With the implementation of “Dual Channel” drug management mechanism, it is necessary for hospitals to upgrade their drug management system. The paper introduces the background, strategy and effect of a Grade III Level A hospital, explores how to make it conform to the "double channel" drug management mechanism and truly implement medical insurance policies. After the transformation, drug management is more proper, it is more convenient to buy drugs, and the medical insurance fund is more effective, meanwhile it promotes the policies of hierarchical diagnosis and treatment, fund safety, and centralized drug procurement. Also, it can improve the drug supply and meet the needs of rational drug use.