Over 150 Medical Device Companies Face Price Cuts in Shandong's Multi-City Alliance Tender: Johnson & Johnson, MicroPort, Weigao Among Participants

Multiple Well-Known Medical Device Companies Face Price Slashing

On November 3, the Dezhou Municipal Healthcare Security Administration released the "Announcement (II) on the Centralized Volume-Based Procurement of Selected Medical Consumables by the Zibo-Qingdao-Dongying-Yantai-Weihai-Binzhou-Dezhou Seven-City Procurement Alliance" (hereinafter referred to as the "Announcement"), announcing that on-site price negotiations for the volume-based procurement of selected medical consumables by the seven-city procurement alliance would be held on November 14.

The products included in the volume-based procurement are primarily divided into two categories: orthopedic trauma and hemodialysis. Among these, the orthopedic trauma products specifically include conventional bone plates, locking bone plates, and intramedullary nail systems, with a total procurement quantity of 118,000 units.

Hemodialysis products specifically include hemodiafilters, high-flux hemodialyzers, low-flux hemodialyzers, disposable dialysis care kits, disposable dialysis care kits (catheter care), hemodialysis concentrate, and disposable blood tubing sets for dialysis (compliant with arterial pressure monitoring, equipped with waste fluid bags and infusion sets). The total procurement quantity is 5.773 million units.

According to a review by Saibailan Devices, the number of medical device companies participating this time exceeds 150, including:

Orthopedic trauma products involve medical device companies such as Johnson & Johnson, Stryker, Smith & Nephew, Shanghai MicroPort, Shandong Weigao, Double Medical, Beijing Libeier, Shanghai Sanyou, and Zimmer Biomet.

Hemodialysis-related products involve medical device companies such as Fresenius, Shandong Weigao, Jiangxi Sanxin, Henan Tuoren Medical, and Jiangxi Hongda.

Prior to this, on October 14, the Zibo Municipal Healthcare Security Administration of Shandong Province released the “Volume-Based Procurement Plan for Selected Medical Consumables by the Seven-City Procurement Alliance,” which indicated that all public medical institutions at secondary level or above conducting hemodialysis and orthopedic trauma services in the seven cities (seven cities for hemodialysis, five cities for orthopedic trauma) would participate in this alliance-based volume procurement.

In accordance with the aforementioned plan, the on-site price negotiation will be conducted in two rounds. In the first round, the review and bidding committee will determine the list of candidate products by comprehensively evaluating factors such as clinical efficacy and price reasonableness.

In the second round of review, the bidding group conducted a comprehensive assessment of enterprises’ production capacity, product coverage, price reduction magnitude, and the risk of medical institutions changing their consumable usage habits. Representative products were scored and ranked according to the second-round scoring rules, and proposed selected products were determined in descending order of scores.

Furthermore, medical institutions in the seven cities participating in the alliance procurement must strictly adhere to the policy requirement of completing payment for goods by the end of the second month following the date of delivery and acceptance of the selected consumables, ensuring timely settlement of payments.

Once dropped below 40 yuan

The aforementioned requirements stipulate that shortlisted enterprises shall submit quotations based on the product specifications and models announced in the notice. The quotation shall include all costs, such as product taxes and design fees, and must not be lower than the cost price.

The quotation shall reflect the cost savings achieved through the procurement by the Seven-City Procurement Alliance and shall not exceed the lowest supply price of the same product category offered by the enterprise to medical institutions in Shandong Province from January 1, 2019, to August 31, 2020.

For hemodialysis-related products included in this volume-based procurement, certain regions have already completed the procurement process and announced the prices.

In June this year, the Medical Insurance Bureau of Nan'an District, Chongqing Municipality, issued the "Notice on Publicizing the Proposed Winning Bidders for the Centralized Volume-Based Procurement of General Medical Consumables in Nan'an District, Chongqing." The price negotiations for this volume-based procurement involved products such as hemodialyzers (including blood dialysis devices with circuit tubing, etc.).

