Abstract
This paper uses macro-level data between 1997 and 2008 to evaluate the effects of China’s pharmaceutical price regulations. We find that these regulations had short-run effects on medicine price indices, reducing them by less than 0.5 percentage points. The effects could have been slightly reinforced when these regulations were imposed on more medicines. However, these regulations failed to reduce household health expenditures and the average profitability of the pharmaceutical industry, and firms on the break-even edge were worse off. Finally, although these regulations had no significant effect on the price of substitute or complementary medicines, they increased expensive medicine imports.
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