Cheap drug stores cure for high prices ( 2003-11-20 00:34) (China Daily)
Four fair-price drugstores recently accepted as designated outlets under
Shanghai's health insurance system pose a threat to the profits of larger
drugstore chains, with the result that they are considering price cuts in their
stores.
Leiyunshang, Fuxing and Guoda, three of the five big chain drugstores in
Shanghai, have started lowering their prices by from 5 to 10 per cent.
The other two chains are Huashi and Shanghai.
Ever since the first fair-price drugstores appeared in the city in May
claiming their drug prices were 40 per cent cheaper on average than those in
hospitals and larger stores, there has been a lot of debate over whether or not
to push for the spread of these economy drugstores.
So far, the city has 110 designated fair-price drugstores under the health
insurance system and 200 million yuan (US$24 million) of their annual retail
revenues have come from people's medical insurance policies.
Medicine sales in Shanghai were and still are mainly concentrated in
hospitals, with retail drugs outlets getting only about 15 to 20 per cent of the
business.
Zhang Yaogang, vice-general manager of Kaixinren, the first fair-price
drugstore in the city, said they keep their drug prices low by cutting out the
middlemen and buying drugs from first-level wholesale enterprises or directly
from pharmaceutical manufacturers.
This transparent and direct supply channel avoids multiple price mark-ups
along the way to the consumer, the main reason why drugs are normally so
expensive when sold to customers.
A cold remedy selling for 6.8 yuan (80 US cents) in fair-price drugstores,
sells for almost four times the price in traditional outlets.
But usually the cheap drugstores sell mainly OTC drugs (over-the-counter
drugs) and medicines for the elderly and patients with chronic diseases.
Some people travelled long distances to get to fair-price drugstores after
getting doctors' prescriptions because there were only a few of the stores,
which meant that they were often far away.
Lu Jun, general manager of Guoda Drugstore, said the fair-price drugstores
are necessary and will benefit patients with chronic diseases and elderly
people, who need medicine continuously, and those with minor diseases.
Faced with the market change, hospitals are also planning to lower their drug
prices.
"The price differential between drugs sold in hospitals and those sold in
drugstores is going to decrease to 10 to 15 per cent from its current 30 per
cent,'' said Yue Wei, an official with Shanghai Municipal Drug Administration.
"Hospitals will remain the main source of drugs for peoples.''
However, the hospitals believed the drugs they prescribe and recommend are
always the best available.
