| Summary: | Abstract Background In September 2012, Beijing, the capital of China, selected five tertiary hospitals as pilots to remove the previously allowed 15% markup for drug sales. However, while most research demonstrated the significant decrease in drug sales, the core issue of high health expenditure was not well solved because of the unintended policy impact. This study aimed to empirically evaluate the short-term and long-term unintended impacts on controlling medical expenses of Beijing’s zero markup drug policy from 2012 to 2015. Methods This study extracted 2012–2015 individual-level data from the Beijing Urban Employee Basic Medical Insurance (UEBMI) database and performed a propensity score-matched analysis to evaluate the short-term and long-term impacts on controlling medical expenses. All inpatients in the 5 pilot reform hospitals were selected as the intervention group, while inpatients in other tertiary hospitals were selected as the control group. Results A total of 520,996 inpatients were extracted in this study. For patients in the pilot hospitals, the total expenditures per admission decreased from 17,140.3 yuan in 2012 to 15,430.1 yuan in 2013 and then increased to 16,789.8 yuan in 2015. Expenditure on drugs reduced from 5811.7 yuan in 2012 to 3903.4 yuan in 2015. However, a significant substitution effect of medical consumables was first observed in the third quarter of 2014, which undermined the impact of the policy. In the long-term, the intervention group and control group demonstrated the same trend. Conclusions After the zero markup drug policy, expenditure on drugs revealed a continuous decline. However, the decline in total expenditure was weakened by the substitution effect of medical consumables in the long term.
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