June 13, 2006

China recently announced it is moving forward with a healthcare initiative to control costs for devices and diagnostic tests.

Eight Chinese agencies are finalizing regulations to "unify" the cost of domestically manufactured and imported devices to eliminate price discrepancies and discourage Chinese hospitals from overcharging for services.

The proposal seeks to "reinforce control" over device prices by publishing price information, reining in factory or import supply price increases, controlling the differential between wholesale and retail prices and enforcing price monitoring.

The Chinese government is facing increasing pressure to control costs as "more and more hospitals and patients are engaging in out-of-pocket expenditures," Ames Gross, president of consulting firm Pacific Bridge Medical, told FDAnews.

AdvaMed says it is expecting the Chinese to issue a formal draft of the regulation soon but that it may not be the final version. "Our member companies have had several meetings with the people who made the regulations, and they have taken our comments into consideration and made changes," said Nancy Travis, AdvaMed's associate vice president for global strategy.

China is still developing its reimbursement policies, according to AdvaMed. The most recent general guideline issued May 19 "does not address reimbursement at all," Gross noted.

"Right now it's not clear exactly which products are covered," Travis said, noting there is a separate regulation being proposed regarding fees paid for diagnostics such as X-rays and other tests.

Chinese authorities are seeking to counter what China's State Council calls the "disguised blow out" in prices and the "practice of increasing prices in every layer" of the device procurement chain.