Pudong Drug Pricing Pilot
#1 Pudong reform pilot permits new drug launch pricing comparable to international markets.
On January 22nd, a joint announcement was made by the General Office of the CPC Central Committee and the General Office of the State Council, unveiling the "Pudong New Area Comprehensive Reform Pilot Implementation Plan for 2023-2027."
This plan explicitly permits new biopharmaceutical products to set their prices by referencing those of comparable international drugs (link in Chinese), aiming to bolster innovation within the pharmaceutical and medical device sectors and potentially opening up new avenues for growth and development.
Yet, the enthusiasm is tempered by the anticipation of specific implementation guidelines needed to operationalize the policy.
A crucial concern among stakeholders is the precise definition of "reference international pricing"—whether it involves comparing retail prices or insurance reimbursement rates, focusing on exact figures, or the pricing methodology. With drug prices varying internationally, selecting a suitable benchmark is complex, raising questions about which countries' pricing strategies to follow and the potential for discounts. There's skepticism about matching prices with Western Europe and the U.S., with some suggesting alignment with middle-income countries' prices instead.
Additionally, the broad acceptance and application of this strategy within China are seen as currently limited due to affordability challenges.
#2 China's medical service pricing reform expands.
Three critical challenges related to the pricing of medical services in China include:
- Fragmented pricing governance and management, leading to significant regional disparities.
- Insufficient consideration of human care in developing medical service pricing, resulting in deviations from market value.
- A lack of alignment with technological innovation.
In response to these issues, following over two years of trial programs in five cities, the National Healthcare Security Administration (NHSA) has decided to extend these trials to three additional provinces (link in Chinese): Inner Mongolia, Zhejiang, and Sichuan.
The pilot programs have been dedicated to refining five principal mechanisms: controlling the overall budget, implementing a tiered pricing system with the capability for dynamic changes, focusing on output-oriented price management, and establishing comprehensive oversight procedures.
Over the last two years, the initial five pilot cities have carried out two phases of pricing adjustments using these new strategies. Previously undervalued but labor-intensive services, such as nursing, surgical, and traditional Chinese medicine services, have seen price increases. Conversely, the cost of diagnostic and testing services, which are heavily reliant on equipment and materials, has been reduced.
Yet, these preliminary outcomes have not produced a model that can be duplicated nationally. Expanding the program to include three provinces, in addition to the original five cities, is expected to enrich the learning experience.
Moving forward, the NHSA plans to directly oversee the three new provinces while continuing to support the original five pilot cities in refining and developing reform practices that can be adopted and implemented across the country.
#3 Tech and policy dual-push to accelerate prescription outflow from hospitals to Direct-to-Patient Pharmacies for Dual-Channel drugs
Slower prescription outflow from hospitals to Direct-To-Patient (DTP) pharmacies for dual-channel drugs is linked to hospital financial concerns and inadequate DTP pharmacy infrastructure.
To accelerate prescription outflow, in January 2023, the National Healthcare Security Administration and the Ministry of Human Resources and Social Security proposed that "by December 31, 2023, each province should establish an online prescription center."
These platforms make use of the national medical insurance information infrastructure and establish connections between BMI-designated hospitals and designated DTP pharmacies. Through the online platform, prescriptions written by physicians are automatically transmitted to the designated DTP pharmacies, which then fulfill the orders and receive payment from BMI simultaneously.
By July 18, 2023, 26 provinces had launched these platforms (link in Chinese), integrating 10,200 medical institutions (1.72% of the national total) and 66,300 retail pharmacies (13.7% of the national total).
In 2024, with the rollout of nationwide online prescription platforms, regulators may set performance metrics for hospitals and doctors to encourage or require their participation in prescription exchanges.
Further, several provinces, including Sichuan, Zhejiang, Qinghai, Shanxi, Guangdong, Heilongjiang, Chongqing, and Fujian, have released management directives for external prescription catalogs to standardize the behavior of public hospitals in dispensing prescriptions at DTP pharmacies.
For instance, Sichuan requires that public medical institutions of all levels and types should integrate external prescriptions into the hospital's pharmacy and therapeutics oversight (link in Chinese). As a principle, except for original innovator drugs not covered under the NRDL and 'dual-channel' drugs, the types and specifications of drugs already available in the institution should not be prescribed for external dispensing.
