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Effects of pharmaceutical price regulation: China's evidence between 1997 and 2008

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  • Binzhen Wu
  • Qiong Zhang
  • Xue Qiao

Abstract

This study uses a macro-level data during the period between 1997 and 2008 to evaluate the effects of China's pharmaceutical price regulations. We find that the regulations exert short-run effects on pharmaceutical price indexes, reducing them by less than 0.5 percentage points. The effects can be slightly reinforced if the price regulations were to be applied to more medicines. The price regulations fail to reduce household health expenditures and the average profitability of the pharmaceutical industry. Moreover, firms on the break-even point are worse off after the implementation. Finally, although these regulations have no significant effects on the prices of medicinal substitutes or complements, they increase the importation of expensive medicines. These findings are also consistent with consumer perceptions of the pharmaceutical policies, based on the household survey data conducted in 2008.

Suggested Citation

  • Binzhen Wu & Qiong Zhang & Xue Qiao, 2015. "Effects of pharmaceutical price regulation: China's evidence between 1997 and 2008," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 20(2), pages 290-329, April.
    • Handle: RePEc:taf:rjapxx:v:20:y:2015:i:2:p:290-329
    DOI: 10.1080/13547860.2014.964968
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    Cited by:

    1. Joosse, Iris R. & Tordrup, David & Bero, Lisa & Mantel-Teeuwisse, Aukje K. & van den Ham, Hendrika A., 2023. "A critical review of methodologies used in pharmaceutical pricing policy analyses," Health Policy, Elsevier, vol. 134(C).
    2. Chen, Xu & Yang, Huan & Wang, Xiaojun, 2019. "Effects of price cap regulation on the pharmaceutical supply chain," Journal of Business Research, Elsevier, vol. 97(C), pages 281-290.

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