When State Becomes the Only Buyer: Effects of national volume-based procurement of cardiac stents in China

Jessica Ya Sun, Ting Yin and Zhiyong Liu

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: Medical device prices are a significant drivers of high healthcare spending in China; however, lowering prices remains an open question. We examine a unique solution for China as the central government acts as a single buyer for medical devices in the context of the national volume-based procurement (VBP) of cardiac stents. The tender held in November 2020 and reduced the average price of cardiac stents by 95%. Using detailed inpatient discharge record data, we found that the national VBP program increased patients’ total medical spending by 20%. The failure in reducing medical costs was due to physician-induced demand; the utilization of coronary stents and drug-eluting balloons increased by almost 10%. Distortionary effects were more prominent for patients with residential insurance and physicians with higher persuasion power.

Pages: 31 pages
Date: 2023-09
New Economics Papers: this item is included in nep-cna and nep-hea
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:23065

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