Abstract
ObjectiveWith a quasi-experimental design, this study aims to assess whether the Zero-markup Policy for Essential Drugs (ZPED) reduces the medical expense for patients at county hospitals, the major healthcare provider in rural China.MethodsData from Ningshan county hospital and Zhenping county hospital, China, include 2014 outpatient records and 9239 inpatient records. Quantitative methods are employed to evaluate ZPED. Both hospital-data difference-in-differences and individual-data regressions are applied to analyze the data from inpatient and outpatient departments.ResultsIn absolute terms, the total expense per visit reduced by 19.02 CNY (3.12 USD) for outpatient services and 399.6 CNY (65.60 USD) for inpatient services. In relative terms, the expense per visit was reduced by 11% for both outpatient and inpatient services. Due to the reduction of inpatient expense, the estimated reduction of outpatient visits is 2% among the general population and 3.39% among users of outpatient services. The drug expense per visit dropped by 27.20 CNY (4.47 USD) for outpatient services and 278.7 CNY (45.75 USD) for inpatient services. The proportion of drug expense out of total expense per visit dropped by 11.73 percentage points in outpatient visits and by 3.92 percentage points in inpatient visits.ConclusionImplementation of ZPED is a benefit for patients in both absolute and relative terms. The absolute monetary reduction of the per-visit inpatient expense is 20 times of that in outpatient care. According to cross-price elasticity, the substitution between inpatient and outpatient due to the change in inpatient price is small. Furthermore, given that the relative reductions are the same for outpatient and inpatient visits, according to relative thinking theory, the incentive to utilize outpatient or inpatient care attributed to ZPED is equivalent, regardless of the 20-times price difference in absolute terms.
Highlights
Medicines are frequently selected, evaluated, used, and spoken about in low-resource settings in ways that are strongly context-dependent [1]
Implementation of Zero-markup Policy for Essential Drugs (ZPED) is a benefit for patients in both absolute and relative terms
Given that the relative reductions are the same for outpatient and inpatient visits, according to relative thinking theory, the incentive to utilize outpatient or inpatient care attributed to ZPED is equivalent, regardless of the 20-times price difference in absolute terms
Summary
Medicines are frequently selected, evaluated, used, and spoken about in low-resource settings in ways that are strongly context-dependent [1]. People in low-resource settings make triage decisions about which medicines to seek, not necessarily on the basis of ‘best practices,’ but rather on cost, as well as aesthetics and palatability [4]. The extent to which medicines become available, accessible and affordable to people is deeply impacted by a country’s policy on essential drugs, which ensures the basic access of drugs at low cost [7]. While it is believed that lowering drug costs increases access, reviews of pharmaceutical policies in developing countries have found virtually no evidence of this [9]. China, which is undergoing rapid health reform, provides a ripe context to investigate the impact of lowering essential drug cost on access to drugs and health-seeking behavior
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