Experiences in Implementing the National Medicines Policy - Change in China

Experiences in Implementing the National Medicines Policy

- Change in China

Jing Sun

National Institute of Hospital Administration, MoH, P.R.China

[email protected]

1Plenary 2: National Systems, Policies, and Programs

15 Nov. 2011

Antalya, Turkey

http://www.inrud.org/ICIUM/Conference-Overview.cfm

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Contents

• Background of the National Health System Reform

• Medicine Sector Reform as Part of the National Health System Reform

• Essential Medicines System as Foundation of the National Medicines Policy

- Contents

- Progress and Achievements

- Challenges and the Way Forward

15 Nov. 2011 Antalya, Turkey

Plenary 2: National Systems, Policies, and Programs


Background of the National Health System Reform - 1

• Consensus of developing well-off society as the top priority of the country

• Fast economic growth allows more government investment and public expense

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• Recognition of health as the foundation of human development by the national top political leaders, and strong political willingness of coordinating the social & economic with the health development

• People’s complains of poor access to quality basic health care both physically and financially

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• Availability - Poor access to services in remote rural areas - Out of stock of key essential medicines

(expensive alternatives available) in urban areas

• Affordability - Soaring health and medicines expenditure - High proportion of pharmaceutical to health

expenditure - High proportion of out of pocket expenditure

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• Quality - Public perception of local products with poor quality

• Rational use - Irrational prescription and unnecessary care

intensified by the perverse incentives a) distort pricing system b) retrospective fee for service payment c) health facilities have to rely on costly medicines and diagnostic equipment, and poly-pharmacy to compensate weak government investment - Implications of huge wastes of limited resources,

alarming burden of drug resistance, adverse drug reaction/event

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Background - Availability

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Basket of key medicines Public patient Private patientShandong province 2005(GDP per capita No.8/31)

Availability Median (%) Orig.0 /

LPG5 5

Price Median Price Ratio

Orig.4.09 7.14

LPG0.93 0.51

Shanghai 2006(GDP per capita No.1/31)

Availability Median (%) Orig.13.30 10

LPG33.30 15


Orig.5.64 8.76

LPG2.03 1.77

Hubei province 2009(GDP per capita No.13/31)

Availability Median (%) Orig./ /

LPG38.90 44.40


Orig.11.25 19.94

LPG1.04 0.68Source: WHO/HAI medicine prices, availability, affordability and price

components survey Plenary 2: National Systems, Policies, and Programs


Background - AffordabilityTotal health expenditure in China

(CNY 100,000,000)

Total medicines expenditure in China

(CNY 100,000,000)

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Source: National Health Account 1990-2010 Plenary 2: National Systems, Policies, and Programs


Background - Affordability

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• Total health expenditure: 5.13% GDP

• Pharmaceutical expenditure: 44.5 % health expenditure

• Government health expenditure: 27.23 % total health expenditure; 6.18% total government budget

• Private health expenditure: 38.19% health expenditure

Source: Annual Yearbook of China Health Statistics 2009 and National Health

Account 2009



Background – Quality Perception

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Source: South Pharmaceutical Economic Research Institute of SFDA 2009



Background – Quality Perception

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• Switching from originator brands to lowest-priced generics in Chinese public hospitals for a limited basket of medicines in 2008

- Total potential cost savings:$ 86,492,276

- Average percentage savings: 65.1%

Source: World Health Report 2010



Background – Rational Use

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• 57%/61%/66% prescriptions in the urban and rural health centers and village clinics include antibiotics

• 33%/39%/30% prescriptions in the urban health centers/stations/rural health centers include infusions

• The isolate rate of Methicillin Resistant Staphylococcus Aureus (MRSA) is over 60% in clinical settings

• The incidence of highly macrolide-resistant streptococcus is over 80%

Source: Chinese national health service survey 2008 and the Report of

National Antimicrobials Resistance Monitoring Network 2006



Medicine Sector Reform as Part of the National Health System Reform

• Government restructure - Drug regulatory authority back to the governance of MoH - National medicines policy issues shift from the drug

regulatory authority to a newly established Department of MoH

• High level political commitment UNIVERSAL coverage of safe, efficient, convenient and

affordable ESSENTIAL health care system, including - Public health service system - Medical service system - Medical security system - Essential medicines system

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Essential Medicines System as Foundation of the

National Medicines Policy - 1 • Establish the State Council Health System Reform

Leading Group, composing 16 ministries for coordination and collaboration

• Resume the development of the national medicines policy since 2004

• Conduct Healthy China 2020 research initiative, covering each aspect of the national medicines policy in 2008, but not officially published and legitimately implemented

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Essential Medicines System as Foundation of the

National Medicines Policy - 2

• Objective - Secure the accessibility, quality and rational use

of medicines - Focus the equity, sustainability and

comprehensive reform of the public primary care facility

• Select essential medicines to guide the supply, financing, reimbursement, quality assurance and rational use




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Contents - 1

• Supply: pooled procurement of essential medicines

• Pricing: price cut (both originators and generics), same maximum retail and reimbursement price under generic name for newly covered medicines by insurance programs

• Financing: government subsidy to both sides - Demand side: essential medicines covered by insurance programs - Supply side: remove mark-up on medicines, and

performance based government subsidies to public primary care facilities




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Contents - 2

• Reimbursement: improved benefit package • Quality: electronic coding; routine sampling and testing

