China to use drug bulk-buy program to close price gap

Asia Business World

BEIJING: China will use its national drug bulk-buy scheme to lower the price of drugs currently sold at higher prices compared with other markets, it said in an official statement.

The move could force international drugmakers to further cut prices and enable copycat medicines to replace imported off-patent brands at faster pace.

Many branded versions of drugs are currently more expensive in China than in other major markets. They could now be subjected to a centralized procurement program where manufacturers will have to go through a bidding process to get the right to supply drugs to public hospitals, the National Health Commission said in a document published on late Friday (Nov 29).

The bulk-buy program, which currently covers 25 types of medicines, allows no more than three successful bidders access to China’s public hospitals, where most Chinese people buy their drugs.

The program caused the price of some drugs to plunge more than 90 per cent when it was introduced last year in some cities, state news agency Xinhua said.

Multinational drugmakers usually cut the price of drugs when they go off-patent and face competition from generic versions, but such price drops were slow to happen in China, partially because many local drugmakers were unable to develop high-quality generic drugs to compete with off-patent branded drugs.

In the first round of nationwide implement of the program, in September, multinationals including Sanofi and Eli Lilly managed to cut some prices low enough to levels close to those offered by local generic makers.

Beijing will strengthen its monitoring of overseas drug market and collect global prices for imported medicines, Friday’s guideline said.

The government is leveraging its large patient population to push non-domestic drugs companies to cut prices to their lowest level globally.

Most foreign drugmakers offered Beijing the lowest prices globally in a recent round of negotiations in order to get some of their new products included in national insurance program, a move that will help them gain access to more patients in less-affluent cities, officials said on Thursday.

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