Hot Issues about Drug Price in China from the View of Internet Public Opinion Monitoring

GUAN Yi-ru, ZHANG Fang, WU Zhi-ang, LI Shu-quan(. School of Business Administration, Shenyang Pharmaceutical University, Shenyang 006, China; . Discipline of Pharmacy & Experimental Pharmacology, School of Biomedical Sciences & Pharmacy, University of Newcastle, Newcastl 308, Australia)

Hot Issues about Drug Price in China from the View of Internet Public Opinion Monitoring

GUAN Yi-ru1, ZHANG Fang1, WU Zhi-ang1, LI Shu-quan2
(1. School of Business Administration, Shenyang Pharmaceutical University, Shenyang 110016, China; 2. Discipline of Pharmacy & Experimental Pharmacology, School of Biomedical Sciences & Pharmacy, University of Newcastle, Newcastl 2308, Australia)

Objective To obtain and analyze the hot issues about drug price in China through Internet public opinion monitoring and to provide references for Chinese government in relevant decision-making processes. Methods All networks were monitored every other day by putting in the key words of drug, price and pricing through using Shunsu Internet public opinion monitoring software. Collected data were verified by two researchers to ensure immediacy and usefulness. The monitoring lasted for a year from October 2012 to September 2013. Results and Conclusion A total of 560 pieces of valid information were extracted, focusing on maximum retail price adjustment, drug’s zero price margin, drug price regulation, etc. Large differences existed between provinces on the amount of information. The amount of public opinion about any issues was closely linked with government policy of that time. Internet public opinion monitoring has been proved to be an effective tool for Chinese government to know the public reflection on policy. Future work should focus on connection of monitoring results and policy decision-making.

drug pricing; drug price; Internet public opinion monitoring; policy suggestion

Pharmaceutical policies as a component of health policy have gained increasing importance in China and other countries of Asia-Pacific region because of rapidly rising expenditures on drugs. The problems are especially acute in China because expenditures on drugs typically consume a large proportion of the total health care budget[1]. In response, the government has enacted several major and minor legislative reforms over the last three decades aiming at cost con1tainment and maintaining stability of the health care system.Various policies and measures have been implemented with respect to pharmaceutical expenditure control especially in drug pricing and procurement administration which have become a significant component in the “new medical reform”.

However, the success of any drug policy in controlling drug price should be evaluated not only through the evidence of the effects on drug price, but also include an assessment of the level of acceptance and concerns about the policy raised by the public. A more holistic analysis of the policy would allow the decision makers to fine tune or adjust the policy to allow optimal benefits for the public. Therefore, knowing the public opinion would provide a great deal of information and insight for the government in relevant decision-making processes.

This paper reported the use of Internet public opinion monitoring to capture the public’s perception, concerns, attitudes and behavior disposition about drug prices transmitted through the Internet when important drug policies were announced or implemented by the government. By analyzing these “hot issues” in drug price, we attempted to see how this could provide reference information for the government in China. This would also assess whether the use of Internet public opinion monitoring can contribute to health service research.

1 Introduction of Internet public opinion monitoring and its importance in relevant decisionmaking of drug price

With the popularity of the Internet, people expresstheir ideas on the Internet more frequently. In China, the Internet has not only become the main medium of information dissemination, but also is a new and important platform for the party and the government to manage state affairs. The Internet public opinion has attracted more and more attention.

Based on the techniques of Internet information collection and data mining, the software can dynamically achieve monitoring on news portals, forums, blogs, microblogs and post bars and realize omni bearing, real-time scanning and monitoring on mass information, obtaining the hot spot information on the Internet without delay and tracking these information[2].

China is experiencing an important stage of medical and health system reform in which the drug price policy is an important component. The implementation of drug price Internet public opinion monitoring is an important initiative to master hot issues at target internet sites in order to provide supporting data in decision-making for relevant government department and actively guide public opinion thus to realize scientific decision-making[3]. The importance of Internet public opinion monitoring has become increasingly prominent.

Figure 1 Hot issues about drug price and quantity of news items for each issue

2 The screening of hot issues in drug price from the perspective of Internet public opinion monitoring

Information monitoring was implemented through“Shunsu Internet Public Opinion Monitoring Software”[4]. In brief, the key search items included the following terms: drug, drug price and drug pricing. With the monitoring work going, the words were expanded to pharmaceutical, maximum retail price, zero mark-up, drug price reduction and price addition according to the monitored issues that aroused intense concern and interest by the public.

