Does Economic Incentive Matter for Rational Use of Medicine? China’s Experience from the Essential Medicines Program

Before the new round of healthcare reform in China, primary healthcare providers could obtain a fixed 15 % or greater mark-up of profits by prescribing and selling medicines. There were concerns that this perverse incentive was a key cause of irrational medicine use. China’s new Essential Medicines Program (EMP) was launched in 2009 as part of the national health sector reform initiatives. One of its core policies was to eliminate primary care providers’ economic incentives to overprescribe or prescribe unnecessarily expensive drugs, which were regarded as consequences of China’s traditional financing system for health institutions.

The objective of the study was to measure changes in prescribing patterns in primary healthcare facilities after the removal of the economic incentives for physicians to overprescribe as a result of the implementation of the EMP.

A comparison design was applied to 8,258 prescriptions in 2007 and 8,278 prescriptions in 2010, from 83 primary healthcare facilities nationwide. Indicators were adopted to evaluate medicine utilization, which included overall number of medicines, average number of Western and traditional Chinese medicines, pharmaceutical expenditure per outpatient prescription, and proportion of prescriptions that contained two or more antibiotics. We further assessed the use of medicines (antibiotics, infusion, hormones, and intravenous injection) per disease-specific prescription for hypertension, diabetes, coronary artery heart disease, bronchitis, upper respiratory tract infection, and gastritis. A difference-in-difference analysis was employed to evaluate the net policy effect.

Overall changes in indicators were not found to be statistically significant between the 2 years. The results varied for different diseases. The number of Western drugs per outpatient prescription decreased while that of traditional Chinese medicines increased. Overuse of antibiotics remained an extensive problem in the treatment of many diseases, though there was some significant improvement in certain diseases, like diabetes in rural areas. Medicine expenditure per prescription also decreased.

It seems that the removal of a perverse economic incentive alone would not lead to improvement of healthcare providers’ prescribing patterns. The rationality of the Essential Medicines List and the lack of payers’ and providers’ meaningful involvement in the development of the policy possibly contribute to the lack of significant changes in prescribing behaviors. It is suggested that China should adopt more comprehensive policies for healthcare facilities, physicians, patients, and payers, rather than just relying on economic incentives to improve rational use of medicines.