensation by rewards” policy: combine the volume and

quality of the basic + major public health services accomplished, as

well as the performance of general reform on personal management,

performance related payment, patient satisfaction and etc. with the

fiscal subsidies

Differential fiscal subsidies-direct subsidies: compensate the gap

based on the average total business income and cost in the previous 3

years

Bill on medical insurance: medical insurance V.S. fiscal input is 7:3 or

6:4 for the 15% mark-up gap

Change of the price after EDS reform

Nationwide average price of EDs:

decline 30% + , due to 0 mark-up policy.

Hebei

Hunan

Zhejiang

Liaoning

Anhui

Sichuan

-46

-47

-45

-34

-50

-54

Change of EDs price in selected areas

compared with national guiding price

But some EDs in some areas:

Price after bidding is much higher

Is this proposition true? Even though in most areas, the EDs price is declining, if

Declining EDs price = Declining economic burden of health exp.?

唯低价是取的招标采购

• 基药供给不足• 质量降低

药物收入缺口补助不到位

• 医务人员工作积极性降低

• 上转患者• 多检查• 门诊转住院• 替代药

患者用药习惯•流向大医院•社会药店购药

Reduce the EDs price

Declining EDs price, but might be increasing economic burden of health exp.

Some preliminary findings

Although it is too early to make any conclusion,

however, some phenomenon should be paid

attentions to…

Change of the volume of health services utilization at rural grass-root health facilities

1st quar. 2011

（ 10,000 pt)

1st quar. 2010

（ 10,000 pt)

Change volume

（ 10,000 pt）

Rate(%)

THC outpatient 20240.1 21624.3 -1384.2 -6.40

inpatient 768.2 889.4 -121.2 -13.63

Beds utilization Rate 57.4 59.8 -2.4 -4.01

Secondary

hospital

outpatient 22123.5 20489.6 1633.9 7.97

inpatient 1267.5 1153.3 114.2 9.90

Beds utilization Rate 90.2 87 3.2 3.68

Table 1 Change of the volume of health services utilization from 2010-2011

Data source: Health Statistics Year Book 2010, MOH, China

Change of the distribution of NCMS reimbursement fund at rural grass-root health facilities

In 2010: reimbursement for inpatients in upper hospitals outside the county and county hospitals has increased 16.69%、 14.8%; in THC has declined 2.59% than 2009.

Areas

Upper hospitals out-side county County hospital THC

2009 2010 2009 2010 2009 2010

East 35.64 36.95 43.81 43.24 20.55 19.81

Middle 35.23 38.78 38.58 39.49 26.19 21.73

West 31.93 34.18 37.49 39.37 30.58 26.44

nationwide 34.44 36.89 40.07 40.67 25.49 22.44

Table 2 Distribution of NCMS reimbursement fund for inpatients

Data source: Research Center on NCMS of MOH, China

Why these Unexpected Outcomes Happen?Political economical

social cultural

EffectiveEDs

delivery

suppliersupplier ConsumerConsumer

Gov. Gov.

Pharm. enterprisePharm. enterprise Drug

storeDrug store

Drug retailerDrug retailer

Others …Others …

Upper hospitals

Upper hospitals

Adaptive agents

Further tracking & analysis

Opportunities in the predicament for the rural grass-root health facilities

Hold back the arms race on medical equipment and

constructions

Reallocate and integrate the health resources in rural areas

Transition of the functions of rural health facilities: balance the

public health service and medical services

Unprecedented policy attentions and fiscal input to village

doctors Facilitate the comprehensive reform on rural grass-root health

facilities, especially the performance management and quality management.

Summary

When introducing a new system will break down the original

interest pattern, collide with and pose pressure to the old

environment.

To stimulate the agent and environment in the old system

more quickly and effectively, the research from complex

adaptive system perspective is needed, to analyze the

adaptive capacities and behaviors of the agents and the

interactions between new and old system components.

A Chinese old saying : “Break to Found, fail to succeed”.

Thank you for listening!