Following the marketization of China\'s health system in the 1980\'s, the government allowed public hospitals to markup the price of certain medications by 15% to compensate for reduced revenue from government subsidies. This incentivized clinicians to induce patient demand for drugs which resulted in higher patient out-of-pocket payments, higher overall medical expenditure, and poor health outcomes. In 2009, China introduced the Zero Markup Drug Policy (ZMDP) which eliminated the 15% markup. Using Shanghai as a case study, this paper analyzes emerging and existing evidence about the impact of ZMDP on hospital expenditure and revenue across secondary and tertiary public hospitals. We use data from 150 public hospitals across Shanghai to examine changes in hospital expenditure and revenue for various health services following the implementation of ZMDP. Our analysis suggests that, across both secondary and tertiary hospitals, the implementation of ZMDP reduced expenditure on drugs but increased expenditure on medical services, exams, and tests thereby increasing hospital revenue and keeping inpatient and outpatient costs unchanged. Moreover, our analysis suggests that tertiary facilities increased their revenue at a faster rate than secondary facilities, likely due to their ability to prescribe more advanced and, therefore, more costly procedures. While rigorous experimental designs are needed to confirm these findings, it appears that ZMDP has not reduced instances of medical expenditure provoked by provider-induced demand (PID) but rather shifted the effect of PID from one revenue source to another with differential effects in secondary vs. tertiary hospitals. Supplemental policies are likely needed to address PID and reduce patient costs.

In April 2009, the Chinese government launched Zero Markup Drug Policy (ZMDP) to adjust medical institutions\' revenue and expenditure structures.
This study evaluated the impact of implementing ZMDP (as an intervention) on the drug costs for managing Parkinson\'s disease (PD) and its complications from the healthcare providers\' perspective.
The drug costs for managing PD and its complications per outpatient visit or inpatient stay were estimated using electronic health data from a tertiary hospital in China from January 2016 to August 2018. An interrupted time series analysis was conducted to evaluate the immediate change following the intervention (step change, β1) and the change in slope, comparing post-intervention with the pre-intervention period (trend change, β2). Subgroup analyses were conducted in outpatients within the strata of age, patients with or without health insurance, and whether drugs were listed in the national Essential Medicine List (EML).
Overall, 18,158 outpatient visits and 366 inpatient stays were included. Outpatient (β1 = -201.7, 95%CI: -285.4, -117.9) and inpatient (β1 = -372.1, 95% CI: -643.6, -100.6) drug costs for managing PD significantly decreased when implementing ZMDP. However, for outpatients without health insurance, the trend change in drug costs for managing PD (β2 = 16.8, 95% CI: 8.0, 25.6) or PD complications (β2 = 12.6, 95% CI: 5.5, 19.7) significantly increased. Trend changes in outpatient drug costs for managing PD differed when stratifying drugs listed in EML (β2 = -1.4, 95% CI: -2.6, -0.2) or not (β2 = 6.3, 95%CI: 2.0, 10.7). Trend changes of outpatient drug costs for managing PD complications significantly increased in drugs listed in EML (β2 = 14.7, 95% CI 9.2, 20.3), patients without health insurance (β2 = 12.6, 95% CI 5.5, 19.7), and age under 65 (β2 = 24.3, 95% CI 17.3, 31.4).
Drug costs for managing PD and its complications significantly decreased when implementing ZMDP. However, the trend in drug costs increased significantly in several subgroups, which may offset the decrease at the implementation.

