Policy Insights from the 2019 Future Healthcare 100 Summit: Reforms in Pharma, Insurance, and Healthcare Delivery
“New Healthcare Reform” has undergone ten years of exploration and has basically established a reform strategy centered on the “Three-Medical Linkage.” It can be said that the “Three-Medical Linkage” is the soul of China’s healthcare reform.
“Three-Medical Linkage” refers to systemic reforms targeting medical institutions, the healthcare security system, and pharmaceutical production and distribution. In layman’s terms, it involves coordinated reforms across three key stakeholders: pharmaceutical suppliers (production and distribution), pharmaceutical users (medical institutions), and pharmaceutical payers (health insurance). Only through genuine linkage among healthcare services, health insurance, and pharmaceuticals can these reforms be sustained.
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Key Terms of the 2019 Pharmaceutical Reform Policies:
Deepen Drug Review and Strengthen Regulation, Promote Priority Review of New Drugs and Consistency Evaluation of Generic Drugs
Time:
In April 2019, the National People's Congress promulgated the "Drug Administration Law of the People's Republic of China (Revised Draft)"
On May 24, 2019, the National Medical Products Administration issued the “Administrative Measures for Imported Medicinal Materials” and the “Action Plan of the National Medical Products Administration on Accelerating the Promotion of Smart Drug Regulation.”
June 29, 2019: The Standing Committee of the National People's Congress enacted the "Vaccine Administration Law of the People's Republic of China"
July 1, 2019, NMPA and NHC “Pilot Work Plan for the Unique Device Identification System”
Key Points:
1. From the supply side, on one hand, outdated production capacity is being eliminated and inefficient enterprises are being phased out through New GMP certification and the consistency evaluation of generic drugs; on the other hand, pharmaceutical review reforms are being deepened to accelerate the registration and approval of new anticancer drugs from both domestic and international markets, while facilitating temporary import channels for clinically urgent anticancer medications. The pharmaceutical industry has entered a new policy cycle characterized by survival of the fittest and innovation-driven upgrading.
2. The implementation of the Marketing Authorization Holder (MAH) system has established a management model that separates drug marketing authorization from production licensing. By decoupling drug production from research and development, this system helps reduce drug development costs, shorten time-to-market, and foster a new ecological environment for the development of China’s pharmaceutical industry. Consequently, corporate development models are gradually evolving from a single, asset-heavy, integrated “R&D, production, and sales” model to an asset-light, platform-based collaborative model prevalent internationally.
3. Strengthen drug supervision. Solidly advance the national centralized drug procurement and pilot programs, strengthen monitoring of the quality of winning-bid drugs, priority use by public medical institutions in pilot regions, settlement of drug payments, and production of winning-bid drugs and active pharmaceutical ingredients (APIs), so as to ensure utilization, guarantee quality, and maintain stable supply.
4. Release the “Rules for the Unique Device Identification System (Draft for Comments)” to strengthen lifecycle management of medical devices, and formulate the rules for the unique device identification system.
Key Terms of the 2019 Medical Insurance Reform Policy:
“4+7” volume-based procurement expansion, stringent medical insurance regulation,
Dynamic Adjustment of the National Reimbursable Drug List,Deepening the Reform of Medical Insurance Payment Methods
“Notice on Issuing the Pilot Program for Centralized Procurement and Use of Drugs Organized by the State”
Time:January 17, 2019
Keywords：Promoting the Reform of the Drug Bidding and Procurement System, with the Expansion of the “4+7” Volume-Based Procurement Program.
Key Points:Promote the reform of the drug bidding and procurement system. Advance the pilot program for national centralized procurement and use of drugs, strengthen the circulation and usage management of high-value medical consumables, eliminate markups on medical consumables in public healthcare institutions, and improve compensation policies for public healthcare institutions.
On January 17, 2019, the General Office of the State Council officially issued the “Notice on Printing and Distributing the Pilot Program for National Centralized Drug Procurement and Use,” under which 11 cities, including the four municipalities directly under the Central Government, would pilot volume-based procurement. This initiative is commonly referred to in the industry as the “4+7” volume-based procurement. The “4+7” volume-based procurement aims to alleviate the current medication burden on the public and reduce drug prices by leveraging purchase volume to negotiate lower prices.
