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The government will more closely supervise the process for setting drug prices in an effort to bring more transparency to the drug industry.

A regulation published by the National Development and Reform Commission (NDRC) lays out a five-step procedure for drug pricing that includes an investigation of production costs, expert evaluations and public hearings.

The regulation is to take effect on Thursday.

Under the new regulation, at least two drug price regulators are to be dispatched directly to drug companies to review production costs. The goal is to further standardize and regulate drug pricing.

Designated drug price regulators will be strictly prohibited from cashing in on their investigations or taking gifts of any sort, such as accepting invitations to banquets or trips abroad, from drug manufacturers.

The regulation also establishes a five-year work rotation system to keep drug regulators from becoming too entrenched or familiar with the people they are supposed to be monitoring.

The regulation also calls for the creation of a pool of experts to help establish a more scientific review and verification system for drug pricing. The experts would be selected randomly to ensure transparency and impartiality.

Drug industry insiders said the move would help restore public confidence in the country's drug industry, which has been criticized for its opaque pricing system and the high costs consumers must bear.

The NDRC has capped the prices of hundreds of drugs to control the soaring costs and regularly orders price reductions.

Meanwhile, the State Food and Drug Administration (SFDA) has also waded into the fray, announcing that it had set up a high-risk drug production supervisory system on Sunday on its website.

By the end of next month, supervisors will be dispatched to companies that make blood products and vaccines to oversee the implementation of the Good Manufacturing Practice (GMP) certification system, which was initiated and pushed forward by the disgraced former SFDA chief Zheng Xiaoyu, who allegedly abused his power by taking bribes.

The drug supervisors are to be selected from among local drug watchdog administrations or their subsidiaries and trained by the SFDA.

"They have to behave morally and be honest and quite experienced in drug supervision," the SFDA posting said.

However, the credibility of GMP certification has been called into question in the wake of repeated health crises caused by low-quality pharmaceuticals.

The SFDA announced a campaign in January to re-examine drug companies who had acquired a GMP certificate for registering new medicines in 2004 and 2005.

(China Daily February 27, 2007)