2024 China Drug Market Access Update

Over the last 5 years, getting drugs registered in China and available for sale has become more efficient, easier, and a lot quicker. However, China drug pricing is still a major concern. Two drug price reduction schemes are outlined below.  First, one of the most detrimental systems for China drug pricing is Volume Based Procurement (VBP). Over the last year or so, China has implemented the 8^th and 9^th round of VBP. VBP normally starts only when sales of a specific drug reach about $75 million per year. Before that sales volume is reached, at least for now, VBP will not affect drug prices. The goal of VBP is to reduce drug prices in exchange for a large sale opportunity. These last 2 VBP programs reduced certain drug prices by about 50% for close to 100 drugs.

Second, China’s National Reimbursement Drug List (NRDL) gives companies a chance to broaden the number of people to receive some reimbursement for their drug prices. Generally, in the past, it was thought that getting on the list was a key to your success in China. However, to get on the NRDL, drug companies must reduce their prices which oftentimes will negate the advantage of more people using the drug. Thus, some foreign drug companies decide not to get on the NRDL and maintain their prices but limit the number of people that can pay for their products.

To counter balance the above reduction in prices, other programs are being initiated to help maintain and increase drug pricing.  For example, Shanghai has started a new program called the Measures to Diversify Payment Mechanisms to back innovative drugs. Such a program hopes to provide more drug funds above the basic Chinese insurance programs. This program hopes to utilize commercial insurance. Commercial insurance underwriters will hopefully get more healthcare data from China’s National Healthcare Security Administration to feel more comfortable in allocating more funds.

In addition, earlier in 2024, the China National Healthcare Security Administration, promulgated a new program to support higher prices for chemical drugs. In this scheme, chemical drugs with higher innovative values will be priced higher with specific premiums.

Although China is opening its market to more foreign drugs, the lower drug prices make the market less appealing to foreign drug makers. How to balance the right mix of affordability for patients, profitability for drug makers, and how much the Chinese government should be involved with price fixing will be an on-going battle for many years to come.