SAN FRANCISCO - In addition to dramatically increasing access to mainly generic drugs, China's sweeping and upcoming health reform will also include measures designed to spur R&D, according to Song Ruilin, Executive Director-General at the Chinese Pharmaceutical Association's Research Center for Medicinal Policy.

Drawing on his decades of experience drafting healthcare regulations for the State Council of the People's Republic of China, Song outlined the key aspects of health reform in his home country during an Oct. 28 session at Windhover's PharmAsia Summit in San Francisco.

In contrast with the U.S., where health reform is being hotly debated, there is broad support for reform in China as a means of correcting inequities and lack of access to care, said Song, speaking through a translator.

Over the last decades, health services have been distributed according to wealth. Consequently, populations in the richer cities of Eastern China have received the lion's share of medical services but those in rural areas, especially those in the impoverished Western crescent of the country, have lost out.

Having already increased the budget significantly for medical services and treatments between 2003 and 2007, the government is set to spend another RMB 850 billion ($120 billion) to further improve access within three years.

Even so, the reform plan is still "short of money," even with the additional plug of RMB 850 billion Song said.

Among other things, reform calls for building new clinics, changing hospital drug and diagnostics pricing systems that drive up the cost of healthcare, providing universal access to insurance and to essential drugs - mainly generics. Goals should be achieved by 2020.

On top of an insurance program for those living in urban areas who are employed and a plan for those who are unemployed city dwellers, health reform calls for the creation of a new cooperative system for those who live in the countryside.

The Chinese government expects to expand insurance coverage to 90 percent of its population by 2010, Song said. That number includes 820 million farmers and 100 million urban residents.

But Song made a point of stressing that Chinese health reform is not just about solving the problem of expensive doctors' visits for rural villagers.

"It's also about how to promote development of the medical and pharmaceutical industries. This is why we believe we have to put more importance to R&D of new drugs and also to be more flexible in terms of pricing," he said.

The first part of healthcare reform, which is focused on expanding medical facilities across rural China as well as extending coverage to those residents, will also create massive opportunities for drug retailers to form huge chain pharmacies (Also see "China's Health System Reforms Are Opening Gates To Creating Gigantic Pharmacy Chains, Says One Would-be Titan" - Scrip, 17 September, 2009.)

Reform has included the creation of an Essential Drug List that consists of mainly generic and traditional treatments. To date, 307 medications - 205 chemical and biologic drugs and 102 traditional Chinese treatments have made it on this formulary of necessary meds (Also see "Second Part Of Essential Drug List Will Cover More Therapeutic Areas, Says China's Minister Of Health" - Scrip, 25 August, 2009.).

According to a new reimbursement policy, 45 percent of drugs on the list will see price cuts of 12 percent, 49 percent will see their current prices maintained, and the remaining 6 percent of drugs will get price increases (Also see "China's Essential Drug Prices Less Severe Than Expected; Some Prices See Increases" - Scrip, 6 October, 2009.). The small number set for increases are low-priced generics that are in short supply.

Health reform promises to significantly increase consumption and spending on drugs (PharmAsia News, Aug. 27, 2009). During his talk at the PharmAsia meeting, Song said he expects the national drug budget to grow by 12 percent to RMB 700 billion by 2010.

Though the government wants to encourage development of new drugs and access to branded medications, it also is aiming to eliminate conflicts of interest between government employees and companies. For example, the government is now revising the list of medicines covered for urban employees. In the past, companies would have been able to file a report seeking inclusion. This year, however, the government is seeking input from thousands of physicians to make coverage decisions, Song said.

- Emily Hayes ( e.hayes@elsevier.com )

China's Health Reform Will Nurture New Drugs, While Boosting Use Of Old Ones - PharmAsia Summit

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