UNASSIGNED: To curb the unreasonable growth of pharmaceutical expenditures, Beijing implemented the zero markup drug policy (ZMDP) in public hospitals in 2017, which focused on separating drug sales from hospital revenue. The purpose of this study is to evaluate the impacts of ZMDP on healthcare expenditures and utilization for inpatients.
UNASSIGNED: The Beijing claims data of inpatients diagnosed with ischemic heart disease (IHD), chronic renal failure (CRF), and lung cancer (LC) was extracted from the China Health Insurance Research Association (CHIRA) database. The study employed an interrupted time series to evaluate the impacts of ZMDP on healthcare expenditures and utilization.
UNASSIGNED: The changes in total hospitalization expenses, health insurance expenses, and out-of-pocket expenses were not statistically significant neither in level change nor in trend change for inpatients diagnosed with IHD, CRF, or LC after implementing ZMDP (all P > 0.05). The Western medicine expenses for the treatment of inpatients diagnosed with IHD significantly decreased by 1,923.38 CNY after the reform (P < 0.05). The Chinese medicine expenses of inpatients diagnosed with CRF instantaneously increased by 1,344.89 CNY (P < 0.05). The service expenses of inpatients diagnosed with IHD and LC instantaneously increased by 756.52 CNY (p > 0.05) and 2,629.19 CNY (p < 0.05), respectively. However, there were no significant changes (P > 0.05) in out-of-pocket expenses, medical consumables, imaging, and laboratory test expenses of inpatients diagnosed with IHD, CRF, or LC. The initiation of the intervention immediately increased the number of inpatient admissions with LC by 2.293 per month (p < 0.05).
UNASSIGNED: The ZMDP was effective in reducing drug costs, and the effects on healthcare utilization varied across diseases type. However, the increase in medical service and Chinese medicine expenses diminished the effect of containing healthcare expenses and relieving the financial burdens of patients. Policymakers are advised to take multiple and long-lasting measures, such as provider payment methods reform, volume-based drug procurement, and drug price negotiation to improve the affordability of patients thoroughly.

High drug costs are putting pressures on health care budgets and posing an obstacle for China to achieve universal coverage. Policies such as the direct price ceiling, and the Essential Medicines Program-with the Zero Markup Drug Policy (ZMDP) one key component-were implemented, coming out with limited evidence for a success. As a benchmark of China\'s recent health reform, Sanming city initiated the ZMDP in January 2013; and further piloted the first reference pricing (RP) policy in China in September 2014, with the intention to dis-incentivize the use of costly original drugs. In this study, we used hospital-based drug procurement data of 14 drug substances that were subjected to the RP, from four hospitals in Sanming and a neighbouring city Longyan, between 2012 and 2016. Adopting the difference-in-difference (DID) approach, we evaluated the impacts of the RP together with the ZMDP. On the one hand, we found that the ZMDP had no impact on drugs\' procurement prices, volumes and costs. While on the other hand, we found that the introduction of RP was not associated with changes in unit prices for the 14 drugs in Sanming. However, the RP pilot was associated with a 25.9% [95% confidence interval (CI), 12.9-37.0%] decrease in monthly drug procurement volumes and a 47.7% (95% CI, 33.7-58.7%) decrease in the total drug costs. In particular, it reduced the procurement volumes of original drugs by 56.8% (95% CI, 47.0-64.7%). Subgroup analyses by hospital level and therapeutic class found similar results. We draw lessons for the Chinese government to experiment RP on a larger scale, considering the development and effective regulation of the generic market. This is a first report on the effects of RP in China, Asia and middle-income countries.

OBJECTIVE: The aim of this study was to determine the impact of the Zero Markup drug (ZMD) policy on hospitalization expenses for inpatients in tertiary Chinese hospitals.
METHODS: Using the administrative data from hospital electronic health records (EHRs) between 2015 and 2017, we implemented the quantile difference-in-differences (QDID) estimators to evaluate the impact of the ZMD policy on hospitalization expenses while controlling for patient-level and hospital-level characteristics.
RESULTS: According to the QDID models, the introduction of ZMD policy significantly induced lower drug costs for all inpatients especially at the 50th (-USD 507.84 (SE = USD 90.91), 75th (-USD 844.77 (SE = USD 149.70), and 90th (-USD 1400.00 (SE = USD 209.97)) percentiles of the overall distributions. However, the total hospitalization, diagnostic, treatment, material and services expenses for inpatients were significantly higher for the treated group than the control group. This tendency was more pronounced for inpatients in tertiary hospitals with lower expenses (in the 10th, 25th and 50th percentiles).
CONCLUSIONS: The implementation of ZMD policy alone may not be enough to change the medical service providers\' profit-driven behavior. The targeted supervision of hospital costs by the Chinese health administration department should be strengthened to avoid unreasonable hospital charges.