The whole network was monitored every other day with the key words mentioned above. Collected data were verified by two researchers to ensure timeliness, accuracy and usefulness. First, information analysis was carried out to confirm accuracy of release time and source. Outdated news and invalid information were weeded out. Generally, only the most recent news or topics within three days from the search date was retained. All the new items were then traced to the initial website where the item was first published and repeated news on other websites was excluded. Finally, information determined to satisfy the inclusion criteria was generated to WORD documents. Internet public opinion monitoring commenced in October 2012 and finished in September 2013. In the monitoring period, a total of 560 pieces of valid information was finally extracted.

All the 560 pieces of information were divided into 9 categories according to titles and contents (Figure 1). Maximum retail price adjustment, zero mark-up, drug price regulation, essential drugs, different prices for the same drug, traditional Chinese medicine, centralized tender for drug purchase and corruption in pharmaceutical industry were thus identified as items of special public concern.

3 Analysis of drug price Internet public opinion monitoring

3.1 Hot issues in drug price in China

3.1.1 Maximum retail price adjustment

National Development and Reform Commission (NDRC) adjusted the maximum retail price of immunity, anti-tumor and blood system drugs in September 2012. This involved an average price cut of 17% for a total of 95 drug types, covering more than 200 drugs. In December 2012, NDRC initiated another round of adjusting the maximum retail price with an average price cut of 15% for respiratory, antipyretic analgesics and specialist (such as ophthalmic medication) drugs involving 20 drug types, with more than 700 drugs[5,6].

In fact, since 1997, China has conducted 31 rounds of drug price cuts. The current rounds of price cut had also aroused a great deal of heated debates.

Firstly, the concerns about “disappearance of drugs”were raised again. “Disappearance of drugs” refers to a phenomenon in which certain drugs disappear in the market after enforced price cut. Based on past experience, every time that “price reduction” was carried out by NDRC, the phenomenon of “disappearance of drugs” appeared. Some drugs with price-cut experienced reduced levels of production by pharmaceutical companies, reduced levels of distribution by wholesalers or retailers, were less often purchased by hospitals, and less often prescribed by doctors[1]. Many people worried that repeated price reduction may affect corporate profits, leading to decreasing production of certain drugs or “face-lift” in packaging and formulations in an attempt to bypass the price reduction policy or even increase prices. But some experts were of the opinion that price reduction would not affect the profits of drug manufacturers. Take anti-tumor drugs for example, large difference between manufactures’ price and retail price produced large space to squeeze the profit margin, thus the effect of price reduction would be diluted, leaving limited impact on manufactures’ profits. Nevertheless, repeated price reduction would impact the availability of “lowpriced” drugs, forcing the patients to use more expensive alternatives.

Another hot topic discussed was the effectiveness of drug price control measures. Some analysts still worried that hospitals may give up low-priced drugs in the tender in pursuit of financial interests[7]. The rationale behind was that the benefit chain between hospitals and pharmaceutical manufactures could not be severed without implementing supporting policies on the whole medical system.

The final “hot topic” was regarding the public perception and view of the policy on cutting drug price, which could be said to be somewhat “lukewarm”. In China, prices of hematological system and anti-tumor drugs are generally high and antipyretic and analgesics are also commonly used in clinical practice, price control can largely reduce the burden on patients. Hence, it should be natural for the public to wait with expectation to see the beneficial effect of price cut. However, the public response was less than enthusiastic, with some being skeptical. This could be explained by the fact that the public was tired of receiving no real benefits through substantial repeated price reductions over the years and some even possessed no faith or confidence in price reduction policies[8].

3.1.2 Zero mark-up

NDRC, Ministry of Health and Ministry of Human and Social Resource made an announcement to promote drug price reform in public hospitals at county level, requiring public county hospitals to cancel the “15% drug price mark-up” policy. As of March 2013, public hospitals in 431 county-level regions of 22 provinces had completed canceling drug price mark-up practice[9].

However, doubts about the policy still existed despite the smooth operation of zero mark-up reform. In 2012, incomes from drug sales accounted for 43.7% of revenues of general hospitals at all levels[10]. The “no mark-up” policy would cause enormous financial losses to the hospitals. However, besides the 15% drug price mark-up adding to drug price, there were many undisclosed price additions. Hospitals could get kickbacks from manufactures through all kinds of fees to make up for benefit losses in canceling the 15% drug price mark-up. Furthermore, drugs with high price and high rebates were apt to be favored by doctors, thus further pushing up prices of drugs and increasing financial burden to patients.

3.1.3 Drug price regulation

During the monitored period, 112 pieces of information were collected about drug price regulation in China. The information mainly concentrated on provincial efforts in price control (57 pieces) and discussions about the current drug price regulation (55 pieces).

