China’s pharmaceutical sector has been undergoing significant transformations in the past year, with sweeping reforms affecting drug reimbursement, approval processes, market access pathways, and the oversight of pharmaceutical representatives. Together, these policy shifts aim to enhance access to high-quality treatments, increase efficiency in drug registration, and strengthen compliance mechanisms. This article explores recent regulatory updates shaping the Chinese drug market and examines their potential impact on domestic and international stakeholders.
Major Expansion of the National Reimbursement Drug List (NRDL)
In late 2024, China’s National Healthcare Security Administration (NHSA) conducted its annual update to the National Reimbursement Drug List (NRDL), incorporating 90 new pharmaceutical products while removing 44 from coverage. With this adjustment, the NRDL now encompasses over 3,160 medicines, spanning chemical compounds, biologics, patent-protected Chinese medicines, and traditional herbal formulations.
The newly added treatments are predominantly recent market entries, with most having launched within the past half-decade. A significant portion — roughly one-quarter — targets oncology, while others address chronic illnesses such as diabetes (16%) and rare disorders (14%). Their inclusion in the NRDL took effect on January 1, 2025.
Being listed on the NRDL presents both strategic benefits and operational trade-offs for pharmaceutical companies. On the one hand, reimbursement eligibility substantially broadens patient access, which can drive uptake. On the other hand, in exchange for this access, manufacturers often agree to steep price concessions. In some cases, international firms have opted out of NRDL inclusion due to concerns about the impact of mandated discounts on revenue potential.
Draft Measures Seek to Tighten Oversight of Medical Representatives
To address ethical and regulatory concerns in drug promotion, China’s National Medical Products Administration (NMPA), in cooperation with six other regulatory bodies, introduced a draft framework to overhaul the governance of pharmaceutical sales personnel. The proposed “Administrative Measures for Management of Medical Representatives” update prior rules from 2020 and seek to clarify responsibilities for Marketing Authorization Holders (MAHs), medical institutions, and healthcare workers.
Under the draft regulations, MAHs will assume greater accountability for ensuring that representatives are properly trained, academically qualified, and free of past misconduct such as commercial bribery. Companies must also document the compliance history and personal identifiers of their sales personnel.
Hospitals and clinics, meanwhile, will be required to create dedicated oversight units to monitor representative activity. These units must enforce restrictions on unapproved drug promotion, prohibit data collection from prescriptions without consent, and prevent undue incentives from being offered to healthcare professionals or their family members.
Noncompliance may lead to serious repercussions. Regulatory authorities may impose sanctions ranging from naming violators publicly to barring them from participating in public procurement initiatives or reimbursement programs. The rules also encourage internal reporting and self-regulation within industry associations. However, some ambiguities remain—particularly around accountability when representatives are hired through third-party distributors rather than directly by MAHs.
Volume-Based Procurement Under Scrutiny Amid Quality Concerns
China’s volume-based procurement (VBP) initiative, launched in 2018, was designed to reduce drug spending by negotiating steep discounts in return for guaranteed sales volumes. While this approach has succeeded in driving down prices—often by as much as 50% to 90%—questions are now being raised about product quality and therapeutic efficacy.
Complaints from healthcare professionals have prompted the NHSA to initiate targeted investigations into medicines procured through VBP channels. These inquiries focus on treatments for conditions like heart disease, infections, and metabolic disorders, where concerns about adverse effects and diminished outcomes have surfaced.
Officials have deployed inspection teams to cities such as Shanghai to review real-world clinical results, including patient response rates and reported side effects. The assessments will also compare domestically manufactured generics with original brand-name drugs, both foreign and local. Authorities aim to enhance transparency by increasing audits of manufacturers, publicizing drug performance data, and developing better reporting mechanisms from hospitals and clinicians. In parallel, a major observational study spanning nearly 100 medical institutions is underway to further evaluate the VBP program’s real-world effectiveness.
