In recent years, there has been rapid growth in pharmaceutical spending in China. In addition, the country faces many challenges with regards to the quality, pricing and affordability of drugs. Pricing and reimbursement are important aspects of pharmaceutical policy that must be prioritised in order to address the many challenges.

This review draws on multiple sources of information. A review of the academic and grey literature along with official government statistics were combined with information from seminars held by China's State Council Development Research Center to provide an overview of pharmaceutical pricing and reimbursement in China.

Pricing and reimbursement policy were analysed through a framework that incorporates supply-side policies, proxy-demand policies and demand-side policies. China's current pharmaceutical policies interact in such a way to create dysfunction in the form of high prices, low drug quality, irrational prescribing and problems with access. Finally, the country's fragmented regulatory environment hampers pharmaceutical policy reform.

The pricing and reimbursement policy landscape can be improved through higher drug quality standards, greater market concentration, an increase in government subsidies, quality-oriented tendering, wider implementation of the zero mark-up policy, through linking reimbursement with rational prescribing, and the promotion of health technology assessment and comparative effectiveness research. Addressing broader issues of regulatory fragmentation, the lack of transparency and corruption will help ensure that policies are created in a coherent, evidence-based fashion.