The impact of China’s ‘Zero-markup Policy for Essential Drugs’ on patients, county hospital revenue and government subsidy levels

  • Yanfang Su
  • Zhongliang Zhou
  • Ben Campbell





In 2009, China implemented a Zero-markup Policy for Essential Drugs (ZPED), a policy with potential to dramatically improve health in the country.  This series of studies aims to evaluate the impact of ZPED on patients, county hospital revenue and government subsidy levels.

Data from Ningshan and Zhenping county hospitals were collected. The hospitals were selected because they were comparable in many ways, with the exception of Ningshan having implemented ZPED during a period when Zhenping had not.  Ningshan, therefore, was used as the experimental group and Zhenping the control group. To compare outcomes of interest between the counties, the primary method of analysis was a difference-in-differences model.

The results showed that ZPED had an effect on patients’ medical expenditure, county hospital revenue and government subsidy levels.  With regard to patients, in absolute terms, the total expense per visit reduced by 19.02 CNY (3.12 USD) for outpatient services and 399.6 CNY (65.60 USD) for inpatient services. In relative terms, the expense per visit was reduced by 11% for both outpatient and inpatient services. With regard to the impact on county hospital revenue, for Ningshan County hospital, ZPED led to an increase in health care provision and a sustained total hospital income despite a decrease in drug revenue. Lastly, with regard to government subsidy levels, the research demonstrates that with minimal or no subsidy, the government can catalyze the zero-markup policy and potentially generate positive outcomes for county hospitals. Overall, this research showed that ZPED has led to positive outcomes for patients, county hospitals and the government.  


Z. Zhou, Y. Su, et al. 2015: “The financial impact of the 'Zero-markup Policy for Essential Drugs' on patients in county hospitals in western rural China,” PLOS ONE. [English] (Data shared via Harvard Dataverse Network, doi:10.7910/DVN/28588)

Z. Zhou, Y. Su, et al. 2013: “The Impact of Zero-markup Policy on Inpatient Expenditure: Evidence from County Public Hospital in Shanxi Province,” Chinese Journal of Health Policy. [Chinese]

Z. Zhou, Y. Su, et al. 2015: “The impact of China’s Zero-Markup Drug Policy on county hospital revenue and government subsidy levels,” Journal of Asian Public Policy. [English] (DOI: 10.1080/17516234.2015.1005561) Free online access to the article with up to 50 colleagues via this eprint link