New Technical Guidelines Streamline Drug Registration
In February 2025, the NMPA’s Center for Drug Evaluation (CDE) released two new guidance documents aimed at refining the drug review process. The first, titled “Guideline for Acceptance and Review of Chemical Drug Registration,” outlines updated criteria for filing applications, including documentation protocols, review checkpoints, and compliance checklists. This policy took effect on March 10, 2025.
On the same day, the CDE will also begin implementing a second set of standards under the “Guideline for Acceptance and Review of Biological Product Registration.” This draft document addresses the regulatory expectations for biologics, therapeutic vaccines, and certain diagnostic reagents, particularly in areas like digital submissions, emerging therapeutic routes, and stricter oversight of production quality.
Together, these two guidance documents are part of a broader movement to harmonize Chinese regulatory practices with international norms, reduce delays in drug approvals, and promote the use of standardized electronic documentation across the industry.
Commercial Insurance Formulary and Category C Drug List: New Access Channels
Beyond public health insurance, China’s commercial insurance landscape is also being reshaped. The Insurance Association of China (IAC), in coordination with leading private insurers such as Ping An Health and PICC Health, is developing a standardized Commercial Insurance Drug Catalog. This effort aims to reduce fragmentation in private insurance coverage and streamline claims by introducing a unified list of eligible treatments.
The new commercial formulary will feature a tiered structure that enables insurers to tailor coverage levels based on drug value, therapeutic category, and cost-effectiveness. A draft version is expected in the first half of 2025, with full policy harmonization anticipated by the end of the year.
In parallel, the NHSA is spearheading the creation of a Category C list under the public reimbursement framework. This proposed third category, supplementing the existing fully reimbursed (Category A) and partially reimbursed (Category B) lists, will target high-cost, innovative therapies such as CAR-T cell treatments, advanced cancer therapies, and medications for rare diseases. While the commercial catalog emphasizes affordability and broader coverage, the Category C list is focused on ensuring access to cutting-edge therapies that are not yet widely adopted but offer substantial clinical benefits.
Both initiatives mark a significant evolution in how new treatments are evaluated and funded in China. They reflect a growing recognition that a single reimbursement pathway is no longer sufficient to meet the complex demands of an increasingly diverse therapeutic landscape.
Surge in New Drug Approvals Highlights Market Growth
In 2024, the NMPA approved 84 new pharmaceutical products — a record high for the country and a 12% increase from the previous year. This number also surpassed the 50 new drugs approved in the U.S. during the same period, signaling China’s growing stature in the global pharmaceutical ecosystem.
The majority of these approvals involved small-molecule drugs, followed by biologics. Oncology remained the leading therapeutic area, accounting for over a third of all approvals, with a heavy emphasis on treatments for non-small cell lung cancer — a reflection of China’s ongoing battle with high smoking rates.
Other therapeutic areas that saw notable activity included cardiovascular and metabolic conditions (18% of approvals), as well as rare diseases (10%). New treatments for Alzheimer’s disease — such as donanemab and lecanemab — marked important breakthroughs in neurology. However, immunology still lags behind, with historically low success rates for drug development in that field.
Foreign pharmaceutical firms dominated the approval charts, contributing to 50 of the 84 new products authorized in China. Nevertheless, local companies are catching up, securing 34 of the total approvals. The influx of global firms and the rising capability of domestic manufacturers highlight China’s increasing importance as both a production hub and a strategic market for pharmaceuticals
However, while the number of drug approvals has surged, reimbursement levels for many of these therapies remain limited. As pricing pressures mount, companies are being forced to weigh market access against profitability, with some choosing to forgo NRDL inclusion in favor of higher pricing through alternative channels like commercial insurance or direct-to-consumer sales.
Conclusion
China’s pharmaceutical regulatory environment is undergoing rapid and multifaceted change. From the expansion of public reimbursement to new pathways through commercial insurance and increased scrutiny of product quality, the reforms aim to balance innovation, affordability, and patient access. At the same time, initiatives to modernize drug evaluation and sales practices are creating a more transparent and internationally aligned system.
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.