Pfizer's Breast Cancer Drug Ibrance Slashes Price by 54% in China Amid Strategic Shift Away from National Reimbursement Drug List Toward Commercial Insurance

Author:Zhu Xueqi, Wu Yeting

On January 18, 2021, Pfizer announced that the price of its blockbuster breast cancer drug Ibrance (generic name: palbociclib) had been cut in half, dropping from RMB 29,799 to RMB 13,667 per bottle, a reduction of 54%. Concurrently with the price cut, Pfizer rapidly adjusted its previous patient assistance program, gradually discontinuing the charitable drug donation previously targeted at patients on subsistence allowances and those with low incomes.

For patients on medication, based on the common dosing regimen, Ibrance (palbociclib) 125 mg is taken once daily for 21 consecutive days, followed by a 7-day break, constituting a 28-day treatment cycle. Before the price reduction, the monthly treatment cost was approximately RMB 30,000; with charitable drug assistance programs, the monthly cost was around RMB 17,000. After the price reduction, the monthly treatment cost has further decreased to approximately RMB 13,000.

This marks the first price reduction for Ibrance since its market launch over two years ago, a timing that is particularly noteworthy: it comes more than three years before the expiration of Ibrance’s patent; less than one month before the announcement of the results of the 2020 National Reimbursement Drug List (NRDL) negotiations; less than 20 days after the domestic approval of Eli Lilly’s competing CDK4/6 inhibitor, abemaciclib tablets; and merely one month after the approval of Qilu Pharmaceutical’s palbociclib capsules, which became the first generic version of Ibrance in China.

Industry analysts note that, influenced by policies such as the national medical insurance negotiations and the centralized volume-based procurement, China’s pharmaceutical market will become increasingly complex. All foreign pharmaceutical companies are adjusting their strategic focus and gradually transforming their business models. “There may be a growing number of drugs, such as those from Pfizer, that are not included in the national medical insurance list but have proactively reduced prices, with significant price cuts.”

△ The new price of Ibrance following this adjustment took effect in mainland China on January 18, 2021

Prices of Star Anti-Cancer Targeted Drugs Halved

Ibrance has always been in the spotlight: as the world’s first cyclin-dependent kinase (CDK) 4/6 inhibitor, it represents a significant breakthrough innovation in the field of advanced breast cancer, filling the gap in targeted therapy for HR+/HER2- advanced breast cancer. Evaluate Pharma included Ibrance in its forecast of the top five oncology drugs by sales in 2024.

These accolades have also driven the drug’s global sales to climb by $1 billion annually, reaching nearly $5 billion in 2019.

In China, Ibrance has also demonstrated excellent performance. Since its launch in 2018, with no other products targeting the same pathway available on the Chinese market, competition came solely from indirect competitors (i.e., alternative treatment regimens). As a result, Ibrance received significant attention within Pfizer and was regarded by the industry as Pfizer’s flagship product in China, making it a highly sought-after brand among pharmaceutical sales representatives.

Bonuses are the most direct reflection. Industry insiders have learned that Pfizer’s medical representatives had a quarterly bonus cap of RMB 128,000 in 2020. Many representatives responsible for Ibrance were able to reach this cap, with annual salaries starting at RMB 300,000. One representative handling Ibrance in a fourth-tier Chinese city earned an annual income as high as RMB 500,000.

Ibrance is indicated for the treatment of hormone receptor (HR)-positive, human epidermal growth factor receptor 2 (HER2)-negative locally advanced or metastatic breast cancer, in combination with an aromatase inhibitor as initial endocrine therapy in postmenopausal women. This patient population is substantial in China.

The latest national cancer statistics released by the National Cancer Center in January 2019 show that new cases of female breast cancer account for 17.10% of all malignant tumors in women, ranking first among female malignancies. The annual incidence is approximately 304,000 cases, and 3%–10% of women present with distant metastasis at the time of diagnosis. Even among patients diagnosed at an early stage, 30%–40% may progress to advanced disease; after being diagnosed with advanced-stage breast cancer, the 5-year survival rate is only 20%.

Approximately 60% of breast cancer patients in China have HR+/HER2- disease. In response to Ba Dian Jian Wen, Pfizer China stated that the population of patients with advanced metastatic HR+/HER2- breast cancer requiring endocrine therapy exceeds 60,000. Treatment options for these patients are limited, with most receiving traditional chemotherapy or endocrine monotherapy. Access to targeted therapies remains low, and Ibrance currently reaches only nearly 20,000 patients.