Most provinces had taken measures in an effort to further bring down drug prices and control drugexpenditures in addition to regulations at the national level. For example, Price Bureau of Yunnan Province released 7 documents outlining policies to control drug price in 2012[11]. At the same year, Guangdong Province planned to take measures one step at a time to bring drug prices down in three years[12]. Apart from these respective policies, a commonly used practice was price monitoring and surveillance. Guangdong province required drugstores to submit drug price information to keep abreast of changes in the actual market price. Other provinces such as Hebei, Heilongjiang and Jiangsu launched full-scale investigations and penalized drugstores where prices of drugs were above the maximum retail prices allowed. Additionally, public notification systems of drug price were established by relevant associations and enterprises in recent years, offering free price information inquiry services to the public[13]. Not only had this become an important social force in monitoring drug prices, the transparency of drug price information had also been improved.

However, substantial price drop combining with the current bidding mode which seeks nothing but low prices might lead to disappearance of low-priced drugs in the market and it was still a worrisome concern. To protect the source and availability of low-priced drugs, price control authorities of Jiangsu Province made a constructive attempt. The relevant authorities had worked out a “low-priced”medicine list, including 50 kinds of drugs in the first batch. Uniform prices across the province were set for these “lowpriced” drugs after overall consideration of the market size, average cost, and reasonable profit of operators of each drug. Instead of price reduction, quite a few drugs in the “lowpriced” medicine list saw price rise under this protection policy[14]. Hence, price leverage had become an important tool in accelerating production and ensuring constant supply of “low-priced” medicine and scarce medicine[15].

Furthermore, many discussions about the current drug price regulation were recorded during the monitoring period. This information was about a variety of topics including price discrimination, prices of imported drugs, pricing of original drugs, etc. Due to the scattered nature and scope and the limited number of news for each individual topic, these topics were not discussed further in this article.

3.1.4 Essential drugs

The General Office of the State Council published“Opinions on the consolidation of essential drug system and new operation mechanism in primary hospitals” on February 20th, 2013. After that, the 2012 edition of “National Essential Drugs List” was published on March 15th, 2013. Compared with the 2009 version, the number of chemical drugs and biological products was increased by 55%, from 205 to 317, and the number of traditional Chinese medicine was increased by 99% from 102 to 203[16].

The publishing of new policy introduced new initiatives to optimize bidding, distribution and incentives, compensation policy and industry supervision in essential drug system and large-scale expansion of essential drugs list made the “cake” of essential drugs market bigger and more attractive, thus drawing more attention on the pricing of essential drugs. Consequently, a total of 45 pieces of information about essential drugs were monitored that focused on pricing and centralized tender.

It has become a topical issue that some new drugs and traditional Chinese medicine produced only by certain companies (exclusive varieties) may well face price reduction. The new published policy stipulated national unified pricing for exclusive varieties, and explored negotiation between manufacturers and provincial authority to determine purchasing quantity and price. The new purchasing approach means the actual price of these drugs will be determined by provinces and not be approved and fixed by the NDRC anymore. After the negotiation process, provincial authority can reduce the purchase price based on the NDRC price, which may partly lower the pricing advantages of the exclusive drug varieties.

Among the drug companies producing these exclusive drug varieties, the originator company especially foreign multinational and traditional Chinese medicine companies were under the greatest price reduction pressure. The new edition of “National Essential Drugs List” has included large number of anti-tumor and blood system drugs making many origin drugs from foreign companies’ essential drugs. However, inclusion in essential drugs list led foreign companies into a big dilemma–reducing price to meet requirement of bidding or giving up the essential drugs market. The new edition list also included as many as 44 new exclusive varieties of traditional Chinese medicine. Inclusion in essential drugs list along with the price reduction year in 2013 for traditional Chinese medicine by NDRC left little rooms for maintaining the higher drug prices[17].

3.1.5 Different prices for the same drug

Fifteen pieces of information were about different prices for the same drugs in different drugstores, and 10 pieces were about different prices between mainland Chinaand Hong Kong.

Citizens’ confusion about different prices in different drugstores was frequently reported. Actually, the differences were due to competition between drugstores, inbound channels and firm size, and most of the differences were within a reasonable range under the maximum retail price policy.

Questions about different prices between mainland China and Hong Kong were raised in August 2013, starting from Herceptin, a monoclonal antibody developed by Roche for the treatment of breast cancer. The price difference could be up to 10,000 CNY (1611 USD). The scenario was similar for other imported drugs. Analysis about the reasons for this phenomenon fell into three categories–defects in the health care system, RLD individual pricing and high costs in public relation and bribery.

