ORGANIZATION: Shanghai is a municipal in China where has 14 million residents and 6 million migrated populations. The Bureau of Health is the health authority and has the jurisdiction of health legislation and policy implementation in Shanghai. PROBLEM OR ISSUE ADDRESSED: The study is to identify how to implement national essential medicine policy in an economic advanced municipality. GOALS: From the perspectives of policy makers, it needs not only to follow the central government requirements but also to adopt the local situation OUTCOMES ITEMS USED IN THE DECISION: Progress indicators used in monitoring and evaluation of essential medicine policy    IMPLEMENTATION STRATEGY: The situation analysis is needed. Information of availability and affordability of essential medicines should be evaluated by WHO/HAI method in Shanghai. The distribution of essential medicines in different level of hospitals is analysed from bulk purchasing data base and IMS data CHPA. The pharmaceutical expenditure in 2001-2007 will be collected from Shanghai sub-national health accounts. RESULTS: Shanghai is an important pharmaceutical market in China. The total pharmaceutical expenditure was 17.5 billion Yuan (RMB) in Shanghai in 2007. The share of pharmaceutical expenditure in total health expenditure was 30.6%, which was equal to 1.47% GDP. Eighty percent of pharmaceuticals were sold from hospital channel, among them, 67% of cost spent in outpatient department and 32%, in inpatient department. The ratio between western (chemical) medicines and traditional Chinese medicines was 84% and 16%, respectively. The mark-up ratio used to be 20%-30%, which are main component in hospital revenue. Since 2009, China has conducted a nationwide health system reform. By the time of 2011, China will establish a preliminary national essential medicine system, 307 items of medicines have been selected by central government as a national essential medicines list and will used in all urban community centres and rural township health centres. The selection of essential medicines is based on the principle of opinion leaders, evidence medicine and pharmacoeconomic evaluation. China has launching an initiative on medical and pharmaceutical system reform since April, 2009 after publishing government official documents. According to the survey, as a matter of fact, the medicines used in urban community centres in Shanghai have already accounted for nearly 2000 items. Only did 25% value or volume of pharmaceuticals are belonged to 307 essential medicines. How to adjust the utilization of essential medicines is the challenge facing to the policy makers. LESSONS LEARNED: It is really a trade-off. Universal coverage of essential medicine is a human right. The implementation of national essential medicine policy will offer safety, effective, convenience and affordable medicines to release the economic burden of the patients. However, if the primary hospital only allows using national essential medicines, it will let the patient flown to the secondary or tertiary hospital. The role of gatekeeper will diminish in the primary health care. This case will tell you that the decision made by Shanghai municipal government are as follows: (1) Under the framework of national essential medicine list, Shanghai will adjust the number and forms of essential medicines to meet the need of 85% pharmaceutical pattern in the primary health care; (2) All grass-root health facilities will allocate and use essential medicines; (3) Zero mark-up ratio will be used in the sale of medicines in primary hospital, meantime, adjustment of reimbursement system is necessary, including increasing government financial support and reforming the fee schedule in hospital; (4) drug bulk purchasing and distribution through market competition and public bidding system; (5) rational use of drug and diagnostic procedure guided by clinical pathway; (6) Strengthening the monitoring and evaluation of essential medicine policy. The WHO country progress indicators will be used in Shanghai.