A dispute about the decreasing-price problem of traditional Chinese medicine (TCM) has recently arisen. This article analyzes the statistical data of 1995-2011 in China, the results showed that the main responsibility of expensive health care has no direct relationship with the drug price. The price index of TCM rose significantly slower than the medicine prices, the production margins of TCM affected by the material prices has been diminishing since 1995, continuous price reduction will further depress profits of the TCM industry. Considering the pros and cons of raw materials vary greatly in price, decreasing medicine price behavior will force enterprises to use inferior materials in order to maintain corporate profits. The results have the guiding meaning to medicine price management.
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