Research On The Regulation Of Medicine Prices In The Market Economy System In China

Objectives: To discuss the connotation and development course of the regulation of medicine prices in the market economy system in China, research and evaluate the regulation of medicine prices systemically; analyze the backgrounds in which the regulation policies of medicine prices were instituted in every phase and its relationship with politics and macro-economy of the time, the main content and the effects of the policies, the responses of the interrelated stakeholders to the regulation of medicine prices; sum up the evolvement laws of regulation policies of medicine prices and its implications for making the new policy. Meanwhile, referring the experiences of other countries in order to provide some new ideas and views for our country when making regulation policies of medicine prices, in the end, put forward some suggestions so as to perfect the regulation policies of medicine prices in China.Methods: This paper uses many research methods synthetically, including: (1) Literature research. To learn regulation policies of medicine prices, literatures, economic theories and demonstration research. (2) Environment analysis. To analyze the political and economic environment in which the regulation policies of medicine prices were constituted and implemented in the market economy system in China, also the relationships with the external environments. (3) Criterion analysis. To sum up the experiences and laws of the regulation of medicine prices, and compare with the regulation policies of medicine prices of some foreign countries, consequently, bring forward the value orientation of the regulation policies of medicine prices in China. (4) Stakeholder analysis. To analyze the implementation desire, ability, and implementation effect of stakeholders in the regulation policies of medicine prices, including regulation departments and regulation objects. (5) Quantitative analysis. To study the regulation effect of medicine prices of China, and compares it with developed markets and emerging markets. (6) Time-series study. To review systemically the evolvement course of the regulation of medicine prices in China, but emphasize particularly on actual regulation policies of medicine prices.Results: The main results of this paper includes: (1) the regulation ranges of medicine prices by the government became from big to small, and then became big; the pricing methods were perfected gradually; (2) the regulation of medicine prices has some effect, but it isn't very obvious. The retail price index of Traditional Chinese and western medicines descend from 111.8 in 1994 to 99.1 in 2006; the price level of medicines regulated by the government declined evidently as a whole, but there was a converse market adjustment on the medicines adjusted by the market; the prices discrepancy between patented medicines, original development medicines and generic medicine was not rational, the price of original development medicines of some innovative corporations was 2.5 times more than the generic medicines. (3) compared with the overseas markets, among the comparable western medicines, the average price index of medicines based on manufacturer's price of China was 35% of that in developed markets, and was 55% of that in Asia or emerging markets; but the average markup ratio in the circulation channel which the patients must be take on of China was higher than the other countries. The main reasons were that markup ratio by the hospitals was very high (average 20%-25%), also the value-added tax (17%). (4) the surface reasons which resulted in nominal price of medicine were that prices of medicine in the hospitals were opaque, the concentration ratio of manufacture & circulation enterprises was low, and information asymmetric between doctors and patients as well, but the essential reasons were that treatment-and-medicine combination in the hospitals, treatment-and-medicine binding between hospitals and patients, and medicine cahoots between hospitals and medicine manufacture & circulation enterprises. (5) The price management departments should not only take into account the cost, but also the innovation of medicines and supply & demand conditions during the pricing. (6) There were not direct relations between medicine prices and the rise of medicine expenditure, the structure and quantity of medicine use have more impact on it.Conclusion: (1) The regulation policies of medicine prices were perfected gradually, and connect international practice step by step; in the management model of medicine prices, it experienced a regulatory system to relax regulations, and then to the process of re-regulation. (2) The cost-plus pricing method at the present time was not rational; it couldn't control cost effectively and make against innovation of medicine manufacture corporations, so the price regulation departments should adopt comprehensive pricing methods. (3) The medicine-classification pricing has its strongpoint, but also has many shortcomings. (4) The single regulation policies of medicine prices couldn't achieve the goal that control medical expenditure effectively, furthermore, it needs good system environment, for examples, the medical insurance system, national basic medicine system, the medical service and medicine separation system, and the reimbursement mechanism for public hospitals. (5) The regulation system of medicine pricse should not only consider the public interest, but also consider the interests of the relevant stakeholders, including medicine production & distribution enterprises and medical institutions.Innovation: (1) In the aspect of theory analysis, the paper put forward the basic principles of the regulation of medicine prices, that is "cost-competition-expectation" theory, and attempt to establish the quantity model and function model of the regulation of medicine prices in China. (2) In the aspect of demonstration study, analyze and evaluate systemically the regulation effect of medicine prices in the market economy system in China. (3) In the policy analysis, review systemically and analyze the basic laws and characteristics of the regulation of medicine prices of China, based on the anterior research, bring forward some policy suggestions in order to perfect the regulation of medicine prices in China.