Poor distribution of essential medicines to primary care institutions has attracted criticism since China adopted provincial centralized regional tendering and procurement systems. This study evaluated the impact of new procurement arrangements that limit the number of distributors at the county level in Hubei province, China.Procurement ordering and distribution data were collected from four counties that pioneered a new distribution arrangement (commencing September 2012) compared with six counties that continued the existing arrangement over the period from August 2011 to September 2013. The new arrangement allowed primary care institutions and/or suppliers to select a local distributor from a limited panel (from 3 to 5) of government nominated distributors. Difference-in-differences analyses were performed to assess the impact of the new arrangements on delivery and receipt of essential medicines.Overall, the new distribution arrangement has not improved distribution of essential medicines to primary care institutions. On the contrary, we found a 7.78-19.85 percentage point (p < 0.01) decrease in distribution rates to rural primary care institutions. Similar results were demonstrated using the indicator of received rates, with a 7.89-19.65 percentage point (p < 0.01) decrease.Simply limiting the number of distributors does not offer a solution to the poor performance of delivery of essential medicines for primary care institutions, especially those located in rural areas. Procurement arrangements need to consider the special characteristics of rural facilities. In a county, there are more rural primary care institutions than urban ones. On average, rural primary care institutions demand more and are more geographically dispersed compared to their urban counterparts, which may impose increased distribution costs.