Cheap Generic Drug Production Stalls in China Due to Incomplete Gov System

INTERFAX-China ^ | August 17, 2007 | By Lizzy Li

[JACKRUSSELL]

(Shanghai) - Government-appointed, low-cost generic drug makers are yet to start producing cheap drugs, partly because the system to ensure that such basic drugs continue to be produced is incomplete, an industry expert told Interfax today.

In December last year, the Chinese government announced that it planned to establish a national essential drug system that would ensure that inexpensive and effective generic drugs would not disappear from the market due to low profit margins, and that local medical institutions would continue to have access to them.

Through the system, the government would appoint several large drug makers to produce specific low-cost drugs, and in return, the drug makers would receive government subsidies and a favorable regulatory environment to ensure they would still make reasonable profits.

At the beginning of this year, the State Food and Drug Administration appointed 10 companies, including Beijing Double-Crane Pharmaceutical Co. Ltd., North China Pharmaceutical Co. Ltd. and Southwest Pharmaceutical Co. Ltd., to produce 18 kinds of low-cost, low-profit margin generic drugs.

However, a recent survey carried out by the China Economics Times found that very few of the SFDA-appointed companies have started to produce the drugs they were designated to produce.

"We have not yet started producing the drugs," an official from the securities department of North China Pharmaceutical, surnamed Wu, said. "The main reason we have not started production is because we have not received a purchase order from the government."

"At the same time, detailed information that explains how much the government will subsidize us to produce such drugs is still not available," he said.

"As far as I know, the other appointed drug makers have not started production either," he added.

"The government's wish to provide the general public with access to inexpensive but effective drugs is a good concept. However, setting up a complete system to support such a program takes time," Cai Renhua, the head of the Shanghai Jiaotong University's School of Public Health, said.

At the beginning of this month, the National Development and Reform Commission's Pharmaceutical Price Evaluation Center discussed the prices of the 18 low-cost generic drugs selected by the government.

During the SFDA's latest monthly press conference, which was held on Aug. 8,  a spokesperson said that the SFDA will soon publish the next two lists of companies that have been appointed to produce generic drugs for urban community health centers and the New Rural Cooperative Health Care System.

It is clear though that until the government makes purchase orders for the generic drugs and issues details on how drug makers will be subsidized, drug companies will not start production and such drugs will not be available to the general public.

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