• Rational Use: health system approach - Training on standard treatment guidelines & formularies - Removing perverse incentives (price adjustment,

insurance payment reform, zero mark-up on medicines) • Comprehensive reforms (public primary care facilities) - Government procurement platform - Performance based government subsidy and income

allocation




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Progress and Achievements - 1

• System construction by coordinated ministerial actions

- 205 western medicines and 102 TCMs selected for primary care (health)

- Zero mark-up on medicines in all public primary care facilities across 31 provinces (health, finance)

- Standard treatment guideline & formulary training (health) - Adjusted prices (pricing) - Improved insurance benefit package (social security) - Provincial pooled procurement (health and regulatory) - Quality assurance (regulatory) - Increase government subsidy to public facilities (finance) - Strengthen rural primary care staff (human resource,

finance)




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Progress and Achievements - 2• Comprehensive reforms in public primary care facilities

- Procurement: contract manufacturers directly with committed quantity; pooled payment via provincial government account; 31 provinces set up government procurement platform, 68.1% counties set up electronic procurement system; 26 provinces initiated new rounds of procurement following the reform

- Comprehensive reforms: 25/31 provinces set up performance based government subsidy and income allocation mechanism; 24/31 provinces adjusted the diagnostic and treatment service fee; varies approaches to subsidize village doctors (fees, insurance outpatient coverage, public health service subsidy, basic salary and pension security)




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Progress and Achievements - 3• Reimbursement - 90% areas cover outpatient service - Reimbursement rates of rural insurance and urban

resident insurance for inpatient service reach 60%-70% - Insurance payments shift from retrospective fee for

service to prospective case based, capitation, and budget control or mixed payment (pilots)

• Quality - Newly revised GMP to be fully implemented by 2015

• Intellectual property right - Compulsory License Provision 2005 - Newly revised Patent Law 2008 - Compulsory license process explored in 2011



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Challenges - 1• Group of policies addressing every aspects of the

pharmaceutical issues exist, but not an official comprehensive full document covering all


Selection Yes, medicines for hospital care to be selected

Medicines financingYes, commitment to be put into actions

Medicines pricing Yes, in process of adjustment

ProcurementYes, in process of improvement

DistributionYes, in process of improvement

RegulationYes, in process of strengthening

Pharmaco-vigilanceYes, in process of strengthening

Rational use of

medicines

Yes, need more comprehensive health system approaches

Human resource

development

Yes, yet comprehensive

ResearchNo, one time projects, yet strategically planned

Monitoring and

evaluation

Yes, just started, need scientific methods

Traditional MedicineYes, need evidence based principles

Intellectual property

right

Yes, laws and regulations exist, in practices


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Challenges - 2

• Consistency of the government structures

• Essential medicines system established, yet comprehensively to address issues beyond essential medicines concept

- Coordination mechanisms for all stakeholders, like stronger role of insurance in pricing, procurement and rational use

- Mid and long term national goal for the pharmaceutical sector, eg. fostering a viable industry



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Challenges and the Way Forward -1

• Credibility and acceptability of selection

- Access to up-to-date and independent evidence to make informed decisions about quality, safety, efficacy and cost-effectiveness

- Evidence based principle adopted at all levels of selection and treatment guideline development

- Guide on dosage form and strength (esp. paediatrics)

- Coordination with the insurance programs



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Challenges and the Way Forward - 2

• Sustainability of financing (supply side)

- Government investment commitment put into actions

- Performance evaluation based government resource allocation to replace simple direct subsidy

- Stronger role of insurance payment method reform, changing from retrospective to prospective payment to remove perverse incentives



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Challenges and the Way Forward - 4• Affordability - Pharmaco-economic analysis for setting the prices of

new medicines (and other medicines entitled free pricing policy) covered by insurance programs

- Develop and implement comprehensive generic policy a) strengthening quality assurance as pre-condition; b) generics substitution; c) consumer & professional education for appropriate perception of generics; d) creating incentives for prescribers, pharmacists and consumers to use generics, eg. selective financing of generics by insurance programs

- Reduce tax on essential medicines



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• Rational use of medicines

- Health system approaches to improve use of medicines a) Insurance payment reform to create cost sensitivity of prescribers b) Quality of care supervision in collaboration with insurance programs c) Public education to build appropriate perception of medicines and medicine use d) Prescription behaviors as part of the performance evaluation system, and liking with the government subsidy and income allocation - Comprehensive interventions at all levels of the system



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• Security of the quality assurance system

- Strengthen the inspection capacity and pay attention to quality system rather than focus on hardware construction



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Challenges and the Way Forward - 7• Reliability of the supply system

- Create incentives for public health facilities to procure essential medicines

- Keep transparency in direct price negotiation with manufacturers

- Clear and objective quality standard based on dynamic quality monitoring

- Remove tired system for branded products and other subjective criteria

- Efficient distribution management



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• Monitoring & Evaluation - Develop M&E strategies and methodologies for

different level

- Regular data collection and analysis of price, availability, affordability and use of medicines

- Government fund to support independent policy research



Thank you !

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Experiences in Implementing the National Medicines Policy - Change in China

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