Imported drugs have not been reduced in taxes, and pricing reform needs to be accelerated

Reducing tariffs on 28 types of imported drugs to zero is a good livelihood policy. And how to make good policies quickly exert their "efficacy" depends on further accelerating the reform of drug pricing mechanisms.

According to relevant regulations of the State Council, starting from May 1st this year, China has reduced tariffs on 28 types of imported drugs to zero, including commonly used drugs for treating cancer. But now, more than a month has passed, and some media have found in their investigation that the prices of drugs sold to patients who have enjoyed the benefits of the new import tariff policy have not yet changed, which has made the relevant families feel quite disappointed.

It is indeed worrying that a good policy that benefits the people cannot be translated into tangible benefits for the people.

At the same time as being anxious, people naturally wonder why the prices of many cars here have dropped in response to the new tariffs on imported cars. Why is the price of imported anti-cancer drugs involved in saving lives so slow to respond?

This is because car prices in our country are completely adjusted by the market, while drug prices must also follow government pricing. The problem is that the drug price is not the the final say of one department. It needs to negotiate with manufacturers or make centralized bidding procurement on the basis of negotiation between the National Health Commission, the National Development and Reform Commission, the Ministry of Human Resources and Social Security, the medical insurance department and other departments. The intermediate process is relatively complex. Every adjustment of drug price requires several months of preparation and implementation. It is not easy to make corresponding adjustments in the short term for a new policy that will be implemented on May 1st. Moreover, the most primitive starting point for this drug adjustment is the tax rate adjustment, which involves not only tariffs but also value-added tax, and there may be more content that needs to be coordinated.

At the same time, the sales of imported drugs in China generally require foreign companies to establish branches or find agents in China to implement, and their prices are also registered domestically in advance, not fully determined by cost. Now, due to changes in taxes and fees, the other party is required to adjust the price, which obviously requires a process of negotiation and negotiation. Especially for some international pharmaceutical companies, they are dominant in certain pharmaceutical fields and have a strong say in pricing.

In response to this situation, it may be necessary for relevant departments to make appropriate adjustments to the management of drug prices.

Firstly, relying on the market appropriately to make drug prices more in line with market rules. In fact, as early as May 2015, China issued the "Notice on Promoting Drug Price Reform", which clearly stated that from June 1, 2015, except for anesthetics and psychotropic drugs, government pricing for other drugs would be abolished, and the drug procurement mechanism would be improved to play the role of medical insurance cost control, strengthen the supervision of drug market prices, and guide drug prices to be more reasonable. However, so far, the market pricing mechanism for drugs has not truly taken shape.

Secondly, for drug management, efforts should be made to minimize departments and implement unified management. For example, neighboring Japan has its drug supervision work under the unified responsibility of the Ministry of Health, Labour and Welfare. The responsibilities cover drug registration and approval, medical insurance management, and drug pricing. This ensures smooth information flow during policy formulation, fully considering market supply and demand as well as financing levels, and has achieved good results. It is worth noting that China has recently established the National Healthcare Security Administration, which is expected to integrate the healthcare security functions that were previously scattered across multiple departments. It is believed that this will provide timely response capabilities for drug management to policy changes.

Finally, it is necessary for China to protect drug patents, but for some irreplaceable medical drugs, when negotiating prices with relevant manufacturers, it is advisable to learn from some foreign experiences and, if necessary, set mandatory imitation clauses to increase the market's ability to adjust prices.

Reducing tariffs on 28 types of imported drugs to zero is a good livelihood policy. And how to make good policies quickly exert their "efficacy" depends on further accelerating the reform of drug pricing mechanisms.