The Zero Mark-up Policy for essential medicines at primary level facilities

Overview

Inappropriate use of drugs and intravenous injections in China over the past three decades has been widely recognised. Poorly regulated fee-for-service payment, distorted fee schedules and the profit margins allowed for drugs and sophisticated diagnostic tests presented strong financial incentives for unnecessary, excess provision. Provider incentives for higher-profit, branded products have also indirectly reduced the availability of essential drugs. In 2009, China established an essential medicines programme for public primary health care facilities, with the goals of reducing inappropriate use of drugs, especially over-prescription of antibiotics, and ensuring access to safe, effective, affordable medicines for all. The Government also introduced a zero-profit drug policy by removing the mark-up for sale of medicines in order to reduce the incentive for providers to prescribe unnecessary drugs and to reduce the price for patients. By the end of 2010, nearly 80% of all primary health care institutions had implemented the new national essential medicine policy. The paper discusses the zero mark-up medicine policy and its impacts on health service quality, rational use of resources and performance based compensation of primary healthcare institutions.

Synthesis report

The China case study is part of a synthesis report that applied a causal framework to synthesize lessons from ten case studies of various health system reforms which aimed to improve the efficiency in health systems