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

Author Name SUN Jessica Ya (Huazhong University of Science and Technology) / YIN Ting (Fellow (Specially Appointed), RIETI) / LIU Zhiyong (Huazhong University of Science and Technology)
Creation Date/NO. September 2023 23-E-065
Research Project Economic Analysis on the problem of an aging population and a declining birthrate in China and Japan in the COVID-19 pandemic
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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.