(Yicai) June 3 -- Shares in Yixintang Pharmaceutical plunged by the exchange-imposed limit today after regulators said the Chinese drugstore chain has been called in for face-to-face talks regarding the alleged siphoning of medical insurance funds to pay for drugs not included in the national medical insurance scheme or to sell more drugs than the amount on the prescription.

Yixintang’s share price [SHE:002727] was trading down 7.1 percent at CNY19.25 (USD2.66) as of 1 p.m. Earlier in the day it sank to CNY18.68.

The Supervision Department of the National Healthcare Security Administration is conducting interviews with executives at Yixintang, the regulator said yesterday. The Kunming-based company has been instructed to immediately conduct internal checks and make the necessary corrections.

Yixintang will conduct a review of its 10,746 outlets and submit a report to the authorities by the end of June in accordance with the probe requirements, a person in charge of the drugstore chain, which serves 108 million customers a year, told Yicai.

The investigation demonstrates that the health insurance watchdog is stepping up supervision of pharmacies, after drugstores were included in the medical insurance social pooling account fund, which is paid by businesses and managed by the state, in February last year, Zhao Heng, founder of healthcare consulting firm Latitude Health, told Yicai.

Before the change, drugs sold by pharmacies were only covered in the personal account of the medical insurance program, which is mostly paid by individuals. China’s medical insurance program is divided into social pooling accounts and personal accounts.

China's medical insurance scheme covered 1.1 million medical institutions, including 594,000 treatment centers and 484,000 pharmacies, as of the end of August last year, according to data released by the National Health Insurance Administration.

Yixintang’s net profit climbed 1 percent in the first three months from a year earlier to CNY242 million (USD33.4 million), while revenue surged 15 percent to CNY5.1 billion (USD703.8 million), according to its latest financial report.

Editors: Dou Shicong, Kim Taylor