The Chinese government plans to introduce far tighter controls over the way that pharmacies process drug prescriptions, after uncovering a massive insurance fraud case worth over 100 million yuan ($14 million).

State broadcaster CCTV reported last week that four pharmacies in the northeastern Chinese city of Harbin were suspected of making vast numbers of fake medical insurance claims using forged doctors’ notes.

The pharmacies reportedly used tens of thousands of these fake handwritten prescriptions to make over 100 million yuan of fraudulent insurance claims.

Days later, the National Healthcare Security Administration (NHSA) announced plans to make sweeping changes to the way that pharmacies across China handle prescriptions, which are designed to prevent similar cases happening in future.

Starting from Jan. 1 next year, retail pharmacies supplying chronic disease medication and so-called “dual-channel” drugs — medication with a high clinical value that is urgently needed by patients — will be required to process prescriptions through a new online system, according to the notice.

The move is designed to ensure that all prescriptions can be tracked and monitored, and to prevent criminals from using forged doctors’ notes.

Previously, patients were able to buy prescribed drugs at designated pharmacies with a prescription signed by a physician. But once a hospital had issued a paper prescription, they were unable to track how they had been used, increasing the risk of fraudulent claims.

The case in Harbin clearly exposed the system’s frailties. According to CCTV, 51 individuals are suspected of being involved in the scheme, including pharmacists, store owners, doctors, patients, and pharmaceutical industry representatives.

The suspects were reportedly able to make claims by purchasing blank prescription forms, writing out fake doctors’ notes, and stamping them with forged hospital seals.

One Harbin resident was able to purchase an astonishing 1-million-yuan worth of Avatrombopag, a drug used to treat chronic liver disease, over a two-year period using this method, according to CCTV.

The new regulations mandate that pharmacies in areas that already have an electronic medical insurance prescription center in place will be required to process all prescriptions of “dual-channel” drugs through the platform starting next year.

Outlets in areas that have not yet launched an electronic medical insurance prescription center will continue to use paper prescriptions, but these must be signed by a hospital’s medical insurance physician and bear a corresponding stamp. Pharmacies must also keep copies of every paper prescription for at least two years.

The government began prioritizing the construction of an online prescription system last year, and 26 Chinese provinces had already launched their own platforms connecting hospitals and pharmacies by the end of last year, according to the NHSA. But many doctors and pharmacists have yet to start using the new systems.

Huang Xiuxiang, former secretary-general of the Hunan Pharmaceutical Distribution Industry Association, told domestic media that the electronic prescription systems will increase accountability, as they can track which pharmacists at the relevant hospital and pharmacy handled each prescription.

But experts worry that the tightened regulations could make it harder for patients to access their medication, as the stricter requirements may slow down processing times or make doctors more cautious about making prescriptions.

The new regulations have tried to anticipate this problem by stating that hospitals are obligated to provide a prescription if they are unable to provide a patient with essential medication on site.

The government will also step up inspections to ensure the health system implements the new regulations. By the end of this year, medical insurance departments will overview the systems in place for prescribing chronic and special disease medications, as well as high-cost drugs that present significant fraud risks, according to the NHSA.

(Header image: VCG)