Chinese regulators tightening distribution chain

China's Health and Family Planning Commission and seven other ministries said they will reduce complexity in drug distribution systems by limiting the number of invoices that can be issued in a distribution chain, according to law firm Covington & Burlington. The change is designed to reduce drug prices by eliminating intermediate distributors.

According to Covington's translation of a notice outlining the new policy, regulators will allow no more than two tax-valid invoices in the distribution process from a drug manufacturer to a hospital: one issued by the manufacturer to the distributor, and the other by the distributor to the hospital. Exceptions would include cases involving exclusive distributors or internal transfer of drugs between company subsidiaries. More than two invoices may be allowed for drugs delivered to remote areas, the firm said...