title: Intended and unintended consequences of China's zero markup drug policy.
abstract: Since economic liberalization in the late 1970s, China's health care providers have grown heavily reliant on revenue from drugs, which they both prescribe and sell. To curb abuse and to promote the availability, safety, and appropriate use of essential drugs, China introduced its national essential drug list in 2009 and implemented a zero markup policy designed to decouple provider compensation from drug prescription and sales. We collected and analyzed representative data from China's township health centers and their catchment-area populations both before and after the reform. We found large reductions in drug revenue, as intended by policy makers. However, we also found a doubling of inpatient care that appeared to be driven by supply, instead of demand. Thus, the reform had an important unintended consequence: China's health care providers have sought new, potentially inappropriate, forms of revenue.
authors.affiliation: Hongmei Yi is an associate professor of agricultural economics at the Center for Chinese Agricultural Policy in the Institute of Geographical Sciences and Natural Resources Research, Chinese Academy of Sciences, in Beijing.
authors.forename: Hongmei
authors.initials: H
authors.lastname: Yi
authors.affiliation: Grant Miller (ngmiller@stanford.edu) is director of Stanford Center for International Development, an associate professor of medicine, a senior fellow at the Freeman Spogli Institute for International Studies and the Stanford Institute for Economic Policy Research, and an associate professor, by courtesy, of economics and of health research and policy, all at Stanford University, in California.
authors.forename: Grant
authors.initials: G
authors.lastname: Miller
authors.affiliation: Linxiu Zhang is deputy director of and a professor of agricultural economics in the Center for Chinese Agricultural Policy, Institute of Geographical Sciences and Natural Resources Research, Chinese Academy of Sciences.
authors.forename: Linxiu
authors.initials: L
authors.lastname: Zhang
authors.affiliation: Shaoping Li is a PhD candidate in agricultural economics and management at the Center for Chinese Agricultural Policy, Institute of Geographical Sciences and Natural Resources Research, Chinese Academy of Sciences.
authors.forename: Shaoping
authors.initials: S
authors.lastname: Li
authors.affiliation: Scott Rozelle is the Helen F. Farnsworth Senior Research Fellow at the Freeman Spogli Institute for International Studies and codirector of the Rural Education Action Program, both at Stanford University.
authors.forename: Scott
authors.initials: S
authors.lastname: Rozelle
mesh_terms: D002681:China; D003363:Cost Control / Q000379:methods*; D016527:Drug Costs / Q000592:standards* / Q000639:trends; D011307:Drug Prescriptions / Q000191:economics; D018954:Drugs, Essential / Q000191:economics*; D018166:Health Care Reform / Q000191:economics; D006291:Health Policy / Q000191:economics; D009313:National Health Programs / Q000191:economics*; D055553:Prescription Drugs / Q000191:economics*
chemical_list: D018954:Drugs, Essential; D055553:Prescription Drugs
keywords: Health Reform