Price is the most pragmatic consideration. Whether before or after the price reduction, patients’ primary concern in the face of high treatment costs remains: When will Ibrance be included in the national medical insurance coverage?

In 2019, Ibrance was included in the list of 128 drugs proposed for negotiation in the National Healthcare Security Administration’s drug reimbursement access negotiations, but the negotiation was unsuccessful. At that time, industry analysts attributed this outcome to Pfizer, the sole marketer of the originator drug Ibrance, noting that its dominant market position meant it would neither proactively reduce prices nor seek inclusion in the national reimbursement drug list.

In December 2020, the results of the new national medical insurance negotiations were announced, and Ibrance was still not included in the reimbursement list. The industry remained optimistic that there was a very high probability of Ibrance being added to the national medical insurance coverage in 2021.

Surprisingly, Pfizer did not wait for the 2021 National Reimbursement Drug List (NRDL) negotiations. Instead, less than a month after the announcement of the 2020 national negotiation results, it slashed the price of Ibrance by approximately 54%, a reduction even greater than the average 50.64% decrease seen in those national negotiations.

Regarding the reasons for the price reduction, Pfizer responded to Eight Point Health News: “This price adjustment is based on the goals of expanding access to high-quality innovative medicines, meeting patients’ urgent clinical needs, and helping patients alleviate their medical financial burden.”

Behind the emphasis on improving access to innovative drugs, price reductions appear to be an inevitable choice. A fundamental business logic is that for patented medicines such as Ibrance (palbociclib), patient accessibility and affordability significantly influence the drug’s commercial value. “If the price is set too high, even though a patient population exists, patients may not be able to afford it, making sales difficult and preventing the realization of corresponding commercial value,” said Fu Gang, Chairman of Baiyang Pharmaceutical, a third-party commercialization platform, in an analysis provided to Ba Dian Jian Wen.

The Timing of the Price Cut Is Thought-Provoking

Price reductions for originator drugs are not uncommon, but it is somewhat unusual given that Ibrance’s patent is still more than three years from expiration.

“Based on past experience, the drugs with significant price cuts by foreign pharmaceutical companies are mostly products that have been off-patent for a long time. There are also some that have just gone off-patent, but domestic generic drugs have already emerged, and not just from one company,” Shi Lichen, founder of Dingchen Consulting, told Ba Dian Jianwen.

As a targeted therapy for breast cancer, Roche’s trastuzumab (brand name Herceptin) was included in China’s National Reimbursement Drug List (Category B) in July 2017, with its price per box dropping from RMB 25,000 to RMB 7,600. The 70% price reduction drew significant attention. However, prior to its inclusion in the reimbursement list, trastuzumab’s patents had already expired in Europe and Japan in 2014 and in the United States in 2015, leading to a decline in sales beginning in 2015.

This is clearly different from the situation faced by Ibrance, whose sales continue to grow rapidly and steadily.

“This is a relatively specialized business decision. For every mature large enterprise, the commercialization of its products must be comprehensively considered based on national policies, the competitive landscape, its own production capacity, and the economic affordability of the consumers it serves.” Fu Gang analyzed that for an original research drug like Ibrance (Palbociclib), which has been listed in China for more than two years and is relatively exclusive, with high drug pricing and poor accessibility and affordability, pharmaceutical companies generally adopt a tiered price reduction strategy considering various comprehensive factors.

“Generally, originator drugs may need to cut prices by 70% to be included in the national reimbursement drug list. While this price reduction improves drug accessibility, pharmaceutical companies may face insufficient production capacity. Therefore, some companies choose to lower prices voluntarily first, waiting until production capacity is further expanded or other competitors emerge before applying for inclusion in the national reimbursement drug list,” judged Fu Gang.

2020 was a year when the established multinational pharmaceutical giant Pfizer regained significant attention. The COVID-19 vaccine it co-developed with BioNTech demonstrated impressive efficacy data, received approval in multiple countries, and commenced large-scale vaccination campaigns. On New Year’s Eve 2021, the World Health Organization (WHO) granted it the first Emergency Use Listing. However, in China, Pfizer had early on sold the commercial promotion rights and market interests for this vaccine to Fosun Pharma, meaning that all commercialization activities in China were no longer associated with Pfizer.

