The longstanding problem of reselling "reflow drugs" in medical insurance has been effectively curbed

China Youth Daily · China Youth Network reporter Liu Changrong

A string of 20-digit numerical codes uncovered 1,124 boxes of illegal drugs, including a large number of high-priced anti-cancer medicines. This is a “reverse-flow drugs” case cracked in a pharmacy in Lanzhou in February 2025.

The pharmacy is located inside a residential community, with its location highly well hidden. However, according to the drug traceability code and medical insurance settlement data, on January 2, 2025, the Yunnan Baiyao aerosol sold by that store had already completed medical insurance settlement at other pharmacies as early as December 28, 2024. It was this key early-warning alert from an anomalous settlement drug traceability code that exposed the full illegal path of the “reverse-flow drugs.”

This case is only a glimpse of the iceberg in recent years’ crackdown on “reverse-flow drugs.” At a news briefing organized by the National Healthcare Security Administration on March 31, Vice Minister Huang Huabo said that over the past five years, healthcare security departments at all levels have recovered about 120 billion yuan in healthcare insurance funds. Reporters learned from the National Healthcare Security Administration that in 2025, by carrying out three rounds of full-coverage, dragnet-style inspections based on nationwide traceability code settlement data, authorities precisely identified 1.83M data leads, reviewed 145k designated medical and pharmaceutical institutions, investigated and handled 12k medical and pharmaceutical institutions suspected of selling “reverse-flow drugs,” and jointly with public security and other departments solved 865 cases involving 3.15 billion yuan.

“Reverse-flow drugs” not only erode the money that ordinary people use to see a doctor and save lives—medical insurance funds—but may also endanger patients’ physical health, and even their life safety.

Because “reverse-flow drugs” are often split and re-packed in illegal circulation, their packaging is typically makeshift plastic bags and paper boxes, with no measures for moisture prevention, pollution prevention, or refrigeration. Phenomena such as squeezed-and-crushed damage to the medicines, labels coming off, dampness causing clumping, and loss of drug potency are commonly found.

The reason “reverse-flow drugs” are called a “long-standing, stubborn problem” is that they have continued from the era of public-funded medical care to the present. They have existed for decades, and disorderly practices such as small ads for “buying drugs at high prices” and drug-buying agents squatting at hospital entrances have repeatedly persisted despite prohibitions.

It is reported that reselling “reverse-flow drugs” to profit from the price difference is lucrative and forms an illegal chain of benefits. For example, a box of medicine has a market price of 100 yuan. After medical insurance reimbursement, the insured person (the person who provides the prescription) only needs to pay out of pocket 20 yuan to buy it. Some illegal actors buy the drugs back from the prescription provider at a price of 30 yuan and sell them at 50 yuan, and then the pharmacy or platform sells the drugs to medical institutions or consumers at a price below the market rate. In this way, the insured person, drug traders, and pharmacies can all illegally profit from it. Industry experts predict that nationwide each year the scale of “reverse-flow drugs” reaches several hundred billion yuan. In 2022, Pu’er, Yunnan, dismantled a gang that trafficked medical-insurance drugs; authorities seized 9 tons of “reverse-flow drugs,” arrested 33 people, and the case amount was 200 million yuan. In 2023, similar cases in Dongyang, Zhejiang, involved an amount as high as 1 billion yuan.

The drug traceability code composed of 20-digit numerical codes has become a powerful tool to address this stubborn problem of “reverse-flow drugs.” A drug traceability code is essentially an electronic identity card for a drug. From the time a drug leaves the factory, each box is affixed with a unique identity label. Drug traceability codes cover all stages of the drug’s production, circulation, and settlement.

In January 2025, the National Healthcare Security Service platform’s App and mini-program launched a “query function for traceability information of medical insurance drugs and consumables.” Daily query volume exceeded 145k person-times. The public can verify the legitimacy of drugs by scanning codes. If the query finds unique sales information, it proves compliance; if it finds sales information two or more times, it may be “reverse-flow drugs” or counterfeit drugs; if no information is found, it can be reported and submitted. “Scan when buying medicine, use medicines with peace of mind.”

