Effects of China's Pharmaceutical Price Regulation between 1997 and 2008

41 Pages Posted: 12 Mar 2012 Last revised: 24 Oct 2014

See all articles by Binzhen Wu

Binzhen Wu

Tsinghua University - School of Economics & Management

Qiong Zhang

Central University of Finance and Economics (CUFE) - School of Economics

Xue Qiao

Tsinghua University - School of Economics & Management

Date Written: March 11, 2012

Abstract

This paper uses macro-level data between 1997 and 2008 to evaluate the effects of China’s pharmaceutical price regulations. We find that these regulations had short-run effects on medicine price indices, reducing them by less than 0.5 percentage points. The effects could have been slightly reinforced when these regulations were imposed on more medicines. However, these regulations failed to reduce household health expenditures and the average profitability of the pharmaceutical industry, and firms on the break-even edge were worse off. Finally, although these regulations had no significant effect on the price of substitute or complementary medicines, they increased expensive medicine imports.

Keywords: Pharmaceutical price regulation, medicine price indices, health expenditure, pharmaceutical industry

JEL Classification: I18, I11, L51

Suggested Citation

Wu, Binzhen and Zhang, Qiong and Qiao, Xue, Effects of China's Pharmaceutical Price Regulation between 1997 and 2008 (March 11, 2012). Available at SSRN: https://ssrn.com/abstract=2019788 or http://dx.doi.org/10.2139/ssrn.2019788

Binzhen Wu (Contact Author)

Tsinghua University - School of Economics & Management ( email )

School of Economics and Management
Tsinghua University
Beijing, Beijing 100084
China

Qiong Zhang

Central University of Finance and Economics (CUFE) - School of Economics ( email )

Beijing
China

Xue Qiao

Tsinghua University - School of Economics & Management ( email )

Beijing, 100084
China

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