In late November, China’s Joint Drug Procurement Office promulgated the 10th round of Volume Based Procurement (VBP). To be eligible for this bid of 60 drugs, applicants needed to submit their price proposals by mid-December. Of these 60 drugs, there were eight key drug categories, including gastro, hematology, cardio, neuro, oncology, etc.
This 10th round of VBP has some criteria changes compared to the 9th round of VBP. The first change includes a decrease in the number of shortlisted companies to get a spot. Second, only companies whose unit comparable price is equal to or less than 1.8 times the lowest unit comparable price for the same product will be eligible. In addition, while procurement agents will be more flexible, drug packaging must meet the guidelines for easy traceability by utilizing tracking codes. VBP has been a tool for China to allocate large sales volume to bid winners with reduced pricing for specific drugs. VBP currently only applies to a drug with sales over about $70 million per year. Some foreign drug companies that do not want to lower their drug prices have refused to join VBP, which allows them to maintain a higher price but dramatically reduces sales volume.
Written by: Ames Gross – President and Founder, Pacific Bridge Medical (PBM)
Mr. Gross founded PBM in 1988 and has helped hundreds of medical companies with regulatory and business development issues in Asia. He is recognized nationally and internationally as a leader in the Asian medical markets. Mr. Gross has a BA degree, Phi Beta Kappa, from the University of Pennsylvania and an MBA from Columbia University.