A reduction in the cost of medicine will be pushed back into the new year due to slower-than-expected progress, a Health Ministry official says. In October, the National Development and Reform Commission announced a list of 1,000 'essential drugs' that would see price cuts of up to 12 per cent by the end of the year. This is part of a broader three-year health-care reform that aims to expand insurance to 90 per cent of the population, set up a network of community clinics and ensure equal access to basic public services. Under the price-reduction plan, about 30 per cent of state-owned local health institutions were to provide all essential medicines on the list by year's end, and these clinics would be required to provide them ahead of more expensive alternatives when treating patients. The reform will be applied nationwide by 2020. Xie Xiaoyu, director of the Ministry of Health's essential drug system division, said the year-end target 'might need to be postponed to next March based on actual progress of policy implementation', the China Youth Daily reported yesterday. Although no reason was given for the delay, medical experts believed financial subsidies were inadequate to encourage health institutions to provide drugs at cost-price. The ceilings on consultation and surgical fees are kept at very low levels but health institutions are allowed to sell drugs at a 15 per cent profit margin to compensate for their loss. Professor Gordon Liu Guoen, head of Peking University's department of health economics and management, said the delay was caused by inadequate government compensation as the cap on drug prices took away the health institutions' main source of subsidy. 'I'm not surprised to learn that the government failed to meet its policy target. They might need more time, even until June or September next year,' Liu said. 'It's because the government is not providing enough compensation, which means some hospitals do not see reducing drug prices as a viable way to survive.' Gu Xin, professor of government management at Peking University, doubted whether the price cap would ever be implemented. 'It's impossible to implement the policy, all they can do is delay it,' he said. Liu said doctors were pressured into prescribing unnecessary drugs to run up high bills. It is common for a patient to pay just seven yuan (HK$7.95) for a specialist's consultation fee in a government hospital, but end up paying 500 yuan for drugs. He said unless doctors and nurses were paid properly, and hospitals received adequate funding, little would change in the health care system. 'The core problem is medical services fees, but few people understand that. The authority thinks doctors are government officials so the salary should be controlled,' Liu said. He said the six to seven million doctors on the mainland made an average of 2,000 to 3,000 yuan a month.