Chinese drug manufacturers would increase their investment in research and development if the government decided to allocate more subsidies to hospitals, a move which would lift the financial burden from the provision of drug sale kickbacks, Interfax reports.
In the 1980s, government subsidies accounted for 70 per cent of Chinese hospitals' revenues. Today, state subsidies account for only around six percent of all hospital revenues, which has forced hospitals to look elsewhere to balance up this shortfall. Consequently, many Chinese drug makers pay kickbacks to incentivise hospitals to sell their drugs.
It is hoped that new laws can rechannel this kickback cash into new drug development. On average, Chinese drug makers invest only around
one per cent of their annual sales revenue into R & D, significantly lower than their multinational competitors. Increasing R&D spend would target two major problems for the Beijing government, widespread corruption and graft in its impoverished health service, and a shortfall of sophisticated medicines to help the nation deal with new illnesses and ailments as lifestyles and eating patterns change, particularly in urban areas.
In 2006, the government launched a campaign against kickbacks in the health sector, but long-term preventative measures are widely seen as essential to deal with an endemic problem.
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