National Volume-Based Procurement Drives Industry-Wide Drug Price Reductions

　　【Pharmaceutical Network Market Analysis】 Under the normalization of centralized procurement, the downward trend in drug prices has become an inevitable industry trend. Pharmaceutical companies' voluntary price reductions are both a response to market dynamics and the result of the combined effects of platform-listed price supervision and the credit evaluation system. Recently, multiple regions have issued announcements regarding voluntary drug price cuts.
 

For example, on September 16, the Sichuan Provincial Drug and Medical Device Bidding and Procurement Service Center published information on the voluntary price reductions of 110 drugs, involving volume-based procurement and price linkage products from 64 pharmaceutical companies. The price reduction list includes drugs from multiple pharmaceutical enterprises such as Innovent Bio, SINOVAC, Qilu Pharmaceutical, Chia Tai Tianqing, Guangzhou Baiyunshan Pharmaceutical Holdings Company, China National Pharmaceutical Group Corporation, Simcere, Yangtze River Pharmaceutical Group, Shandong E-hua Biotech Pharmaceutical Co., Ltd., BRILLIANT PHARMACEUTICALS, Hunan Sailong Biopharmaceutical Co., Ltd., Shanghai Pharma, and Suzhou Genemen Biotech. Co., Ltd.
 

On August 10, the Liaoning Provincial Centralized Procurement Network for Drugs and Medical Consumables issued the 《Notice on Implementing the Results of Voluntary Price Reductions for 440 Drugs Including Pemetrexed Disodium for Injection》. The document stated that the Provincial Public Resource Trading Center had received applications from enterprises including Yangtze River Pharmaceutical Group Jiangsu Yangtze River Pharmaceutical Trading Co., Ltd., CSPC Ouyi Pharmaceutical Co., Ltd., and Hainan Lingkang Pharmaceutical Co., Ltd. for the voluntary price reduction in Liaoning Province of 440 drugs they had submitted for bidding. In accordance with the 《Implementation Plan for Centralized Procurement of Drugs by Medical Institutions in Liaoning Province》, approval has been granted to adjust the platform-listed procurement prices for the aforementioned products.
 

On July 27, the Hunan Provincial Public Resources Trading Center issued the 《Public Notice on the Adjustment of Online Listing Prices for Certain Drugs》. According to the notice, a total of 20 product specifications applied for price reductions. Among them, the price of Xi'an Janssen's Daratumumab Injection (Specification: 400mg/20ml) was reduced from RMB 19,710 to RMB 8,512.4, and the 100mg/5ml specification was lowered from RMB 5,460 to RMB 2,358, marking a price cut of up to 56.8%.
 

Furthermore, the Shaanxi Provincial Drug Centralized Procurement Platform and the Heilongjiang Centralized Procurement Network have also successively issued notices indicating that they have received voluntary price reduction applications from multiple pharmaceutical companies. These involve several imported originator drugs, including sodium zirconium cyclosilicate powder for hyperkalemia and ustekinumab for psoriasis, with price reductions ranging from 30% to 50%.
 

Faced with the voluntary price cuts by numerous pharmaceutical companies, it is evident that a price war in the drug market has already begun. Analysts point out that the decision by pharmaceutical enterprises to lower prices during this period may be related to factors such as corporate development strategies and adjustments to the medical insurance catalog. Meanwhile, behind these proactive price reductions lies the increasingly stringent regulatory oversight of platform-listed prices by provincial tendering and procurement agencies.
 

For example, on August 13, the Sichuan Provincial Drug and Medical Device Bidding and Procurement Service Center released the “Specifications for Price Monitoring of Platform-Listed Drugs on the Sichuan Provincial Drug and Medical Device Centralized Procurement and Medical Price Regulatory Platform.” The prices of all products listed on the Sichuan provincial platform shall be included in the scope of price monitoring for platform-listed drugs, including volume-based procurement drugs, price-linked procurement drugs, and record-filing procurement drugs.
 

In accordance with the above specifications, taking each listed product as the unit, its listed price shall be compared with the average procurement price over the past three years for products from the same manufacturer, with the identical drug name and dosage form. Products exhibiting a price increase of less than 50% (excluding 50%) will be classified as Green Zone prices; those with a price increase between 50% (inclusive) and 100% (exclusive) will be classified as Yellow Zone prices; and those with a price increase exceeding 100% will be classified as Red Zone prices. Furthermore, monitoring data will be compiled into monthly reports, submitted on schedule to the Provincial Healthcare Security Administration and the Provincial Commission for Discipline Inspection and Supervision, and specifically pushed to the involved medical institutions. This also implies that listed products from pharmaceutical enterprises, if flagged with Red Zone or even Yellow Zone prices, are highly likely to be rejected.
 

Strict price regulation will lead to more reasonable drug pricing, while non-compliant entities will naturally face corresponding penalties. For example, during Hunan Province's first round of "inter-provincial price linkage" this year, 13 pharmaceutical companies were rated as having "general dishonesty" by the Hunan Provincial Centralized Drug Procurement Platform for failing to truthfully report the lowest procurement platform-listed prices from other provinces. Additionally, in Shaanxi, multiple enterprises had their price-capped listed products penalized for violating the requirements of the *Implementation Plan for the Dynamic Adjustment of Sunshine Listing of Drugs at the Shaanxi Provincial Public Resource Trading Center*. The plan stipulates that "for products within the price-capped listing catalog, if a new national lowest price emerges, the listing manufacturer must report it to the provincial platform within one month from the effective date of the new price. Any failure to report promptly or truthfully, once verified, will result in the cancellation of the product's listing qualification and a record in the enterprise's credit archive, with no product applications accepted for one year." Consequently, these companies had their listing qualifications revoked and were recorded in their corporate credit archives.
 

Given the nearly uniform demand for price reductions on centrally procured drugs across various regions, as national centralized procurement continues to advance amid intensifying market competition, price reduction will become an inevitable trend for all pharmaceutical companies, regardless of whether they win the bid. In this regard, industry experts believe that, in line with the healthcare reform schedule and the numerous reform-oriented policy documents issued, a growing number of pharmaceutical companies will likely adopt this strategy successively in the future, proactively seeking price cuts in more cities to expand their market coverage.