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How Zero Markups Work: A Closer Look At Public Hospital Reform In Shenzhen

 
• By Jialing Dai

Shenzhen, China's testing ground for hospital reform, is also experimenting with a factory-direct sales model, which could create "absolute chaos" for pharma companies, according to the Monitor Group.

SHANGHAI – After three years of implementing its healthcare reforms, China's basic medical insurance now covers 1.3 billion people – nearly all of China. This year, the government has targeted public hospital reform as one of its main goals, and the city of Shenzhen is serving as a testing ground for many reforms, most recently for the removal of drug price markups in all public hospitals.

The main goal of eliminating drug markups is to delink hospital revenues from pharmaceutical sales, which is then expected to...

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