Wang YunPing of the China National Health Development Research Center gives a presentation on behalf of her boss, Director Zhang Zhenzhong about reforming China's essential drug system.

1. Research on The Implementation of Essential Drug Systemin China Rural Health Facilities Zhang Zhenzhong, Wang Yunping China National Health Development Research Center

2. Outlines Background Progress of EDS Implementation Some preliminary findings and discussions Summary

3. Background Why the drug price is so high? Before the reform, the mark-up taches in China 50% 30%-50% 12%-15% 7%-15% Manufacturer Sale agent Distribution enterpriseHospital Patients 。。。 。。。 The more agents and distributors involved, the more mark-up taches, and thus the higher prices of drugs and heavier economic burden on patients.

5. Revenue from selling drug income in its total business income: 55.03%(western areas ≥70%)

7. Progress of EDS Implementation From 2010 – Apr. 2011: has covered 86%public grass-root health facilities Data source: WHO Beijing office, Tongji Medical University , CNHDRC, Evaluation on Essential Drug System implementation Progress.

9. Differential fiscal subsidies-direct subsidies: compensate the gap based on the average total business income and cost in the previous 3 years

11. Is this proposition true? Even though in most areas, the EDs price is declining, if Declining EDs price = Declining economic burden of health exp.? Declining EDs price, but might be increasing economic burden of health exp. Reduce the EDs price

12. Some preliminary findings Although it is too early to make any conclusion, however, some phenomenon should be paid attentions to…

13. Change of the volume of health services utilization at rural grass-root health facilities Table 1Change of the volume of health services utilizationfrom 2010-2011 Data source: Health Statistics Year Book 2010, MOH, China

14. Change of the distribution of NCMS reimbursement fund at rural grass-root health facilities In 2010: reimbursement for inpatients in upper hospitals outside the county and county hospitals has increased 16.69%、14.8%; in THC has declined 2.59% than 2009. Table 2 Distribution of NCMS reimbursement fund for inpatients Data source: Research Center on NCMS of MOH, China

15. Why these Unexpected Outcomes Happen? Politicaleconomical socialcultural Upper hospitals Gov. Further tracking & analysis Pharm. enterprise Adaptive agents supplier Consumer Drug store Others… Drug retailer

16. Opportunities in the predicament for the rural grass-root health facilities Hold back the arms race on medical equipment and constructions Reallocate and integrate the health resources in rural areas Transition of the functions of rural health facilities: balance the public health service and medical services Unprecedented policy attentions and fiscal input to village doctors Facilitate the comprehensive reform on rural grass-root health facilities, especially the performance management and quality management.

17. Summary When introducing a new system will break down the original interest pattern, collide with and pose pressure to the old environment. To stimulate the agent and environment in the old system more quickly and effectively, the research from complex adaptive system perspective is needed, to analyze the adaptive capacities and behaviors of the agents and the interactions between new and old system components. A Chinese old saying : “Break to Found, fail to succeed”.

18. Thank you for listening!