La Trobe
1186358_Li,Z_2021.pdf (762.74 kB)

Effects of Volume-Price Contracts on Pharmaceutical Prices: A Retrospective Comparative Study of Public Hospitals in Hubei of China

Download (762.74 kB)
journal contribution
posted on 2021-11-19, 01:21 authored by Z Li, Chaojie LiuChaojie Liu, K Zuo, J Liu, Y Tang
Background: Pharmaceutical expenditure has been increasing worldwide. Many countries have attempted to contain the increase through collective bargaining, including in China. In 2015, the Chinese government introduced a new policy to empower regional governments to reduce pharmaceutical prices through its existing tendering system which enables a lower price for products with higher procurement volumes. Xiangyang municipality in Hubei province took a lead in piloting this initiative. Objectives: This study aimed to evaluate the effects of the volume-price contract initiative on pharmaceutical price procured by the public hospitals in Xiangyang. Methods: A retrospective comparative design was adopted. The price of cardiovascular medicines (349 products under 164 International Nonproprietary Names) procured by the public hospitals in Xiangyang was compared with those procured in Yichang municipality in Hubei. A total of 15,921 procurement records over the period from January 2017 to December 2018 were examined (Xiangyang started the volume-price contract initiative in January 2018). Generalized linear regression models with a difference-in-differences approach which could reflect the differences between the two cities between January 2018 and December 2018 were established to test the effects of the volume-price contract initiative on pharmaceutical prices. Results: On average, the procurement price for cardiovascular medicines adjusted by defined daily dosage in Xiangyang dropped by 41.51%, compared with a 0.22% decrease in Yichang. The difference-in-differences results showed that the volume-price contract initiative resulted in a 36.24% drop (p = 0.006) in the price (30.23% for the original brands, p = 0.008), in addition to the therapeutic competition effect (31.61% reduction in the price, p = 0.002). The top 100 domestic suppliers were highly responsive to the initiative (82.80% drop in the price, p = 0.001). Conclusion: The volume-price contract initiative has the potential to bring down the price of pharmaceutical supplies. Higher responses from the domestic suppliers are evident.


Funding This study was supported by the National Natural Science Foundation of China, Grant number 71704058. The funding body played no role in the study design; the collection, analysis, and interpretation of data; the writing of the manuscript; or the decision to submit the manuscript for publication.


Publication Date



Frontiers in Pharmacology



Article Number








Rights Statement

The Author reserves all moral rights over the deposited text and must be credited if any re-use occurs. Documents deposited in OPAL are the Open Access versions of outputs published elsewhere. Changes resulting from the publishing process may therefore not be reflected in this document. The final published version may be obtained via the publisher’s DOI. Please note that additional copyright and access restrictions may apply to the published version.

Usage metrics

    Journal Articles


    No categories selected



    Ref. manager