Columbia International Affairs Online: Working Papers

CIAO DATE: 03/2012

Pharmaceutical Price Regulation: Macro-Level Evidence from China between 1997 and 2008

Binzhen Wu, Qiong Zhang, Xue Qiao

January 2012

Asia-Pacific Research Center


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 indexes, 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 have no significant effects on the price of substitutes or complements for medicines, they increased expensive medicine imports.