The team will be formed of 11 departments including the Ministry of Health, the National Development and Reform Commission (NDRC), and the State Food and Drug Administration (SFDA).

Their main task will be to co-ordinate efforts to cut costs, with a particular focus on prices of drugs.

At the moment many of these 11 departments already play a role in regulating the healthcare sector, but due to poor co-ordination many problems are not being solved.

Experts cite high drug costs, profit-oriented hospitals and widespread lack of insurance as the chief concerns in the sector.

"Medical reform cannot be done by the Ministry of Health alone," Wang Dongsheng, deputy director of the Social Development Department of NDRC, told journalists at a health industry forum in Shanghai, which opened on Sunday.

Currently medical insurance is managed by the Ministry of Labour and Social Security. The NDRC is in charge of approving drug factory establishment and drug prices, while the SFDA is authorized to approve new drugs.

"Better co-ordination between these departments is vital," Wang said.

An example used at the forum to illustrate the co-ordination challenge was over drug pricing.

The NDRC over the past couple of years has frequently announced drug price cuts.

However, once a price is cut many factories will stop producing the brand of drug. They will then register the same drug by a new name with the SFDA, thus circumventing the price cut.

China has about 6,000 approved drug manufacturers, and at least 10,000 drug marketing companies. 80 per cent of drugs are sold in hospitals, so cases of bribery of doctors are frequent.

If the cost of a medicine is US$10, the factory takes US$3, the marketing company US$2 and the hospital US$5, said an NDRC official at the forum.

Meanwhile, 40 per cent of China's 500 million urban residents and 80 per cent of 800 million rural residents have no medical insurance. This makes many of them hesitant to see doctors even if they are seriously ill, according to a national survey in 2003.

Because of high drug prices and the lack of medical insurance, about half of patients in China who need treatment do not seek it, the survey found.

(China Daily 09/19/2006 page2)