Watchdog key to cost of medicines

A Chinese clerk adjusts medicines for sale on a shelf at a pharmacy in Hangzhou city, east China's Zhejiang province, 5 May 2015. [Photo/IC]

The invisible hand of the market will play a major role in deciding the prices of medicines starting from June 1, which means the government will have to change its role from decision-maker to supervisor.

The move was announced by the National Development and Reform Commission, the country's top economic planner, on Tuesday.

In the past almost two decades, inadequate competition, abuse of power by government officials in giving the green light to the unreasonably high prices of some medicines and the channeling of interests between pharmaceutical companies, hospitals and even government agencies have increased the cost of medicines.

Government control has proved unable to check unreasonable rises in medicine prices. It can only be used in a provisional manner. With government control lifted, the market competition and healthcare security mechanism will play their own roles in regulating the prices of medicines.

Theoretically at least, the invisible hand of the market should activate market competition so that consumers may get medicines of good quality at more reasonable prices.

However, competition without good rules for a fair environment will result in chaos, and unfair competition may bring about unreasonably high prices for some medicines or a lack of some commonly used medicines because too low prices are unable to cover the cost of production.

So lifting government control on medicine prices does not mean that the government will just stand by or even turn a blind eye to the illegal practice of lubricating medicine sales channels by offering illicit kickbacks.

The work for the government as a watchdog to defend market order and the interests of consumers is no easier than the role it used to play in exerting direct control over medicine prices. It will have to organize experts to make rules that will guarantee healthy competition in a fair environment. It will have to organize investigations into cases involving unfair competition or even cases involving abuse of power in hospitals.