The National Development and Reform Commission (NDRC), China's chief economic planner, will investigate the production costs of major pharmaceutical companies over the next three months in a bid to prevent them from inflating retail prices, but experts told the Global Times Thursday this is not an efficient way of curbing drug prices.
The upcoming investigation will cover 60 drug makers, mostly domestic firms such as Zhejiang Hisun Pharmaceutical Co, as well as several foreign peers such as UK-based GlaxoSmithKline, the NDRC announced Wednesday. The regulator said it will target domestic companies' manufacturing and logistics costs and foreign companies' import prices from 2010 to 2012, and that it intends to explore drug costs in a more detailed way than it did in its previous investigations.
The country started to track drug makers' production costs as early as February 2007 as a way of supervising drug prices, and has continued such investigations almost every year.
"Despite the (investigations), drug prices have surged much more quickly than production costs over the last five years," Xia Qing, a pharmaceutical analyst with Beijing-based consulting firm Anbound, told the Global Times.
Overall profits by pharmaceutical makers in China stood at 25.74 billion yuan in the first two months of this year, up 24.3 percent year-on-year, according to figures from Anbound.
Domestic hospitals are heavily reliant on prescribing expensive drugs to push up their doctors' salaries, which has encouraged pharmaceutical firms to inflate prices, Yu Mingde, president of the Chinese Pharmaceutical Enterprises Association, told the Global Times.
As many as 77 percent of the drug categories in China's market are priced by the pharmaceutical firms, while the rest of the prices are controlled by the government, according to official figures.