The drug market in China has long been subject to both market competition and administrative control. While the government leaves drug prices to market fundamentals in principle, it also actively intervenes in the case of market failures, which includes adjusting the market structure to regulate drug prices.
Administrative intervention is a double-edged sword. Due to the first-line reviewing officers lack of experience with the recently implemented fair competition review system, the relevant regulatory departments need to make a full analysis and assessment before intervening in the market. The competition law enforcement agencies should also closely monitor the regulatory departments’ abuse of administrative power and assist in establishing proper enforcement principles in influential cases. For example, the National Development and Reform Commission ("NDRC") recently played a very positive role in the standardization of the drug group purchasing organization (“GPO”) reforms in Shenzhen.
