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China has been rolling out various measures to reform its healthcare system. Grace Xie, Henry Ngai and Thomas Li provide an overview of what is happening in China and how it will impact the pharmaceutical sector. The overall goal of CHCSR is to establish and improve the basic healthcare system covering urban and rural residents, and provide the Chinese people with secure, efficient, convenient and affordable healthcare services.
This reform gradually strengthens the leading role of government. It introduced a number of reform measures, such as: The separation of drug income from total medical income; Control of medical insurance expenses; and Reduction of drug prices.
In "Opinions on Deepening the Healthcare Reform in ", Guobanfa 26, hereafter referred as Circular 26 it is specified that "… the two invoices system will be rolled out to public hospitals in comprehensive Healthcare Reform pilot provinces.
It is encouraged that hospitals directly settle the drug payment with drug manufacturers and drug manufacturers settle the drug logistics fees with distributors, which aims to compress intermediate processes and reduce unrealistically high drug prices. Depending on the result and feedback, then the two invoices system may be rolled out nationwide.
The most pioneering city in healthcare reform in China is Sanming, a city in Fujian province, which has experienced significant reform since The reform in Sanming has demonstrated significant achievements in terms of savings in social medical insurance funds, reduction of drug prices, optimisation of hospital income structures, income improvements for the medical workforce, and enlargement of social medical insurance coverage.
It has had a profound impact on the government, pharmaceutical companies, as well as medical insurance and medical service providers. The details are summarised in the table below. The real story of grass-roots healthcare transformation in China".
On September 29Anhui province issued its detailed implementation rules for the roll out of the "two invoices system" the Anhui two invoices system plan. Anhui was the first province out of the 11 provinces to put in place the two invoices system, after the Sanming reform, from November 1 However, these guidance policies fall short of the details on how the system will be implemented or when it will be implemented.
The comments made in this article are mainly based on the practice in Sanming and the Anhui two invoices system plan. Figure 1 Click on image to enlarge What is the "two invoices system"? According to Article 4.
The first invoice refers to the invoice from the manufacturer to the distributor; and The second invoice refers to the invoice from the distributor to the medical service providers. Furthermore, pursuant to Article 39 of Weiguicaifa 64 Circular 64the following companies can be deemed as manufacturers: A commercial enterprise set up by a manufacturing company that sells the products of the company only; and Master agent of the imported drug for China only one allowed ; Under the Anhui province two invoices system plan, the deemed manufacturer will also cover the following in addition to the above situations: Commercial enterprises set up by the manufacturing company that sells the product of the group only; and A drug listing permit holder who assigns another manufacturing company or commercial enterprise to sell the drug.
By adopting the two invoices system, the unnecessary invoice "pass through" within the value chain is expected to be eliminated, as well as increasing transparency over the pricing of drugs.
What is the impact for pharmaceutical company business models? Before we look at the business impact of the two invoices system it is necessary to first understand the existing business models used by pharmaceutical companies. At present, the common business model of pharmaceutical companies could be depicted as shown in Model 1.
The manufacturer will sell the drugs at a relatively low price to the distributor. The margin retained in the distribution channel will be used to cover the promotion, marketing and sales support-related services provided by the distributors.
Under this model, the drugs will be sold through multiple distributors before being sold to the medical service provider at a much higher price. Under Model 2, the manufacturer will sell the drugs at a higher price to the distributor.
The distributor will earn a limited margin for the distribution services provided.Whether the title is manager, medical practice manager, physician practice manager, administrator, practice administrator, executive director, office manager, CEO, COO, director, division manager, department manager, or any combination thereof, with some exceptions, people who manage physician practices do some combination of the responsibilities listed here or manage people who do.
“The health care environment—with its packed work days, demanding pace, time pressures, and emotional intensity—can put physicians and other clinicians at high risk for burnout,” according to the Agency for Healthcare Research and Quality (AHRQ).
“Burnout is a long-term stress reaction marked by emotional exhaustion, depersonalization. The hospital pharmacy is a therapeutic ancillary service.
If your physician checks the level of triglycerides in your blood in his office lab, he is using a diagnostic ancillary service. The third common place in which ancillary services are provided is a free-standing setting.
Our focus on Medicare is unwavering. Our products are some of the most comprehensive and sought-after on the market. But the final piece of the puzzle for agents is the support and tools you need to .
The hospital pharmacy is a therapeutic ancillary service. If your physician checks the level of triglycerides in your blood in his office lab, he is using a diagnostic ancillary service.
The third common place in which ancillary services are provided is a free-standing setting. Read about state and federal roles in balancing consumer access to broad choices of providers and efforts to offer cost-effective choices.
At least 28 states have laws related to this topic, while the federal ACA also regulates some situations.