China drug procurement pilot scheme reduces drug prices

Just two multinational pharmaceutical manufacturers have been selected to supply drugs to 11 major Chinese cities, as a government pilot program designed to glean lower drug prices goes into effect.

The two firms, AstraZeneca and Bristol-Myers Squibb, will supply key drugs at prices more than 65% lower than those they sold the drugs for in China in 2017. Under the terms of the program, the firms will hold a monopoly on the supply of the drugs in public hospitals across the eleven cities. The drugs are AstraZeneca’s cancer fighting drug Gefitinib and Squibbs hypertension treatment Fosinopril.

Under the new government program, drug manufacturers have been invited since December to bid for contracts to supply 31 drugs to public medical institutions in the eleven cities. The winner selected in each of the categories — from cholesterol and high-blood pressure medications to allergy and cancer treatments —  then becomes the sole supplier of its product across the board in the cities.

To date, most of the pharmaceuticals selected in the bidding process have been produced by Chinese firms. Many multinational companies have opposed the plan, citing the pressure the intense price competition puts on product quality, safety, and their bottom lines.

The 11 cities participating in the pilot project are Beijing, Tianjin, Shanghai, Chongqing, Shenyang, Dalian, Xiamen, Guangzhou, Shenzhen, Chengdu, and Xi’an.