National Cross-regional Traditional Chinese Medicine (TCM) Consortium Procurement Launches with 86 Cities and 9,547 Hospitals Participating in First-Ever Joint Purchase

Nineteen provinces, 86 cities, and 9,547 medical institutions have submitted procurement volumes exceeding RMB 10 billion (as of 12:00 on January 6). On January 6, with the opening bell rung at the Shandong Internet Traditional Chinese Medicine (Herbal Materials) Trading Center, the first joint centralized procurement initiative by the National Inter-provincial Alliance for Traditional Chinese Medicine (Herbal Materials) Procurement was officially launched. The alliance’s joint procurement covers various categories of traditional Chinese medicine (TCM), including TCM decoction pieces (including formula granules) and proprietary Chinese medicines. According to the procurement announcement released by the alliance on the same day, the initial phase of joint procurement focuses on TCM decoction pieces (including formula granules).

Leaders of the Shandong Provincial Committee of the Communist Party of China and the Shandong Provincial People’s Government Observed On-Site the Launch of the First Joint Procurement by the National Inter-Provincial Alliance of Traditional Chinese Medicines (Materials)

As the only nationwide, cross-regional procurement alliance for pharmaceuticals and medical consumables officially recognized and encouraged by the state, the Sanming Procurement Alliance (National) serves as a vital complement to national and provincial centralized procurement programs. On that day, the Sanming Procurement Alliance (National) conferred authorization upon the National Inter-Provincial Traditional Chinese Medicine (TCM) Materials Procurement Alliance to carry out regularized, cross-regional joint procurement of TCM materials. This initiative aims to help member provinces and municipalities establish a closed-loop TCM service system “from production sites to patients.” According to the plan, the alliance’s first joint procurement transaction will be completed in the first quarter of this year, enabling member provinces and municipalities to benefit from the results in the second quarter. At that time, residents in these regions will have access to high-quality, reliably sourced TCM products resulting from this joint procurement effort.

Zhan Jifu, Chairman of the Standing Committee of the Sanming Municipal People’s Congress and Chief Advisor to the Leadership Group of the Sanming Procurement Alliance (China), stated in his opening remarks at the launch of the joint procurement initiative: “The Inter-Provincial Traditional Chinese Medicine (TCM) Materials Procurement Alliance, jointly initiated by Shandong Province and 11 other provinces, autonomous regions, and municipalities, has joined forces with the Sanming Procurement Alliance (China) to undertake the joint procurement of TCM materials for the alliance. We look forward to the establishment of a high-quality, fairly priced joint procurement trading mechanism by the Shandong Internet TCM Materials Trading Center, thereby enhancing the quality and efficiency of the development of traditional Chinese medicine.”

Sanming Procurement Alliance (China) Awards Plaque to the National Inter-Provincial Traditional Chinese Medicine (Materials) Procurement Alliance

On that day, Li Ganjie, Secretary of the Shandong Provincial Committee of the Communist Party of China and Director of the Standing Committee of the Provincial People’s Congress; Zhou Naixiang, Deputy Secretary of the Provincial Party Committee and Governor of Shandong Province; key officials from Shandong’s 16 prefecture-level cities; and representatives from provinces and cities participating in the alliance were present to observe the launch of the alliance’s joint procurement initiative. Liao Jieyuan, Chairman of Shandong Internet Medical Insurance and Big Health Group and head of the Shandong Internet Traditional Chinese Medicine (Materials) Trading Center, provided an on-site briefing to leaders and guests on the construction and operational status of the trading center.

According to reports, to better serve and support the alliance’s joint procurement of traditional Chinese medicine (TCM) materials, the Shandong Internet TCM Materials Trading Center has leveraged its robust digital platform capabilities to establish five core systems: “quality control and traceability, quality insurance, volume-based price negotiation, transaction settlement, and smart pharmacy.” These initiatives aim to address numerous industry pain points in the circulation of TCM materials and promote the achievement of “quality assurance, grade improvement, and stable supply” for TCM materials across the alliance’s provinces and cities.

Schematic Diagram of the National Inter-Provincial Chinese Herbal Medicine (Materials) Procurement Alliance

The quality of traditional Chinese medicine (TCM) materials is a crucial guarantee for the clinical efficacy of TCM and patient medication safety, and it also serves as the prerequisite for upholding integrity while pursuing innovation, inheritance, and development in the TCM field. In recent years, the state has issued multiple documents to promote volume-based procurement of pharmaceuticals; however, there has been no breakthrough in the joint procurement of TCM materials, primarily due to unresolved standardization issues. Factors such as the cultivation of TCM medicinal herbs, implementation standards for drug production, and technological proficiency all influence the quality of finished TCM decoction pieces (including formula granules).

To this end, the Shandong Internet Traditional Chinese Medicine (Herbal Materials) Trading Center has established standards for high-quality TCM decoction pieces. By leveraging competitive participation from enterprises, it has selected and established sources of TCM decoction pieces that are of superior quality, reasonably priced, derived from certified planting bases, and fully traceable throughout the supply chain. Measures such as quality insurance and retention sample comparison are implemented to safeguard product quality. This centralized procurement model for TCM decoction pieces significantly enhances product quality while maintaining price stability, thereby ensuring medication safety and clinical efficacy for patients and improving the efficiency of medical insurance fund utilization.

“Resolving quality control issues and establishing mutual recognition of standards and prices across regions form the foundation of alliance-based procurement,” said Fan Jiping, former Deputy Director of the Department of Science, Education and International Cooperation under the former State Administration of Traditional Chinese Medicine, and Chairman of the Expert Committee on Quality Assurance of TCM Decoction Pieces at the Shandong Internet Traditional Chinese Medicine (Materials) Trading Center. The Trading Center has established a full-process traceability and quality control system based on a digital platform. By linking all upstream and downstream stakeholders through traceability codes, it achieves automated data collection, recording, and monitoring throughout the entire process—from planting and harvesting to processing and decocting, and from finished product testing to warehousing—thereby enabling “one-code traceability.”

Under the premise of comprehensive quality control, the Trading Center is also dedicated to building a quality insurance system, a volume-based price negotiation system, a transaction settlement system, and a smart pharmacy system. The quality insurance system provides end-to-end quality assurance for purchasers such as medical insurance departments, healthcare institutions, and retail pharmacies. Adopting a trading model characterized by “volume-price alignment and intelligent matching,” transactions are facilitated based on the principle of “premium quality at competitive prices.” An integrated online closed-loop service system has been established for traditional Chinese medicine (TCM) materials, covering joint procurement, price negotiation, trading, settlement, and supervision, thereby further optimizing distribution methods and reducing circulation costs. Meanwhile, smart TCM pharmacies have been launched and operated in key cities, providing patients with centralized intelligent decoction services and home delivery, thus bridging the “last mile” of TCM service delivery.

Liu Zhi, from the Department of Drug Pricing and Tendering Procurement of the Shandong Provincial Healthcare Security Administration, stated that the Sanming Procurement Alliance (National) is a significant achievement of the Sanming healthcare reform. The National Inter-provincial Alliance for Traditional Chinese Medicine (TCM) Materials Procurement has become its TCM materials procurement branch, facilitating better learning from and adoption of the Sanming healthcare reform experience. This move aims to implement the national policy objective of “achieving greater health benefits at lower costs,” actively explore new models for TCM materials procurement, promote innovative reform and standardized development of the TCM industry, build a unified national market, and ensure that the benefits of reform reach people in more regions.