Currently, the scope of the “4+7” centralized procurement is gradually expanding nationwide. Provinces such as Hebei, Fujian, and Jiangsu have explicitly adopted the national “4+7” model, while eight provinces—including Henan, Anhui, Guangxi, Shandong, Inner Mongolia, Qinghai, Jiangxi, and Chongqing—are conducting preliminary assessments of the drugs included in the “4+7” program.
"Notice on Doing a Good Job in the Supervision and Management of Medical Security Funds in 2019"
Date: February 26, 2019
Keywords: Safeguarding the security of medical insurance funds, strengthening the supervision of medical insurance funds.
Key Points:Preventing fund risks and maximizing fund efficacy are key responsibilities of medical insurance work, while strengthening the supervision of medical insurance funds is a protracted battle requiring participation from all sectors of society. This document covers nearly all entities involved in the use of medical insurance funds and provides specific explanations on the scope of investigation and punishment for entities with different attributes. This signifies that fund supervision has officially entered a phase of prolonged engagement. The 10 tasks comprising 27 specific items outlined therein will also be the focal points of future medical insurance fund supervision efforts.
“Notice on Issuing the List of National Pilot Cities for Diagnosis-Related Group (DRG) Payment”
Time: June 2019
Keywords: Continue to deepen the reform of healthcare insurance payment methods.
Key Points:Thirty cities were designated as national pilot cities for DRG-based payment. The document disclosed that we would adopt a three-step approach comprising “top-level design, simulation testing, and actual payment,” entering the simulation phase in 2020 and initiating actual payments in 2021.
Regarding DRG, this year remains in the phase of top-level design. Ongoing initiatives include strengthening the information systems for DRG-based payment, standardizing the collection of health insurance data for DRGs, and continuously improving health insurance payment policies as well as administrative and operational management processes.
“Notice on Effectively Implementing Direct Settlement of Inpatient Medical Expenses for Cross-Provincial Healthcare in 2019”
Time: June 2019
Keywords: Strengthening the foundational work of medical insurance.
Key Points:Accelerate the implementation and refinement of policies for direct settlement of cross-provincial medical expenses incurred outside the insured’s home province, and standardize medical information coding. By the end of 2019, strive to connect over 85% of tertiary designated hospitals, more than 50% of secondary designated hospitals, and at least 10% of other designated hospitals nationwide to the National Cross-Provincial Medical Expense Settlement System, thereby basically meeting the demand for direct settlement of inpatient costs for insured individuals receiving care across provincial boundaries. With the development of a unified national healthcare security information platform, by the end of 2020, basically achieve direct inpatient service availability at all designated hospitals for eligible patients seeking cross-provincial medical care.
"National Reimbursement Drug List for Basic Medical Insurance, Work-Related Injury Insurance, and Maternity Insurance"
Date: August 20, 2019
Keywords: Establishing a dynamic adjustment mechanism for the national medical insurance drug list.
Key Points:From the perspective of the newly added drug varieties, the 148 new additions cover national essential medicines, medications for chronic diseases, pediatric drugs, and treatments for major diseases such as cancer. Notably, in key areas like diabetes management, there is a significant increase in the number of new drug varieties, accompanied by more refined classification and management. This reflects that the current adjustment will further enhance the accessibility and rationality of medication use.
Based on the varieties removed, a total of 150 varieties were removed in this adjustment. Approximately half of these were pharmaceutical products whose approval numbers had been revoked by the national drug regulatory authorities. The remainder primarily consisted of drugs with limited clinical value, evident potential for misuse, and availability of superior alternatives. Notably, all 20 varieties from the first batch of the Key Monitoring List for Rational Drug Use, which accounted for significant clinical usage, were removed. This demonstrates the determination and intensity of the adjustments to the National Reimbursement Drug List (NRDL), thereby creating greater space for drugs with high clinical value.
This major adjustment to the drug list marks the first comprehensive revision since the establishment of the National Healthcare Security Administration (NHSA). It also represents a thorough review of the existing formulary items since the inaugural edition in 2000, coming just two years after the previous major update to the medical insurance drug list.
From this perspective, the dynamic adjustment of the National Reimbursement Drug List (NRDL) is returning to a normalized routine. With the shortened adjustment cycle, the NRDL can facilitate more timely inclusion and exclusion of drugs, thereby revitalizing existing medical insurance resources, improving drug accessibility, and maximizing the efficacy of the medical insurance fund.
