The Government Insurance Scheme (GIS) or the Labor Insurance Scheme (LIS) covers the health insurance of the urban population in China. GIS is sponsored by the central government for employees working in their organization and LIS sponsored by state government and cover the employees working in their respective states. After 1978, cost of the health raised drastically. GIS and LIS do not cover private employees. In China, the coverage is drastically different across different working groups.

In 1977, the Basic Health Insurance Scheme (BHIS) was introduced. This is maintained by municipal governments. The employers and employees contribute to this fund. Enterprises need to be included in this scheme to cover their employees for basic health insurance.

BHIS is maintained to spend effectively and everyone contributed for BHIS are eligible for having the healthcare at designated places. Also, the pharmaceuticals that are covered under BHIS are reimbursed.

Step-therapy, co-payments were also included in BHIS. BHIS does not cover dependents. BHIS implementation is not proper with some employees avoid it to save money.

As per 2003 survey, 39% urban population was covered by BHIS and government health insurances. 16% was covered by commercial health insurances, 45% urban population was not covered by any health insurance.

Prior 1978, China rural population was covered by local Cooperative Medical System. Later it was dissolved once the China’s economy was privatized.

In 2003, New Cooperative Medical System was introduced in which by 2006, 50% of China’s rural population was covered. NCMS is contributed by beneficiaries, country and central government.

China is in its early states of developing insurance system and insurance coverage in both urban and rural is less. Most of the health expenditure is through out of pocket.

China drug expenditure is high with $40 billion, which accounts for 45% of total health expenditure.


the Ministry of Labor and Social Security maintains the BHIS formulary, which mainly targets in providing basic health but not cost-effectiveness.

The Ministry selects the individuals from the local bodies and the experts will decide whether the drug need to be included in the list A or list B.

The review of drug selection is expected to happen in every 2-4 years.


The National Development and Reform Commission (NDRC) is the body that keep the maximum price for drugs listed in the list A and B. NDRC considered the average production cost, R&D costs for setting the price.

Pharmaceutical companies can keep higher prices if

  • Peer review publication regarding safety and efficacy

  • Proper quality in the past

  • For adverse reactions, a surveillance system is necessary

Local authorities also have rights in setting up the prices.

  • Prices for OTP products

  • Based on NDRC prices, list B products can be varied around 5%

  • Some drugs added to list B by local bodies

Reference: ISPOR HTA Road Maps

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