China's Ministry of Health (MOH) has decided to ban hospitals from raising medicine prices. The ban, to be implemented soon, is aimed at curbing soaring medicine prices, Han Qide, vice-chairman of Standing Committee of National People's Congress (NPC) said on Tuesday.

Previously, hospitals received government subsidies according to patient numbers. The subsidy system was then replaced by one that allowed hospitals to determine medicine prices to make a profit. But they were limited to a 15 percent increase.

However, the later policy has resulted in high prices of medicine and, in some cases, an abuse of the system. Some doctors have been reported to have sold either unnecessary or expensive medicine to patients. 

According to Han, larger hospitals have made up to a 60 percent profit from the sale of medicines.

The government has tried various measures to cut medicine prices, but none has proven effective, Han said. Depriving hospitals of the right to raise prices could have a great impact on the reform of China's medi-care system.

Figures released by the latest national health survey show that a Chinese citizen paid an average of 108.2 yuan (US$13) for out-patient treatment in 2003, up 57.5 percent over 1998; 3,910 yuan (US$477) for in-patient treatment in 2003, up 76.1 percent over 1998. Increases in expenditure were higher than income growth over the same period.

Medicine prices in China vary considerably throughout the country but can be as much as 10 times higher than wholesale prices.

"There are many illegal operations in the intermediary process", said Han.

(Xinhua News Agency May 25, 2005)