Shanghai is Planning to Promote More Innovative Drugs and Devices via Commercial Insurance

Advanced healthcare is limited in China due to restrictive pricing schemes that reduce payments. Programs like the drug reimbursement list, diagnosis-related groups (DRGs), and Diagnostic Intervention Packets (DIPs) limit reimbursements and thus make expensive new therapies unaffordable in China. To counter these measures, the Shanghai Municipal Security Bureau and other government bureaus announced a new program called – Measures to Diversify Payment Mechanisms to support innovative devices and drugs. The goal of this initiative is to provide funds and access to new medical therapies over and above China’s basic medical insurance programs via commercial insurance.

The program plans to make it easier for commercial insurance to get more real big data to analyze risk and provide more information for their underwriters. One way to get more data is by sharing information between commercial insurers and the National Healthcare Security Administration (NHSA). The plan calls for commercial insurers to go beyond providing funds for products, but also includes funds for services, funds for patients with pre-existing problems, etc. Similarly to Pharmacy Benefit Managers in the US, the plan calls for third-party administrators to become more involved with pharmaceutical pricing, filtering claims, and other medical services. Also, an additional budget will be allocated to new therapies that are currently constrained under the restrictive pricing schemes mentioned above.