Compared with developed economies,health expenditure in China is not particularly high on aper capita basis or as a share of Gross Domestic Product(GDP). Similarly, pharmaceutical expenditure in comparativeperspective is not particularly high on a per capita basisor as a percentage of GDP. China's exceptionally highrate of pharmaceutical expenditure has importantimplications for the future of a health care system that notonly serves a rapidly aging population, but encouragesoveruse of drugs in ways that are both financially andmedically inefficient. Pharmaceutical reform is therefore ahigh priority for China's health policymakers. Severalfactors are discussed for reforming this system based onlessons from recent reforms. The section following thisintroduction briefly reviews the expansion of basic medicalinsurance coverage in the 2000s and several structuralfeatures of the pharmaceutical sector in China. The relatedconcepts of an essential medicines policy, an essential druglist, and a generic drug policy are briefly described infirst section. The second section of the paper looks atseveral hurdles that are built into the path of essentialmedicines reform. The third section considers some lessonsfor pharmaceutical reform based on China's recentlearning from regional experimentation and pilotinginitiatives. The fourth section considers several relevantlessons derived from reform experiences in other countries.The fifth section looks at the path forward-success factorsfor implementing an essential medicines program based onlow-cost generic drugs.
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