The feedback from various parties is as follows:
a. Distributors who are strongly opposed because hospitals taking a larger slice of distribution margin;
b. Local generic industry as most of their products face many competitors in the Good Manufacture Practice ("GMP") category;
c. Hospitals which are hesitant to purchase lower margin products;
d. Other government authorities which had thought that the primary purpose of hospital bidding is to lower the patient price, however, the early results of bidding do not show significantly lower patient prices;
e. Other government authorities which see possible MOH encroachment into industrial development policy and pricing policy;
f. However, some government authorities whose focus is almost exclusively on cost may support, but even they have noted bidding has lead to shortages of some essential drugs; and
g. Research-based pharmaceutical industry which has provided feedback to MOH and State Council and out of many concerns emphasizes:
1) need to maintain an "innovative" category during a transition period to allow pioneer companies to earn adequate return on their investments as, in launching their products in China, pioneer companies did not receive full intellectual property protection;
2) current bidding categories do not promote purchase of quality medicine, rather price becomes most important criteria;
3) at this stage of economic development and in light of hospital shortage of funds, bidding is not a appropriate because it likely increases, not decreases inappropriate practices;
4) bidding, to a certain extent, contradicts current pricing policy because bids, regardless of size, can lead to price cuts and because some SOE bids are not based on market principles.
