Health officials are pushing a new initiative aimed at allaying one of the nation's most vexing public concerns: excessive medication costs.

The government wants to catalogue some 300 to 400 basic drugs to be produced and distributed under government control and supervision, Minister of Health, Gao Qiang told a ministry workshop in Beijing Tuesday.

"Securing ample and consistent supply of these listed drugs at an affordable price, the system recommended by the World Health Organization, would substantially alleviate the economic strain of drugs on people," Gao said.

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His remarks came after the State Food and Drug Administration (SFDA) named the first batch of 10 pharmaceutical manufacturers designated to supply 18 kinds of medicines included in a guided basic medication list issued by the nation's top drug watchdog last year.

The move, SFDA said, would help lay the foundations to establish the long anticipated national basic medicine system.

Designated manufacturers of basic prescription drugs would be aided by "favorable tax and financial policies", to produce cheaper drugs, SFDA said.

The National Development and Reform Commission (NDRC) has capped the cost of hundreds of drugs to control the soaring prices. But drug companies have used loopholes enabling them to charge inflated prices by simply changing drug names and packaging, Gao said.

Medicines have been big business for hospitals, with some drugs sold up to 10 times the manufacturing price.

The Chinese government used to pay subsidies to hospitals according to the number of patients they received.

Later, instead of getting subsidies, hospitals were allowed to raise medicine prices by 15 percent to make a profit.

However, that resulted in soaring drug prices and doctors sometimes reportedly sold medicine which were either unnecessary for the patient or expensive.

(China Daily 02/15/2007 page3)