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Table 1 The key reasons of medicines shortages in China

From: A review of promoting access to medicines in China - problems and recommendations

Demand-side reasons

Sudden increase of medicines demand may lead to shortage. For the case of some rare disease, the routine quantity of demand is small. Production and transportation of larger quantity within a short time is difficult when there is a sudden increased number of patients under specific conditions. Pressure on inventory control brought by dramatic demand-side change may lead to temporary shortages. Such shortages are always accompanied by a revision of treatment guidelines. If the buffering and alert capacity of the inventory control system is not strong enough, the poor flow of information, finances, and logistics may cause short supply [21].

Supply-side reasons

Regulatory shortages

Shortages may happen when manufacturers temporarily stop production to test the newly revised specifications, or to validate compliance of Good Manufacturing Practice as required by the regulatory authority [22]. In 2007, all Chinese blood products manufacturers were required by the national drug regulatory authority to update the specifications, and to implement the lot release policy. These requirements caused a sharp reduction in the quantity of marketed blood products [23]. The shortage of protamine sulfate in 2011 was due to the fact that manufacturers had to validate the stability of the products after a change of raw materials. This was followed by a similar situation in 2016, when the national pharmacopeia was updated and the manufacturers recalled relevant lots of the marketed products [24].

Policy shortages

The distorted pricing of medicines, medical services, compensation of medical staff, reimbursement policies, and financing of public hospitals create severe perverse financial incentives in the Chinese health system. These have not been fundamentally changed through the major reform initiatives since 2009, which include price-cuttings and zero mark-up on medicines. Under a chaotic medicines distribution system with irregular finance practices and disordered competitions, the un-ethical relationship between pharmaceutical industry and doctors is still quite common in Chinese public hospitals. The informal payment to public hospitals and doctors continues. As both the demand-side and the supply-side do not have incentives to lower the medicines prices, low-cost medicines do not have market value. Manufacturers tend to produce medicines with higher price and better sales performance. This lead to shortages of those old low-cost medicines. The tough price-cutting may also lead to bid suppression – manufacturers tend to pool the small orders into big ones to pursue the economy of scale, potentially leading to temporary shortages.

Unfair competition

A few companies monopolize the production of key raw materials for the manufacture of some medicines. Hoarding key raw materials for speculation at low price reduces or ceases the supply, forcing the downstream manufacturers to stop production of pharmaceutical formulations. This leads to fear and panic of downstream manufacturers, allowing the speculators to raise price for illicit profits [25].