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Drug Pricing Pattern in China: Dilemma and Countermeasure

  • Mingxi Wang
  • Yi Hu
  • Han Qiao
  • Chuangyin Dang
Article

Abstract

Maybe it is the most important medical reform for current China to adopt the bid-and-procurement scheme to correct the distortion of pharmaceutical resources allocation. Nevertheless, overpriced drugs often happen. This article aims to identify potential factors leading to the overpriced. Based on the mechanism rules of the scheme, it is found that unethical doctors are crucial to high price markup in the pricing pattern of drugs. Under China's actual conditions, asymmetric ownership is identified to be another cause of the overpriced by developing an asymmetric bidding model. How are the impacts of these two factors to be alleviated? Upon examination, several reform measures cannot effectively avoid the occurrence of the overpriced. Yet, the issue is very urgent for China because it is facing with the problem of population aging. Therefore, alternative options - a regulation-penalty tool and an investment subsidy policy - are proposed to improve China's health care.

Keywords

The bid-and-procurement scheme overpriced drug asymmetry health-care reform 

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Notes

Acknowledgments

We are indebted to two anonymous referees for their help to improve the quality of the paper and Prof. Shouyang Wang for encouragement and detailed comments on an earlier draft. During this research, we have benefited from the financial support of National Natural Science Foundation of China (No. 71471039) and CityU 11301014 of the Government of Hong Kong SAR.

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Copyright information

© Systems Engineering Society of China and Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.School of International Trade and EconomicsUniversity of International Business and EconomicsBeijingChina
  2. 2.School of Economics and ManagementUniversity of Chinese Academy of SciencesBeijingChina
  3. 3.Department of Systems Engineering and Engineering ManagementCity University of Hong KongKowloonHong Kong

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