3.1.6 Traditional Chinese medicine

The Internet public opinion monitoring results showed that the public paid close attention to the price of traditional Chinese medicine and traditional Chinese medicinal materials. Occupying only a relatively small proportion in drug directory of health insurance and other reasons made Chinese patent medicine experienced a narrow escape from previous price reductions. Consequently, Chinese patent medicines especially those expensive ones used in the treatment of anti-tumor were first targeted in 2013 for price reduction. However, the prices of traditional Chinese medicinal materials went up at the same time, driving up the production cost of Chinese medicine companies.

Furthermore, much information about price rising of Chinese herbal medicine for protection against influenza was monitored during the H7N9 influenza outbreak period. 3.1.7 Corruption in pharmaceutical industry

Corruption in pharmaceutical industry seemed to have become a latent rule in China, which to some extent pushed up the price of drugs. Although the problem was persistent and much criticized, relevant authorities did not take aggressive measures until July 2013 when GSK was charged with bribing. The GSK event attracted much attention on corruption in pharmaceutical industry in China, with 17 pieces of information monitored, most of which in July 2013.

3.1.8 Centralized tender for drug purchase

The year 2013 was a key year for drug tender. Whether essential drugs or non-essential drugs, the bidding processes was subjected to significant changes. How to ensure transparency of centralized tender for drug purchase and promote the rationalization of drug pricing had become one of the priorities for relevant authorities in 2013[18].

Subsequently, centralized tender for drug purchase became hot issues among the public. A total of 27 pieces of information were collected. They were about whether and how to carry out “the second negotiation”, price reduction after centralized tender for drug purchase and provincial attempts to reform the bidding pattern in Guangdong Province, Anhui Province and Hubei Province.

3.2 Attention level on drug price issues in every province (municipality)

All provinces (municipalities) except Hong Kong, Macao and Taiwan were included in the monitoring areas. Of all the 560 pieces of valid information, 199 pieces were based on the perspective of the nation as a whole, and 361 from the perspective of each province (Figure 2).

The amount of information to some extent represented the level of attention on drug price issues of provincial government and masses. From this perspective, large differences existed between provinces. Notably, Shandong, Jiangsu, Guangdong and Beijing (with the number of information of 44, 39, 33 and 25, respectively) were the most prominent, while Xinjiang, Tibet, Ningxia, Inner Mongolia and Guizhou (with the number of information of 0, 0, 0, and 2, respectively) were on the opposite end.

3.3 Connection between timing of policy or news and quantity of information

Quantity of each hot issue proved to connect closely with the timing of new policy or relevant news. Take the issue of maximum retail price for example. Figure 3 shows the quantity of all the issues and maximum retail price in each month from October 2012 to September 2013. The monitoring results showed that the quantity of news about maximum retail price were significantly prominent in October 2012, January 2013 and February 2013 due to the two price adjustments by NDRC in September 2012 and December 2012.

Similarly, the occurrence of some events also induced wide discussion about the relevant issues over a period of time, such as price rising of Chinese herbal medicine for protection against influenza during the H7N9 influenza outbreak period and corruption in pharmaceutical industry during the GSK event period as previously mentioned.

Figure 2 Quantity of information in every province (municipality)

Figure 3 Quantity of all the issues and maximum retail price in each month

4 Conclusions

Providing a scientific and evidence-based approach of decision-making in drug pricing is a key and difficult issue in drug expenditure containment. In previous studies, relevant issues including organizations involved in decisionmaking, drug pricing decision-making process, decisionmaking criteria/factors and role of stakeholders were analyzed worldwide. However, great importance should also be attached to public opinion and response on these decisions.

Internet public opinion monitoring, with its timeliness, high efficiency and comprehensiveness, has proved to be a maneuverable, scientific, evidence-based approach to acquire hotspots and public opinions, and provide policy suggestions to Chinese government. Potentially, this could be an invaluable tool for conducting health service research.

We have shown the hot issues of drug price that the public were most concerned about, and have analyzed public opinions and local governments’ reflection on drug price reform policy in China based on Internet public opinion monitoring from October 2012 to September 2013. Internet public opinion monitoring can be applied to a large country such as China for obtaining hot issues about drug price or other topics of importance. Nevertheless, future work should focus on the connection of monitoring resultsand policy decision-making which is the most important part that embodies the values of using Internet public opinion monitoring.

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[18] Three Changes in Future Priorities to Promote Centralized Drug Purchasing [EB/OL]. http://www.zyzhan.com/news/detail/35944. html, 2013-11-13.

Author’s information: ZHANG Fang, Associate professor. Major researsh area: Health economic policy evaluation of traditional medicine, methodlogy of pharmacoeconomics. Tel: 024-23986979,

E-mail: xzhangf@126.com