Does China improve social welfare after implementing the national volume-based procurement?

Area of Science:

• Health Economics
• Pharmaceutical Policy
• Public Health

Background:

• The implementation of national volume-based procurement (NVBP) aims to balance patient benefits with pharmaceutical market dynamics.
• Understanding the impact of NVBP on social welfare, including consumer and producer surplus, is crucial for policy evaluation.

Purpose of the Study:

• To analyze social welfare changes pre- and post-NVBP implementation.
• To assess if NVBP fosters healthy manufacturer development while prioritizing patient well-being.
• To propose governmental intervention strategies for the pharmaceutical market.

Main Methods:

• Social welfare analysis using consumer surplus and producer surplus.
• Evaluation from the perspectives of price, supply, and demand dynamics.
• Comparative study of pre- and post-NVBP market conditions.

Main Results:

• Significant increases in consumer surplus and patient medication welfare observed.
• Initial decrease in overall pharmaceutical industry profits, with projected future growth.
• Varied impact on individual pharmaceutical enterprises, but overall social welfare improved.

Conclusions:

• NVBP's primary goal of enhancing patient medication welfare is achieved.
• Increased consumer surplus positively influences producer surplus through a linkage mechanism.
• A diversified system linking price, demand, and supply yields synergistic benefits exceeding individual components.