NHSA Fast-Tracks China's First Category C Drug List to Expand Commercial Funding for Innovative Medicines

The National Healthcare Security Administration (NHSA) is accelerating the development of China’s first-ever Category C Drug List, with a draft proposal expected to be open for public consultation in the coming months. This initiative marks China’s first national-level drug catalog funded by commercial insurance, aiming to create new payment pathways for clinically necessary, high-cost innovative medicines that do not currently qualify for basic medical insurance (BMI) reimbursement.

1. What is the Category C Drug List?

NHSA maintains a Basic Medical Insurance (BMI) Drug List, which is updated annually and includes drugs that meet "basic coverage" criteria, such as clinical necessity, safety, and cost-effectiveness.

Currently, drugs on the BMI Drug List are classified into:

• Category A: Essential, widely used, and cost-effective medicines that are fully covered, with patients only responsible for standard copayments.
• Category B: Effective but higher-cost medicines requiring partial out-of-pocket payment before insurance reimbursement applies.

Historically, drugs not covered by BMI were informally referred to as Category C drugs, meaning patients had to pay the full cost out-of-pocket. The newly proposed Category C Drug List is intended to supplement the BMI Drug List, incorporating high-value, innovative medicines that do not meet BMI’s “basic coverage” criteria but offer significant clinical benefits.

2. How Will Category C Drugs Be Covered?

NHSA plans to integrate qualified commercial health insurance into the reimbursement system for Category C drugs, providing incentives for insurers to include them in their coverage.

To guide this process, NHSA has enlisted academic experts to draft the selection criteria. A preliminary version is under review, and a public consultation draft is expected soon.

Expected Selection Criteria

• Priority will be given to high-cost, innovative drugs, such as rare disease treatments and therapies with novel mechanisms of action.
• Drugs already covered under BMI (e.g., multiple PD-1 inhibitors) are unlikely to qualify for the Category C list.
• Pharmaceutical companies will apply for inclusion, followed by evaluation and potential price negotiations before final selection.

Early speculation suggests the initial Category C list may include around 20 drugs.

3. Implementation and Pricing Mechanisms

Insurance companies will play a central role in determining pricing and reimbursement, negotiating directly with pharmaceutical firms under NHSA’s oversight. Strict price confidentiality measures will be explored to ensure fair pricing.

The first Category C list is expected to align with China’s 2025 national drug reimbursement negotiations. This means pharmaceutical companies may soon face a choice:

• Apply for BMI inclusion (Category B) through national negotiations, or
• Seek Category C listing, leveraging commercial insurance as an alternative funding source.

4. Timeline and Policy Adjustments

To support Category C implementation, NHSA is adjusting the annual BMI Drug List update schedule:

• Starting in 2025, applications for BMI inclusion will open on April 1, with the goal of finalizing adjustments by September.
• This timeline change allows insurers time to design products, conduct actuarial assessments, and integrate Category C drugs into their plans.

To encourage hospital adoption, NHSA will optimize reimbursement policies, ensuring that Category C drugs:

• Are excluded from out-of-pocket expense ratio calculations for insured patients.
• Are exempt from volume-based procurement substitution monitoring when alternative drugs are available.
• Are reimbursed under a fee-for-service model rather than bundled into disease-based payment schemes (DRG/DIP) for qualified cases.

Conclusion

The Category C Drug List marks a transformative shift in China’s healthcare financing, leveraging commercial insurance to expand access to high-value, innovative therapies. By fostering collaboration between public health authorities, pharmaceutical firms, and insurers, this initiative aims to create new funding pathways while promoting a more sustainable pricing environment for breakthrough medicines.

However, its success will depend on transparent selection criteria, fair pricing strategies, and broad market adoption. Striking the right balance between insurers, pharmaceutical companies, and patients will be critical to ensuring that innovative therapies remain accessible, commercially viable, and financially sustainable in the long run.

To help global life sciences firms navigate this evolving landscape, NRDL+ is launching a dedicated discussion series covering key topics such as:

✅ The role of the Category C Drug List in China’s multi-tier medical security system
✅ Selection criteria for Category C drugs
✅ The relationship between the Category C Drug List and the NRDL, and its impact on Huiminbao’s existing specialty drug catalog
✅ What is the current state of commercial insurance reimbursement for innovative drugs, and what is needed for the effective rollout of Category C Drug List-linked coverage?
✅ Drug pricing strategies for Category C drugs
✅ Potential policy challenges and implementation hurdles

📢 Interested in joining? Sign up for the waitlist here:
🔗 NRDL+ Category C Drug List Discussion Series

References:

1. The Future of Innovative Medicine Pricing and Reimbursement in China: Signals from the 2024 NRDL Negotiations, NRDL+ Newsletter, 1-2-2025, https://www.nrdlplus.com/the-future-of-innovative-medicine-pricing-and-reimbursement-in-china-signals-from-the-2024-nrdl-negotiations/
2. 药品丙类目录将至，据传征求意见稿近期出炉，业界热议入选标准, 第一财经, 2024-12-26, https://www.yicai.com/news/102418117.html
3. 药品丙类目录箭在弦上，遴选标准已有初版方案，创新药企“又爱又怕”, 健闻咨询, 2025-1-9, https://www.phirda.com/artilce_37591.html?module=trackingCodeGenerator
4. 首版丙类药品目录年内发布，如何影响国内医药行业？, 澎湃新闻, 2025-2-2, https://www.chinanews.com.cn/jk/2025/02-02/10362430.shtml