Among the published prices for medical consumables, hollow-fiber dialyzers for hemodialysis are categorized into domestically produced and imported types, as shown in the figure below:

At the unit price of the first selected enterprise:

Domestic Suzhou Junkang low-flux hollow fiber dialyzer: 35 yuan; imported Fresenius low-flux hollow fiber dialyzer: 73.2 yuan;

The price of the domestically produced Suzhou Junkang high-flux hollow fiber dialyzer is 47 yuan, while the imported Nipro high-flux hollow fiber dialyzer is priced at 110 yuan.

Based on the two types of consumables mentioned above, the prices of domestically produced products are 49.7% and 42.7% of those of imported products, respectively. In addition, only imported brands of hemofilters were included in the selection.

A relevant person in charge of the hemodialysis consumables sales department at a well-known medical device company once stated to Saibailan Medical Devices that the differences between domestically produced and imported consumables are mainly reflected in dialyzers and hemofilters, as these products involve certain technical thresholds in the fiber spinning and membrane formation manufacturing processes.

For these products, the manufacturing principles and materials used by various medical device companies are similar, although some manufacturers may incorporate patented technical ingredients into the membrane materials. However, in terms of overall product quality, imported dialyzers and hemofilters may offer more consistent safety, efficacy, and patient compatibility (allergic reactions).

Price Reductions in Other Regions or Linked Areas

Following the price reductions in the seven-city alliance, other regions may align their prices with those established in this volume-based procurement.

On September 29, the Linyi Municipal People's Government released the "Notice of the Southern Shandong Economic Circle Public Medical Institutions Drug (Consumable) Procurement Alliance on Promoting the Coordination of City-wide Centralized Procurement Price Policies for Drugs (Consumables)," indicating that Linyi, Zaozhuang, Jining, and Heze have begun to advance the coordination of centralized procurement prices within the alliance.

From the date of issuance of the aforementioned notice, for the results of centralized volume-based procurement of pharmaceuticals (consumables) conducted by other prefecture-level city alliances within the province, after the joint research and determination of linked products by the alliance cities’ procurement consortium, public medical institutions in the alliance cities shall follow the bid for the same products with a volume not less than 50% of their annual usage.

Since 2019, for varieties that have undergone volume-based procurement at the municipal level within the province, if the winning enterprises intend to engage in price linkage, they may submit a written letter of intent to the lead hospital of the consortium purchasing alliance in the allied cities. The Southern Shandong Economic Circle Procurement Alliance will consolidate these submissions and select products proposed for price linkage based on factors such as clinical demand, the price levels of winning products in other cities within the province, and medical insurance payment standards.

A review indicates that Shandong Province has completed multiple rounds of volume-based procurement for medical consumables.

On May 9, the Zibo Municipal Healthcare Security Administration of Shandong Province issued the “Announcement on Joint Procurement of Medical Consumables by the Zibo-Qingdao-Yantai-Weifang-Weihai-Dongying-Binzhou Seven-City Pharmaceutical and Medical Device Procurement Alliance,” launching volume-based procurement for five products—syringes, urinary catheters, urinary catheterization kits, oxygen inhalation devices, and blood collection needles—covering a total of 19 specifications.

According to Luzhong Morning Post, the market price of an oxygen inhalation device from a certain manufacturer was ultimately RMB 46, which was negotiated down to RMB 12.9, representing a price reduction of 72%. On-site estimates indicated that the price of blood collection needles dropped by approximately 50%, with other product categories also experiencing significant price reductions.

In addition to the seven cities in Shandong, on July 25, 2019, the Joint Office for Drug and Medical Device Procurement of Qingdao, Zibo, Yantai, Weifang, and Weihai in Shandong Province jointly issued a price negotiation plan to conduct joint price negotiations for drug and medical device procurement across all public hospitals in these five cities.

On December 3, 2019, the Healthcare Security Administration of Weihai City, Shandong Province, announced that it would conduct negotiated pricing for 19 product specifications across three categories of general medical consumables: infusion sets, indwelling needles, and pre-filled catheter flush syringes.

The final average price reduction reached 60.93%, with the highest reduction for a single item at 86.5% and the lowest at 37.31%. Multiple products set new national lowest prices in joint procurement at the prefecture-level city level. Previously, imported products with persistently high prices saw an overall price reduction of over 50%.

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