Research On The Regulation Mechanism Of Chinese Medicine Prices

Medicine prices are related to life and health of thousands of millions of families. Medicine price regulation is intended to control fast increase of medical expenses, keep medicine price reasonable and to keep medicine supply fair. Through comparing main contents and effectiveness of medicine price regulation in China and other countries, in connection of Chinese medical system reforms, the thesis studies Chinese medicine price forming mechanism, medicine price controlling mechanism and incentive mechanism to medical service organizations under price regulation. Finally, it suggests some policies of related price regulation.(1) Medicine prices are affected by R&D expenses, market development expenses, manufacturing costs, treatment progressiveness, market competitiveness, medical insurance as well as national situations and other factors. The thesis discusses medicine cost-plus pricing model, feature vector price model and trilateral information game model, among which it concludes that in the information game model, the medical prices are results from gaming between supervisors, interest groups and the government.(2) On the basis of analyzing factors affecting medicine prices, pricing links as well as interest distribution, the thesis designs the basic medicine expenses controlling model, supplier-demander bilateral controlling mechanism, hospital controlling mechanism, as well as effective measures to realize the mechanisms. Through analysis, it concludes that demanders’health marginal return equals to his copayment ratio and accordingly the copayment ratio becomes restrainer for his over-consumption. A doctor’s organizational compensation is proportionate to supplier’s labor marginal effects, that is, the more he is compensated by his organization, the more labor the supplier is willing to pay. Therefore, an individual must consider not only the necessary medicine consumption amount, but also the copayment ratio, which are influencing each other.(3) Medicine-hospital separation is not the necessary and sufficient conditions to control medicine price and costs. The thesis analyzes and establishes doctors’ behavioral standardizing model. Then, it demonstrates a theoretical model of medical expense increase and medicine price regulation. It discusses the influences of high medicine prices on total social welfare under perfect competition and price regulation. It proves that even under non-separation of medicine and hospital, if medicine and services are priced reasonably, the total social welfare will be optimized.(4) The government’s price regulation is ineffectual. Prices set by government are dropping considerably while prices of medicines not set by government or those so-called "new medicines" are not dropping or even rising. It is medicine structure and amount instead of medicine prices that contribute more to medicine expense rise.Chinese medicine price regulation is being improved, which is a large systematical engineering. Thus, a single price regulation will never result in effectively controlling medical expenses, which needs other supporting policies and favorable market conditions, such as perfect medical security system, the national basic medicine system, reasonable compensating mechanism for medical institutions, and so on. Or the medicine price regulation will surely result in governmental failure, ending in vain.