Confused about how the government ensures that drugs are affordable? Here is a brief look at how its price-control policies were set up and are being put into effect.

The drugs whose prices are being controlled in the Chinese market appear on two lists. The more important one is called the essential drug list and was compiled by the National Development and Reform Commission.

It identifies drugs available to the public at all times, in appropriate dosages and at affordable prices. In 2009, the Ministry of Health issued a list of 307 essential drugs, all of them Western medicines, as part of its 10-year plan to establish a system for providing essential drugs. State-owned health institutions are required to stock the medicines that appear on the essential drug list and to put a priority on using them when they treat patients.

Minister of Health Chen Zhu said at the National People's Congress session that just ended that China will add about 400 Western drugs and 200 traditional Chinese medicines to the essential drugs list this year.

The other list, meanwhile, is called the national reimbursement drug list. It divides the medicines it contains into two groups and deals with 23 therapeutic classes of medicine.

On the second list, cheaper generic drugs selected by the central government are deemed to be part of "List A". Those who have certain types of health insurance can be reimbursed for the cost of those medicines.

The drugs on "List B", meanwhile, tend to be more expensive. Provincial-level governments have some leeway in deciding whether such medicines should appear on local national drug reimbursement lists and setting reimbursement rates for those drugs in accordance with local economic conditions and healthcare needs.

List A contains 503 drugs, including the 307 on the essential drug list. Those who buy them are guaranteed that they can be reimbursed for their cost.

List B, in contrast, has 1,624 drugs, 15 percent of which can be changed by a local government.

After the government's previous move to reduce medicine prices, sales of prescription medicines in China increased by 18.6 percent year-on-year to reach $50 billion in 2011, after increasing by 19.5 percent in 2010.