Freeman Spogli Institute for International Studies Stanford University


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Pharmaceutical Price Regulation: Macro-Level Evidence from China between 1997 and 2008

Working Paper

Authors
Binzhen Wu - The School of Economics and Management at Tsinghua University, Beijing, China
Qiong Zhang - The School of Economics at Central University of Finance and Economics, Beijing, China
Xue Qiao - The School of Economics and Management at Tsinghua University, Beijing, China

Issued by
Asia Health Policy Program working paper #26, January 2012


This paper uses macro-level data between 1997 and 2008 to evaluate the effects of China’s pharmaceutical price regulations. We find that these regulations had short-run effects on medicine price indexes, reducing them by less than 0.5 percentage points. The effects could have been slightly reinforced when these regulations were imposed on more medicines. However, these regulations failed to reduce household health expenditures and the average profitability of the pharmaceutical industry, and firms on the break-even edge were worse off. Finally, although these regulations have no significant effects on the price of substitutes or complements for medicines, they increased expensive medicine imports.