Meanwhile, competition in the market for targeted breast cancer therapies is intensifying. Currently, the FDA has approved three CDK4/6 inhibitors as targeted treatments for breast cancer: in addition to palbociclib, these include Novartis’ Kisqali (ribociclib), which received FDA approval in March 2017, and Eli Lilly’s abemaciclib tablets.

While the impact of new global products on China remains limited, the launch of direct competitors in the Chinese market may be a more critical factor.

This price reduction comes less than 20 days after the approval in China of Abemaciclib, a competing CDK4/6 inhibitor from Eli Lilly.

On December 31, 2020, Eli Lilly’s new breast cancer drug, abemaciclib tablets, was approved in China. This approval is widely regarded by the industry as significantly intensifying competition in the domestic CDK4/6 inhibitor market, undoubtedly breaking the previously dominant market position held solely by palbociclib.

In terms of indications, palbociclib and abemaciclib have overlapping indications; however, due to the absence of head-to-head studies, it is not yet possible to determine which agent demonstrates superior efficacy. Nevertheless, in the PALOMA-2 study evaluating palbociclib combined with letrozole as first-line treatment for postmenopausal women or men with breast cancer, the objective response rate (ORR) was 55.3%, and the median progression-free survival (mPFS) was 24.8 months. In contrast, in the MONARCH 3 study assessing abemaciclib combined with a nonsteroidal aromatase inhibitor as first-line treatment for women with breast cancer, the ORR was 62.5%, and the mPFS was 28.2 months. These figures are quite similar. In the future, these two CDK4/6 inhibitors are poised to engage in intense competition.

It is worth noting that abemaciclib also benefits patients with early-stage breast cancer. In May and October 2020, Pfizer announced the clinical trial failures of palbociclib capsules as CDK4/6 inhibitor adjuvant therapy to prevent recurrence in HR+/HER2- early-stage breast cancer.

If the target is early-stage breast cancer patients, abemaciclib will clearly have greater market competitiveness in the future.

“The pricing principles for patented drugs are primarily twofold: first, the competitive landscape, specifically the number of similar products available; and second, patients’ ability to pay and drug accessibility. This constitutes the fundamental business logic,” analyzed Fu Gang. From a competitive standpoint, the approval and imminent launch of Eli Lilly’s competing product may represent the most severe market challenge Pfizer has faced to date.

In addition to Eli Lilly’s direct competitor, abemaciclib, generic drugs have also become a “gray rhino,” threatening Pfizer’s domestic market. In December 2020, Qilu Pharmaceutical’s palbociclib capsules were approved, becoming the first generic version in China. Besides Qilu Pharmaceutical, Simcere Pharmaceutical also submitted a marketing application for this drug in May 2020. Additionally, there are 12 other companies with applications under review.

Although generic drugs could not be marketed and sold before the expiration of the Ibrance patent in 2023, Pfizer was already facing significant pressure.

From “Super-National Treatment” to Voluntary Price Reductions:

Changes in China's Domestic Environment Are a Major Constraint

“The golden age of foreign pharmaceutical companies is over”—this slogan may have been shouted for ten years.

Prior to this, with China’s reform and opening-up, a large number of multinational pharmaceutical companies flocked to China to “strike gold.” The rapidly growing demand for high-quality medicines in China presented a rare opportunity for foreign pharmaceutical manufacturers: while their patents had expired in the United States and strict price controls were in place in Europe, leading to declining sales, China remained an exception.

In the absence of competing domestic pharmaceuticals, Chinese patients facing shortages of medical resources and medications became heavily reliant on products from foreign pharmaceutical companies. As a result, these multinational firms enjoyed long-term “super-national treatment” in China—originator drugs could maintain high price premiums and substantial profits even after patent expiration. At one point, foreign pharmaceutical companies employed more sales representatives in China than in the United States, the world’s largest pharmaceutical market.

The separate pricing rights long enjoyed by original research drugs were not abolished until 2015, when documents issued by the National Development and Reform Commission, the National Health and Family Planning Commission, and the Ministry of Human Resources and Social Security replaced them with a market-based pricing mechanism.

