China’s Commercial Insurance Catalog Accelerates Expanding Beyond Category C Drug List

With the NHSA’s anticipated launch of the Category C drug list driving industry-wide discussions, efforts to establish a standardized commercial insurance drug catalog have rapidly gained traction.

Led by the Insurance Association of China (IAC), a key industry self-regulatory body, this initiative builds on the association’s previous groundwork, including the release of Standards Setting and Long-term Development of Commercial Health Insurance Formularies (March 2022) and Methodological Exploration for Developing Commercial Health Insurance Formularies: Phase II Project (May 2023). Now, the IAC is accelerating its efforts, aiming to introduce a preliminary formulary in the first half of the year, followed by model policy terms by year-end—significantly ahead of the expected Category C list launch in September.

Beyond expanding commercial funding, this industry-led initiative seeks to standardize coverage, create a multi-tiered access framework, and enhance insurers' bargaining power in negotiations with manufacturers. But how will this initiative interact with NHSA’s Category C drug list? And what factors will determine the success of these distinct funding pathways?

China’s Commercial Health Insurance Drug Formularies: Current Landscape

China’s commercial health insurance market consists of two main product categories:

• Disease Insurance (e.g., critical illness insurance): Representing approximately 50% of premium income in 2023, these policies provide a lump-sum payout upon the diagnosis of a major illness. With most policyholders under 45 and a low immediate claims frequency, they function more as financial protection than direct medical expense coverage.
• Medical Insurance (e.g., million-yuan medical plans, Huiminbao, group supplementary policies): Accounting for about 40% of premium income, these policies reimburse actual medical expenses and have a significantly higher claims frequency, with an industry claims ratio of around 70%. They serve as the primary commercial insurance mechanism for expanding access to high-value innovative drugs and medical devices.

The rapid growth of medical insurance premiums suggests it may soon surpass disease insurance in market share, further solidifying its role in funding innovative treatments within China’s multi-tier healthcare system.

Originally, commercial medical insurance simply distinguished between drugs covered or not by public insurance, reimbursing costs based on deductibles, co-payments, and coverage limits. Over the past five years, insurers have introduced drug formularies to facilitate outpatient and pharmacy reimbursements. However, the lack of a standardized formulary has led to unclear coverage boundaries and frequent claims disputes.

Moreover, these policies remain largely reactive, operating as post-event reimbursement systems rather than proactively managing medical risks beyond public insurance catalogs or negotiating drug prices within the pharmaceutical supply chain. Without effective cost-control measures, most policies—except for Huiminbao—focus on screening for healthy individuals to minimize payouts. This approach limits their ability to pool payment volume, ultimately reducing their overall impact and value.

The Industry-Led Commercial Insurance Drug Catalog

On February 19, the Insurance Industry Association convened a meeting to align the industry toward a standardized, coordinated approach to catalog development. Then, on February 23, major insurers—including New China Life, Taiping Life, Ping An Health Insurance, People’s Insurance Life, People’s Insurance Property, Taikang Life, PICC Health, and China Re Life—announced their commitment to actively shaping the catalog.

This initiative aims to reduce fragmentation, expand access, and enhance financial sustainability for commercial health insurance.

Industry-Wide Collaboration to Standardize Coverage

Previously, insurers developed their own independent drug lists, leading to inconsistent coverage and frequent claims disputes. Now, the industry is working together to harmonize drug coverage, improve transparency, and reduce consumer confusion by establishing a standardized catalog. Additionally, pooled industry resources can strengthen negotiating power with pharmaceutical companies, improving cost efficiency and ensuring broader drug access.

A Multi-Tiered System to Expand Access

The catalog will introduce a structured, tiered framework that differentiates commercial insurance from basic public insurance. As public medical insurance remains constrained in covering high-cost, innovative treatments, commercial health insurance is stepping in—particularly to serve mid-tier medical needs and provide access to drugs excluded from public reimbursement programs.

