Pharmaceutical companies cut prices in China in exchange for inclusion on the National Reimbursement Drug List

Last week, the result of negotiations between pharma companies and China’s National Healthcare Security administration was revealed. 150 medicines were evaluated, and the outcome is as follows.

  • Out of the 119 new medicines evaluated, 70 were accepted onto the National Reimbursement Drug List (NRDL) after an average price cut of 60.7%.
  • The remaining 31 under renewed discussions were subject to a price review which resulted on an average 26.4 % price drop for 21 of the medicines

With the newly reimbursed medicines being made available as a result of this negotiation, the largest since the establishment of the medical insurance system, the NRDL will be comprised of a total of 2,709 medicines.

It is noteworthy that, since the revamp of the regulatory system in 2017, China has been updating its NRDL more frequently and accelerated approval reviews to meet patients’ demand for novel medicines in therapeutic areas such as oncology, rare disease and chronic disorders.

From a pricing perspective, it is also relevant that the latest price cuts resulted in China having the lowest prices globally for the medicines on NRDL. This reinforces China as a low-price market where manufacturers accept a big price cut for their drugs in order to gain access to the world’s second largest market. Consequently, these consistent and considerable price cuts accepted by pharma companies may spark criticism in other markets where there is mounting pressure to lower prices, such as the US.

The investment in innovative treatments and broader national insurance coverage has rendered the booming Chinese market increasingly attractive to companies. However, western companies are faced with some challenges in adapting their business models to succeed in this market. Besides the management of high-volume sales coupled with big price cuts and NRDL inclusions, companies must account for huge supply demands, the possibility of product replacement in national bulk buying programs for off-patent medicines and rising competition from local biopharma. Looking into the near future, the Chinese healthcare system reforms are likely to impact other emerging economies and therefore China needs to be watched by the global pharma industry.

Global Pricing Innovations are industry-leading experts in pricing and market access. We can support you with comprehensive pharmaceutical pricing data in 90 markets worldwide, including China, and with our consulting services. Please contact us via info@globalpricing.com info@globalpricing.comto discuss how we can help you.

By Joao Ataide – Consultant & Jack Ziomek – Project Manager, Web Platforms.

Reference:

National Healthcare Security Administration release (issued on 28 November 2019)

http://www.nhsa.gov.cn/art/2019/11/28/art_14_2052.html