The State Development Planning Commission announced the ceilings for retail prices of two categories of drugs, effective May 20.

The average price cut of those drugs will be as much as 20 percent,saving consumers an estimated 2 billion yuan (US$240 million) per year.

The commission is authorized to regulate the prices of a few products, including drugs, that are of great importance to people's lives and the country's economic development. The prices of most goods and services in China are determined by the market.

This is the first batch of drugs to see price cuts this year. More price cuts will be launched later this year, officials with the commission pledged.

To achieve a reasonable price system, the commission conducted a national survey of manufacturer drug prices. Advice on retail prices of medicines also was collected from experts in drug manufacturing, sale and consumption, the officials said.

A reasonable drug price system can promote the medicare system that was introduced to urban residents in 1998, officials of the State Development Planning Commission said.

Local market supervision departments will keep an eye on prices, the commission said.

Since China abandoned the State monopoly pricing structure for medicines in 1992, pharmaceutical manufacturers and sellers have increased prices sharply. They kept a double-digit growth rate until 1998, when measures were taken to curb them.

Statistics from health departments show the annual average growth of medical costs has been about 25 percent.

The country's hospitals rely heavily on medicine sales, accounting for half of their incomes.

The current system has loopholes that allow wholesalers and retailers to increase drug prices through special deals and kickbacks, said a State Drug Administration official.

To break the hospitals' monopoly on the retail drug trade, the government has called for the separation of drugstore operations from hospitals.

Along with the practice of over-the-counter purchasing, which ensures consumers can buy non-prescribed medicines at pharmacies, China has implemented drug price cuts several times in recent few years.

(China Daily 05/14/2001)