The policy gap had been opened even earlier. In 2011, the National Development and Reform Commission (NDRC) adjusted the maximum retail prices for a batch of pharmaceuticals, covering 162 varieties and nearly 1,300 dosage forms and specifications, with an average price reduction of 21%. Under the pricing adjustment plan at that time, the NDRC revoked the separate pricing authority for 20 varieties, which were almost exclusively products of foreign pharmaceutical companies. The most significantly affected company was Pfizer, the world’s largest pharmaceutical enterprise, which lost separate pricing authority for four of its products. This marked the first time the NDRC had revoked separate pricing authority for pharmaceuticals, signaling to the market that price reductions were an irreversible trend. At that time, a price cut of around 20% was described by the media as a “significant price reduction.”

Once foreign pharmaceutical companies integrate into the market pricing mechanism, drug prices become directly linked to market competition. It is conceivable that if the capacity for independent innovation and R&D in China’s domestic pharmaceutical industry improves, and if the national new drug R&D and approval systems are further refined, the persistently high prices of foreign drugs can be broken through robust competition.

And the subsequent course of events indeed unfolded as such.

In 2015, the reform of the review and approval system for drugs and medical devices accelerated the approval and market launch of new drugs. In 2018, the establishment of the National Healthcare Security Administration, followed by the consistency evaluation of generic drugs, volume-based drug procurement, and the ongoing national reimbursement drug list negotiations, directly compelled enterprises to “exchange price for market share” through policy measures.

Foreign Pharmaceutical Companies in China Seem to Be Trapped in a Dilemma. With the rapid tightening of drug bidding policies, pressure from price reductions under medical insurance, the cancellation of preferential pricing policies that granted "super-national treatment," and the successive arrival of the "patent cliff" for original research drugs, foreign pharmaceutical companies are facing challenges in both pricing and market access.

“I returned to China ten years ago, when multinational pharmaceutical companies were quite ‘elegant.’ Now, the distinction between multinational and domestic firms is becoming increasingly blurred,” remarked a marketing director at a prominent multinational pharmaceutical company. In recent years, multinationals have abandoned their genteel approach, as the profitability window for new drugs has shortened considerably. Shortly after a new drug enters the Chinese market, domestic companies quickly launch generic or similar products, necessitating rapid market capture and efficient optimization of the product’s lifecycle. “Due to continuous changes in national policies over the past few years, multinational pharmaceutical companies have undergone significant adjustments to their sales structures. The era of earning easy profits by relying on traditional business models is long gone.”

After successive rounds of negotiations and practical validation, foreign pharmaceutical companies have gradually come to recognize the reality: “Price wars are not a standard strategy for foreign firms, as they fundamentally cannot reduce their prices to the level of domestically produced drugs.” There are many reasons why it is impossible to lower prices to match those of domestic products. Fu Gang explained that this is not only due to the higher costs of the products themselves, but also because multinational corporations must consider their global pricing systems; if prices fall below the global average, there is a risk of drug parallel imports flowing back into other countries.

Based on the outcomes of the 2020 volume-based procurement and national reimbursement drug list negotiations, foreign pharmaceutical companies appear to have reached a consensus: strategically forgoing inclusion in the national medical insurance scheme, withdrawing from the hospital market, and shifting their competitive focus to the out-of-hospital market.

Foreign companies have not refrained from attempting price wars; rather, the outcomes were too devastating.

In early 2020, the second round of China’s national volume-based drug procurement bidding opened. For the drug acarbose, Bayer, the originator manufacturer, won the bid with the lowest price of RMB 0.1807 per tablet, representing a 78.4% price reduction. This prompted a representative from Beijing Fuyuan, a domestic pharmaceutical company producing a similar product, to shout “unfair competition” at the bidding site. However, Bayer’s 2020 semi-annual report showed that acarbose generated sales revenue of €15.6 billion in the first half of the year, a year-on-year decrease of 54.4%. Revenue in the second quarter amounted to €4 billion, a year-on-year decline of approximately 74%. In contrast, some multinational pharmaceutical companies that did not win the bids actually experienced growth in sales.

When the third batch of China’s national volume-based drug procurement was opened in August, foreign pharmaceutical companies largely adopted a “participation-for-the-sake-of-participation” stance, with some submitting bids far above the price ceilings, which the industry viewed as a “disguised withdrawal from bidding.” The same pattern emerged in the year-end national reimbursement drug list (NRDL) negotiations: foreign pharmaceutical companies with PD-1 inhibitors had essentially prepared for the likelihood of exclusion prior to the negotiations. In the end, the three domestically produced PD-1 inhibitors that participated in the negotiations achieved a resounding success. Xiong Xianjun, Director of the Pharmaceutical Services Department of the National Healthcare Security Administration, revealed in an interview with CCTV that “the price reductions for these three products were substantial, averaging around 80%.”