Keywords of the 2019 Healthcare Reform Policy:
Promote the construction of a Healthy China, deepen comprehensive reforms in public hospitals, and encourage private healthcare provision.
"Internet + Healthcare: Advancing Medical Informatics"
“Key Tasks for Deepening the Reform of the Medical and Healthcare System in 2019”
Time: June 2019
Keywords: Advancing the construction of a Healthy China.
Key Points:Implement the Healthy China Action, popularize health knowledge, carry out health promotion, and extend life expectancy; advance reform of the disease prevention and control system, refine the functional positioning of disease prevention and control institutions at all levels, continuously promote institutional innovation in maternal and child health hospitals, and deepen reforms of grassroots operational mechanisms. Strengthen support for medical institutions in delivering public health services, and establish a funding guarantee mechanism for public health services provided by medical institutions. Evaluate the implementation of basic public health service programs and promote improved efficiency in fund utilization.
《Operational Manual for the Performance Assessment of National Tertiary Public Hospitals (2019 Edition)》
Date: May 31, 2019
Keywords: Deepening the Comprehensive Reform of Public Hospitals.
Key Points:Pilot programs to improve the modern hospital management system are being advanced in selected hospitals. Government funding policies for public hospitals will be refined, and central fiscal subsidies will be allocated based on the evaluation results of comprehensive reforms in public hospitals. A national performance assessment information system for public hospitals will be established and improved, and performance assessments for all tertiary public hospitals will be fully implemented according to the principle of territorial jurisdiction. Performance assessments for secondary and lower-level public medical institutions will also be promoted. The markup on consumables in public medical institutions will be abolished, and compensation policies for these institutions will be improved to address the issue of compensating for the reasonable income lost due to the removal of markups on medical consumables. Regarding the reform of medical service pricing in public hospitals, guidance and supervision will be provided to localities to establish a dynamic adjustment mechanism for medical service prices that helps rationalize price ratios and optimize revenue structures. Medical service prices will be adjusted dynamically in accordance with the principles of “overall cost control, structural adjustment, selective increases and decreases, and gradual implementation.” Reforms to the compensation system in public hospitals will be advanced, implementing the “two allowances” policy to ensure that personnel expenditure accounts for a reasonable proportion of the operational expenditures of public hospitals.
“Notice on Issuing the Opinions on Promoting the Continuous, Healthy, and Standardized Development of Socially Run Medical Institutions”
Date: June 12, 2019
Keywords: Encouraging private investment in healthcare.
Key Points:Continuously deepen the reform of “streamlining administration, delegating power, and improving services” in the healthcare sector, optimize approval services, eliminate discriminatory policies, and treat privately-run medical institutions equally. Encourage and support social forces to establish clinics, and increase government procurement of services.
《Notice on the Grading and Evaluation Standard System for Smart Hospital Services (Pilot)》
Date: March 18, 2019
Keywords: Internet + Healthcare, Advancing Medical Informatics.
Key Points:Advance the development of the National Health Information Platform and provincially coordinated regional platforms, enhance telemedicine networks, ensure medical and data security, promptly summarize and evaluate pilot programs for “Internet + Nursing Services,” and establish standardized and robust regulatory frameworks as soon as possible. Deepen the construction of information platforms for Traditional Chinese Medicine (TCM) clinics at the primary care level. Further implement initiatives to improve medical services, ensuring that at least 50% of hospitals at Level II and above provide online services such as time-slot appointment scheduling, intelligent patient guidance and triage, waiting notifications, access to laboratory and imaging test results, point-of-care settlement, and mobile payment. Launch pilot programs for the development of community hospitals.
By examining the changes in industrial policies since 2019 across three dimensions—guiding policies for deepening healthcare reform, medical insurance-related policies, and drug regulation-related policies—it is evident that industrial policies play a role in accelerating, guiding, regulating, and enhancing the healthcare industry.
Amid a Wave of New Policies, How Can Healthcare Industry Professionals Adapt and Embrace New Growth Opportunities?
2019 Future Healthcare Top 100 ConferenceOn,5000+Industry Elites, Intellectual Exchange: Jointly Exploring Policy Trends in Industrial Development.
