China's NDRC proposes new drug price formula.(National Development and Reform Commission)

China's government has issued a five-step procedure for drug pricing, including an investigation of production costs, expert evaluations and public hearings, according to a report by the China Daily newspaper. The stated aim of the reforms, announced by the National Development and Reform Commission, is to bring more transparency to the drug industry. The new provisions were to take effect on March 1.

One element of the new arrangements is for two designated drug price regulators to communicate with drugmakers in order to review production costs. The representatives would be prohibited from accepting invitations to banquets or foreign trips paid for by drug firms, as well as investing in the companies with which they deal. A five-year rotation system is also imposed, with the aim of preventing entrenched or over-familiar relationships from developing between regulators and firms.

The NDRC proposals also provide for the creation of a pool of experts to be formed. This would ensure a more scientific review and verification system for drug pricing, according to the China Daily. The government agency imposes price caps on "hundreds of drugs" in an attempt to control costs.

Critics note that one avoidance method used by local drugmakers is to apply for a new drug license for a slightly repackaged product, as regulators tend to force ...