Does the leading pharmaceutical reform in China really solve the issue of overly expensive healthcare services? Evidence from an empirical study.

Abstract

Healthcare system reform of Sanming city has become a leading healthcare reform model in China. It has developed a rigorous pharmaceutical reform consisted of the Zero Mark-up Drug Policy and the Centralized Procurement of Medicine Policy to bring down drug expenses and total health expenditures. However, despite the credit and much attention have been given to Sanming's pharmaceutical reform, its impact still remains unclear. Therefore, the purpose of this study was to explore the impact of the pharmaceutical reform of Sanming on both drug and total health expenditures.Interrupted time series analysis with three segments divided by two intervention points was employed to evaluate the impact of the pharmaceutical reform. Segment 1 was the pre-reform period which captured the baseline information. Segment 2 occurred after the first intervention point when the Zero Mark-up Drug Policy was implemented, whereas Segment 3 was after the implementation of the Centralized Procurement of Medicine Policy. Primary outcomes are outpatient drug expenditure, outpatient total health expenditure, inpatient drug expenditure, and inpatient total health expenditure. Data spanning from May 2012 to May 2014 are included.Both drug and total health expenditures exhibited rising trends before any policy was carried out. The launch of Zero Mark-up Drug Policy led to significant instant reductions in levels of outpatient drug expenditure (coefficient = -6,602.99, p<0.01), outpatient total health expenditure (coefficient = -9,958.58, p<0.05), inpatient drug expenditure (coefficient = -7,520.90, p<0.01), and inpatient total health expenditure (coefficient = -16,737, p<0.01). Moreover, the previous upward trends were changed into downward trends for inpatient drug expenditure (coefficient = -2,747.02, p = 0.00) and total health expenditure (coefficient = -3,069.29, p = 0.12). However, after the implementation of Centralized Procurement of Medicine Policy, we observed no significant instant level changes and also, the inpatient drug expenditure (coefficient = 372.95, p = 0.01) and total health expenditure (coefficient = 788.76, p = 0.06) resumed upward trends again.Although the pharmaceutical reform could control or reduced drug expenditure and total health expenditure in short term, expenditures gradually resumed growing again and reached or even exceeded their baseline levels of pre-reform period, indicating the effect became weakened or even faded out in long term. In all, the pharmaceutical reform as a whole failed to meet its goal of combating sharp growth of drug and total health expenditure.