Global concerns over rising drug prices have led to regulatory efforts in the pharmaceutical industry targeting price transparency and distribution efficiency. This study examines the impact of China’s Two-Invoice System (TIS), a 2016 reform aimed at reducing drug costs by streamlining the pharmaceutical distribution chain and enhancing price transparency. With a theoretical model, we examine the decision-making for pharmaceutical manufacturers and distributors on pricing and promotion activities. We predict competing effects on drug prices: while intermediary markups inflated by double marginalization are reduced, the removal of efficient distributors may elevate supply chain expenses. Using a staggered difference-in-differences approach with procurement data from 2015 to 2019, we find that the implementation of TIS led to a 1.9% increase in average drug prices, contrary to policy expectations. Price increases were more pronounced for lower-priced drugs and in wealthier regions, for which the supply chain markups are limited and the effect of efficiency disruption might dominate. We also document a significant increase in sales and marketing expenses of the manufacturers, who are supposed to have absorbed a considerable amount of promotional costs previously borne by distributors. These findings underscore the unintended inefficiencies of regulatory reforms, highlighting the need for a balanced policy design that considers both cost control and market dynamics in healthcare.
扫码关注我们
求助内容:
应助结果提醒方式:
