The construction of a comprehensive drug information platform is crucial for the successful development of drug procurement in quantity. Such information is essential to the regulatory authority and Ministry of Health to monitor the rational use of medicines[13]. An appropriate purchase is a competitive purchase, and the buyer will act on preparing the good with enough information about the supply and demand situation, the price, and how to access it [14]. Public hospitals purchase drugs through a centralised provincial drug platform. The procurement platform can ensure that the relevant information of drug suppliers and consumers is open and transparent to the government and plays an important role in regulating drug procurement and controlling drug prices. In 2015, the National Integrated Management Information Platform for Drug Supply guarantee and the provincial centralised drug procurement platform realised the interconnection of information and data, so as to grasp the purchase price, quantity, and settlement of drugs in public hospitals. In addition, the National Drug Use Monitoring Platform maps each drug in the country to a unique drug identification number, including more than 210,000 drug identification numbers, monitoring drugs out of storage, drugs in storage and use in medical and health institutions across the country. Before carrying out the procurement in quantity, the country can clarify the market demand and historical price information of all drugs in the country through a big statistical analysis of these information platforms. Such accurate and rich data play an important role in improving drug price transparency. When purchasing in quantity, the information platform can monitor the progress of purchasing with the quantity of public hospitals and the supply of manufacturers. After the purchase and sales agreement is complete, the information platform can provide data for public hospitals and medical insurance departments to evaluate the implementation effect of the purchase policy on quantity.
Purchasing in bulk and its price are the core elements of the drug purchase in quantity policy. In most countries, all medicines are purchased through a tendering procedure
[15].In the past, drug bidding in China was organised by provincial government departments, which had some shortcomings compared with national-level bidding. First, the suppliers’ price reduction competitiveness was different. Second, there was unequal availability and pricing of medicines among different provinces [16]. Additionally, provincial government departments only determine the manufacturer and price of the winning drug and do not determine the specific purchase quantity. More than 8,135 pharmaceutical companies exist in China, most of which produce generic drugs[17]. How can drug enterprises compete effectively and reduce drug prices to a reasonable level? Competition among suppliers lowers prices and may raise quality [18]. Lower drug prices could solve problems in the area of drug distribution by increasing competition through bulk procurement and thorough the enforcement of procurement volume. Drug procurement in quantity organised by the state not only unified the national purchase price of the bid-winning drugs but also ensured that the agreed purchase quantity with the bid-winning enterprises could be completed by signing the purchase contract. Drug purchase contract-specific procurement, procurement varieties, quantity and amount for the purchase cycle, and other key content, solved the previous problems for purchasing quantity, quality, delivery time and delivery mode and the payback period. In addition, the liability for a breach of contract is incomplete and leads to problems in the contract, effectively ensuring that the drug purchase contract is performed smoothly. The results indicate that the volume–price contract initiative offers an additional tool to reduce the unit price of medicines in addition to the competition mechanism[10]. As the procurement volume is guaranteed, the sales cost of pharmaceutical companies is also reduced, which ultimately reduces the price of the winning drugs.
4.1 Other supporting policies
China has been working hard to promote the full coverage of medical insurance. Individual contributions to medical insurance are managed by the medical insurance bureau, and most patients’ medical expenses are paid out of the medical insurance fund. For the specific medical insurance settlement process, when a patient settles medical expenses, the medical insurance expense is first deducted from the personal account by the medical insurance bureau, and then returned to the medical institution by monthly settlements. As a result, China’s health insurance bureaus hold the purse strings. Capital is the blood in the drug supply chain, and the immediacy of payment is the lubricant of efficient capital turnover.
According to the total amount of the purchase and sales contract signed by medical institutions and pharmaceutical enterprises, the medical insurance Bureau prepays 30% of the amount to medical institutions in advance, thus reducing the capital cost of medical institutions. The medical insurance Bureau requires medical institutions to pay drug purchase costs within 30 days of the arrival of the drugs to improve the capital turnover of pharmaceutical enterprises and reduce financial costs. The decrease in enterprise capital occupation costs can promote a decrease in drug prices.
4.2 Limitations
The current study had several possible limitations. First, the procurement policy in quantity is implemented in all public medical institutions in China but limited by data; this study only involved one public medical group in Zhejiang Province for analysis. Second, the results of this study were based on drug purchase data rather than drug use data. Although there is a strong linkage between the purchase and use data of drugs, for instance, the quantity of drug purchase orders is determined by the actual quantity of drugs used. However, it is impossible for the two data sources to be consistent; thus, there are certain limitations. Third, this study involves the purchase of drugs in bulk during the first three batches of the first round of purchase and sales agreement. Since the first round of the fourth and fifth batches has not yet been completed, there may have been some limitations in exploring long-term trends.
4.3 Conclusion
A retrospective summary was made of the volume-based procurement mode. The continuous and effective promotion and implementation of this innovative mode greatly reduced the drug cost and medical insurance burden on patients, thus helping improve the coverage of medical insurance. The effective operation of the procurement model benefits from the coordination of a series of relevant policies and provides a systematic solution for other countries or economies to reduce the drug burden.