In March 2025, four departments jointly issued a document clarifying that starting July 1, “no code, no settlement.” All designated medical and pharmaceutical institutions selling medicines must capture codes in order to have medical insurance settlement.

Reporters learned from the National Healthcare Security Administration that as of March 25, 2026, the department has cumulatively gathered 12k drug traceability codes, connected with 1.0375 million designated medical and pharmaceutical institutions, with a connection rate of 99% or more.

However, governing the trafficking and reselling of “reverse-flow drugs” faces new challenges. As the intensity of medical insurance regulation continues to increase, “reverse-flow drugs” are gradually flowing to non-designated medical and pharmaceutical institutions and online drug-selling platforms, or are sold again in the form of self-payment. Reporters learned from the National Healthcare Security Administration that, according to preliminary statistics, more than 4,000 retail pharmacies nationwide that sell “reverse-flow drugs” originate from online drug wholesale platforms.

According to information from the National Healthcare Security Administration’s press conference, the 《Implementation Rules for the Provisions on Oversight and Administration of the Use of Medical Security Funds》 (hereinafter referred to as the 《Implementation Rules》) takes effect on April 1, 2026.

“The 《Implementation Rules》 further refine relatively typical and prominent issues encountered in regulation, providing a more powerful legal tool to severely crack down on fraud and abuse of medical insurance.” said Gu Rong, director of the Fund Supervision Division of the National Healthcare Security Administration, at the briefing.

Article 2 of the 《Implementation Rules》 proposes to improve an intelligent regulatory system combining pre-event, in-event, and post-event oversight. In response, Gu Rong explained: “We have developed dozens of big-data supervision models to provide ‘eyes in the distance’ and ‘ears to the wind’ for supervision and inspection, strengthening precise identification and efficient crackdowns on various illegal and non-compliant issues. We have also built an intelligent regulatory rules and knowledge database for medical insurance funds to provide strong support for handling and review.”

In addition, the 《Implementation Rules》 stipulate that key focus will be placed on cracking down on issues such as trafficking and reselling “reverse-flow drugs.” For example, Article 26 provides that if a designated medical and pharmaceutical institution and its staff knowingly assist others who are deceiving for medical insurance reimbursement purposes—by impersonation or false medical visits or drug purchasing—and still assist them in getting medical treatment or buying drugs, it may be determined as fraud and abuse of medical insurance.

“During our supervision, we found that some drug traders held a dozen or more medical security documents to get prescriptions at a hospital, and medical staff coordinated to issue the prescription without checking any identity information or authorization procedures. This falls under ‘assisting others in impersonation or false medical visits or drug purchasing,’ and it can be determined as fraud for medical insurance.” Gu Rong said.

Reporters learned from the medical insurance authorities that some outpatient patients with special diseases, relying on favorable medical insurance benefits, treat it as ‘an invisible benefit’ and intentionally exaggerate their condition to induce doctors to prescribe more than necessary, with the aim of reselling the drugs.

In response, Article 31, Item 3 of the 《Implementation Rules》 provides that during a person’s enjoyment of medical insurance benefits, if they buy drugs, medical consumables, or medical service items beyond the reasonable quantity and scope needed for treating the disease and then resell them, it may be determined that there is a purpose to commit fraud and abuse of medical insurance.

Recently, the National Healthcare Security Administration released the 《Notice on Deepening the Special Campaign to Crack Down on Illegal and Non-Compliant Issues in the Field of Medical Insurance Drugs》 and emphasized that it is necessary to focus on all stages and the entire process of trafficking and reselling “reverse-flow drugs,” continuously strengthen cross-through-style crackdowns on various implicated parties, including professional prescription providers, drug traders, and illegal and non-compliant drug wholesale enterprises and medical and pharmaceutical institutions, in order to completely sever the illegal chain of “prescription provision—trafficking and reselling—reverse-flow—sales.”

Source: China Youth Daily Client

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