Feb. 15 (Bloomberg) -- China plans to expand its list of essential drugs to 800 to cover diseases such as cancer this year, and prices for pharmaceuticals may fall further, Health Minister Chen Zhu said.

China, which in 2009 introduced the current roster of 307 drugs that are subsidized and purchased in bulk by provincial governments, may have 500 western products and as many as 300 traditional Chinese medicines on the new list, Chen said in Beijing yesterday.

The country implemented a series of drug price cuts last year and is introducing a nationwide system of procurement aimed at making essential medicines cheaper. Those plans raised concerns of global drugmakers such as Pfizer Inc. and Merck & Co., seeking expansion in the world’s fastest-growing pharmaceuticals market. Prices of drugs have declined by an average of between 30 percent and 35 percent, according to Chen.

“I hope prices can come down a bit more,” Chen said at a briefing arranged by the World Health Organization. “But price is no longer the main issue, it’s quality,” he said, adding the ministry will focus on improving the assessment of the quality of drugs in the new tender system.

Cancer Lobby

Chen, a hematologist who received medical training in France, said one disease the government may cover is chronic myelogenous leukemia, a form of blood cancer, as patients’ lobby groups push for drugs used in its treatment to be included in the essential list.

“Drugs on our essential list today are mostly generics, but shortly I think pressure groups for some of the diseases such as cancer may ask for aid in some targeted therapies and we are considering that,” he said.

The country also wants to eliminate hospitals’ reliance on drug sales in the five years through 2015 to lower medical costs, according to the Ministry of Health.

China Business News reported Feb. 13, citing an unidentified person close to the Ministry of Commerce, that one plan being studied is for drug companies to manage pharmacies operated by public hospitals, benefiting China’s biggest drug distributors such as Sinopharm Group Co. and Shanghai Pharmaceutical Holding Co.

Chen said he doesn’t expect this to happen.

“The likelihood of removing pharmacies from public hospitals is not huge,” Chen told reporters after the briefing. “We need to ensure the quality of drugs. And currently pharmacies in hospitals are much more strictly managed than those in society.”

One way for hospital to offset losses from drug sales is to increase the amount they charge for services such as surgery, Chen said.

“Neurosurgery for example, which needs about 10 people -- doctors, surgeons, nurses, anestheticians -- to perform for a whole day, is charged at less than 2,000 yuan, which is ridiculous,” Chen said.