Furthermore, for multinational pharmaceutical companies like Pfizer, which produces the high-priced originator drug Ibrance (palbociclib), the National Healthcare Security Administration’s implementation of Diagnosis-Related Groups (DRG)-based payment has further intensified challenges in the hospital market. “Under bundled payment systems, it becomes difficult for high-priced drugs to be included in medical insurance reimbursement pathways,” analyzed Shi Lichen. “The hospital market is largely regulated by policy and can be considered a policy-driven market. Price reduction is a major trend, and companies must align their strategies with national drug procurement policies.”

For these foreign-funded enterprises, this is a rational decision made after assessing the situation: by not joining the National Reimbursement Drug List (NRDL), they avoid losing pricing power in the out-of-hospital market. “In negotiations such as volume-based procurement, they are abandoning their original channels and focusing primarily on the retail market. Through the retail channel, they aim to maintain brand value and achieve reasonable returns. They are also disbanding teams previously dedicated to hospital promotion and redirecting more resources toward the marketing of innovative drugs. This is currently a common strategy adopted by many foreign-funded enterprises,” analyzed Fu Gang.

Strategically Abandoning Public Health Insurance to Pivot Toward Commercial Insurance

Foreign Pharmaceutical Companies Adjust Business Models

In addition to price reductions, online pharmacies such as JD.com have also launched the retail sale of Ibrance.

Previously, the original research drugs of many foreign-funded enterprises, including targeted drugs, were mainly sold through hospitals. Among these, public hospitals accounted for the majority.

In recent years, influenced by policies such as the National Reimbursement Drug List (NRDL) negotiations and centralized volume-based procurement (VBP), multinational pharmaceutical companies like Pfizer have been adjusting their business models. They are strategically opting out of significant price reductions required for NRDL inclusion, thereby deprioritizing the hospital-based market they represent, and placing greater emphasis on the out-of-hospital retail and online internet markets. Some foreign pharmaceutical companies have even merged their previously separate market access teams—responsible for NRDL negotiations and commercial insurance—into a single unit.

The signs were already evident. At the Shanghai China International Import Expo (CIIE) last November, the most notable difference from previous years was that, in addition to the launch of new product series and patient education activities, signing ceremonies for collaborations with internet healthcare companies were staged one after another on the exhibition platforms of major pharmaceutical companies.

Beyond the out-of-hospital market, multinational pharmaceutical companies that have faced setbacks in national reimbursement drug list (NRDL) negotiations are also attempting to enhance drug accessibility and affordability through commercial insurance.

In January 2019, Pfizer integrated commercial insurance into the payment framework for breast cancer treatment by launching a therapeutic payment scheme titled “Bo’ai Xin’an – Medical Expense Reimbursement Program for Breast Cancer Patients.” Eligible breast cancer patients who meet the specific criteria of the “Bo’ai Xin’an” program, upon successful application and approval, will be reimbursed 33.5% of the cost of Ibrance (palbociclib) if disease progression or metastasis occurs within the first 126 days after initiating treatment with Ibrance and an aromatase inhibitor, provided this occurs within four months of enrollment in the program.

The project is planned to cover 34 cities in China. However, the protocol stipulates that only patients who have not previously received first-line endocrine therapy are eligible to apply for enrollment in the program. Patients must enroll within 28 days of initiating Ibrance (palbociclib) treatment. The enrollment is capped at 500 participants, thereby limiting the number of patients who can benefit.

In cities such as Zhuhai, Shenzhen, Foshan, and Suzhou, Ibrance has been gradually included in local government-led supplementary medical insurance for major and critical illnesses as well as commercial insurance in recent years.

In its response to Ba Dian Jian Wen, Pfizer also stated that, as an effective supplement to medical insurance, it will continue to actively collaborate with commercial insurance companies to explore the inclusion of Ibrance in commercial insurance plans in more cities.

Will future new foreign-funded drugs entering China see direct price reductions? A marketing head from a well-known foreign pharmaceutical company believes they will not. “The more this happens, the less room there is for price cuts upon entry; otherwise, countless subsequent drugs would require reductions, leaving no margin for further decreases. If it’s an original research drug, the initial price will certainly remain high, but it will adjust according to changing circumstances.”