• High-End Insurance: It covers global medical networks and advanced therapies without restrictions from public health insurance.
• Mid-tier medical insurance (2024 trend): Designed to cover branded and innovative drugs, with annual premiums ranging from 1,000 to 3,000 RMB, incorporating more innovative medicines.
• Inclusive insurance products (e.g., Million Medical Insurance, Huiminbao): Annual premiums range from tens to several hundred RMB, covering certain specialty drugs not included in public insurance. As of 2023, over 168 million people were enrolled.

Ping An Health’s proposed “ABCDE” tiered catalog is a key example, which aligns coverage levels with different insurance products. At the basic level, Huiminbao (Tier A) offers narrow drug coverage, while Million Medical (Tier B) expands access to specialty drugs. Higher tiers (C–E) provide broader global drug access and personalized treatment options.

Strengthening Negotiation Power and Risk Management

The standardized catalog serves as a critical link between insurers and the pharmaceutical industry, helping to:

• Improve pricing strategies by setting clearer benchmarks for reimbursement.
• Enhance insurers’ bargaining power in negotiations with drug manufacturers.
• Enable risk-sharing mechanisms that improve the financial sustainability of commercial health insurance.

Additionally, by integrating claims data and drug usage patterns, insurers can better assess risk, optimize product offerings, and reduce adverse selection, creating a more stable and scalable funding model for innovative medicines.

Contrasting NHSA’s Category C Drug List and the Industry-Led Commercial Insurance Drug Catalog

While both initiatives aim to expand access to high-cost drugs, the NHSA’s Category C drug list and the industry-led commercial insurance catalog serve distinct roles.

The Category C Drug List focuses on high-cost, clinically essential innovative drugs that are too expensive for inclusion in the NRDL. Early indications suggest its initial integration will be with all-inclusive commercial health insurance products like Huiminbao, primarily benefiting individuals already enrolled in basic medical insurance through their personal accounts.

In contrast, the industry-led commercial insurance drug catalog is designed for comprehensive, multi-tiered coverage to address diverse healthcare needs. Rather than focusing solely on clinically essential drugs, it offers broader access, including originator drugs, as DRG/DIP and VBP procurement reshape the market. Unlike the Category C list, which targets innovative medicines with few alternatives in the public insurance catalog, the commercial insurance catalog is built around tiered benefit designs driven by consumer affordability and market demand.

Key Success Factors

The success of both initiatives will depend on how effectively commercial insurance can expand its capacity to fund innovative drugs while ensuring long-term financial sustainability.

Huiminbao-style inclusive insurance has played a critical role in increasing payment volume due to its broad eligibility, including coverage for individuals with pre-existing conditions. However, its financial capacity remains limited when it comes to high-cost innovative medicines. On the other hand, insurance products that restrict coverage to healthy individuals—without robust risk control mechanisms—fail to meaningfully expand access to innovative treatments for those who need them most.

Beyond funding constraints, structural barriers in China’s healthcare system also shape market uptake. Approximately 90% of drugs are distributed through hospitals and village clinics, with 64% of licensed doctors employed by public hospitals. Strict policy mandates often limit prescribing flexibility within these institutions, underscoring the need for targeted policy measures to ensure broader adoption of both funding models.

To help global pharma navigate how these developments will reshape funding pathways, pricing strategies, and market access for innovative drugs in China, NRDL+ is launching a dedicated discussion series. Join the growing group of global pharma and consulting leaders already signed up—secure your spot on the waitlist today:

🔗 NRDL+ Category C Drug List Discussion Series

References:

1. 中国保险行业协会组织召开商业健康保险工作座谈会, Insurance Association of China, 2025-2-19, https://www.iachina.cn/art/2025/2/19/art_22_108250.html
2. 商业健康保险与多层次医疗保障体系发展的几个核心问题, Shanghai Insurance Magazine, 2025-02-12, https://www.phirda.com/artilce_37841.html?module=trackingCodeGenerator
3. China's Commercial Health Insurance Formulary Development: Current State and Future Directions, NRDL+ Newsletter, 2024-6-12, https://www.nrdlplus.com/chinas-commercial-health-insurance-formulary-development-current-state-and-future-directions/
4. 商保药品目录提上议程！如何推动健康险破局转型?, 北京商报, 2025-02-23, https://baijiahao.baidu.com/s?id=1824855955541210207&wfr=spider&for=pc