BEIJING Nov 14 China's central planning
agency has fined two middlemen for attempting to control the
market for a drug compound, and thereby driving up the cost to
make a blood pressure medicine provided by the government at low
The case is one of very few applications of China's
anti-monopoly law by the National Development and Reform
Commission, which has a mandate to monitor prices.
It also points to a potential future emphasis in China's
effort to provide low-cost medicine through its national health
The NDRC fined Weifang Shuntong Pharmaceuticals 6.87 million
yuan ($1.08 million) for having signed a contract to buy
promethazine hydrochloride from one of the two firms in Liaoning
Province that are the primary producers in China, the Xinhua
news agency said on Monday.
Weifang Xinhua Pharmaceutical Trading Co., also from Weifang
in Shandong Province, was fined 152,600 yuan for cutting a
similar deal with the other major producer, according to the
Having cornered supplies of the compound, the two firms then
became sole suppliers to the four companies that produce 75
percent of a certain blood pressure medicine, forcing them to
raise the price of the medicine from 1.3 yuan a bottle to
between 5 and 6 yuan a bottle, Xinhua said.
The blood pressure medicine is included in China's national
drug list, which rewards its suppliers with high volume in
return for tendering to supply at low prices. The drug list is a
central component of China's health care reform, and aims to
provide drugs at an affordable and government-set price.
"This is pretty interesting because the product is sort of a
commodity, but it's affecting prices," said Peter Wang, a lawyer
at Jones Day in Shanghai specializing in anti-trust issues.
"The people hurt are the manufacturers that are being
squeezed because the input price is rising but they can't sell
The NDRC, which in an earlier stage had broad authority to
set prices in China, has been active in attempting to prevent
sticker shock from fueling discontent among Chinese. Even so,
prices, especially for food, have risen steadily.
The NDRC is one of two agencies in charge of administering
China's anti-monopoly law, with authority to intervene on price
fixing. The Ministry of Commerce has broader authority to assess
mergers on the basis of market dominance.
In 2010, during a time of rising inflation, the NDRC broke
up what it called a cartel of rice noodle suppliers in the
southern Guangxi region for increasing wholesale noodle prices.
The same year, it cracked a cartel of mung bean suppliers in
This month it targeted state-owned firms for the first time,
in an investigation of two Chinese telecoms giants for possible
violations involving broadband access.
($1 = 6.342 Chinese Yuan)
(Editing by Ken Wills)