National Healthcare Security Administration Responds to Proposal on Optimizing Drug Centralized Procurement System

On September 11, the National Healthcare Security Administration responded to Suggestion No. 6633 from the Second Session of the 13th National People’s Congress regarding issues such as improving centralized drug procurement and bidding in public hospitals. VCBeat (WeChat ID: vcbeat) has summarized the relevant content.

The pilot program for centralized drug procurement aims to explore and improve the mechanism for centralized drug purchasing and a market-driven drug pricing formation mechanism, reduce the public’s financial burden for medications, standardize the order of drug distribution, and enhance medication safety for the public.

In 2018, the National Healthcare Security Administration, in conjunction with the National Health Commission, the National Medical Products Administration, and other relevant departments, studied and drafted a pilot program. Following the principle of “state organization, alliance-based procurement, and platform-based operation,” a procurement alliance was formed comprising 11 cities: Beijing, Tianjin, Shanghai, Chongqing, Shenyang, Dalian, Xiamen, Guangzhou, Shenzhen, Chengdu, and Xi’an. This initiative aimed to restore the original intent of “linking volume with price and integrating tendering with procurement” by selecting drug varieties that had passed the consistency evaluation, consolidating the pharmaceutical demand of public medical institutions, and genuinely implementing volume-based procurement to reduce artificially inflated drug prices, all while ensuring quality and supply. Among the 31 pilot drug varieties, 25 were successfully selected. The average price reduction for these selected drugs was 52% compared to the lowest procurement prices for the same drugs in the pilot cities in 2017. Currently, the pilot program is operating smoothly, with results exceeding expectations. It has significantly reduced the financial burden of medical expenses on patients and promoted the substitution of brand-name drugs with generic alternatives.

Recently, the National Healthcare Security Administration, in collaboration with relevant departments, has studied and formulated a plan to expand the scope of pilot implementation based on a careful summary of pilot experiences. The plan primarily adopts the approach of “moderate bidding competition and multiple winners.” A symposium with pharmaceutical companies was convened to solicit opinions and suggestions. The companies generally endorsed the overall framework of the plan, noting that it takes a holistic view and balances the interests of all parties involved.Adhering to the principles of fairness and openness, while prices have largely returned to reasonable levels, deemphasizing bidding competition and highlighting the goal of ensuring long-term stable supply aligns with the requirements for industrial development.

Next, relevant national authorities will focus on carrying out work in the following three areas:First, we will continue to diligently implement the pilot programs. We will strengthen monitoring and guidance of the pilot initiatives, ensure the quality and supply of selected drugs in pilot regions, promote the priority use of these selected drugs, and enable patients to fully benefit from the reforms. Second, we will promptly expand the scope of the pilot programs to extend the benefits of the reforms to a broader population. Third, based on the evaluation results of the pilots and feedback from various stakeholders, we will optimize and improve the drug centralized procurement and bidding system.

In 2015, the National Development and Reform Commission (NDRC) and six other ministries jointly issued the “Notice on Printing and Distributing the Opinions on Promoting Drug Price Reform” (Fa Gai Jia Ge [2015] No. 904), which reformed drug price management methods. While abolishing government-set prices for most drugs, the Notice proposed to “gradually establish a market-led mechanism for drug price formation” and required that “healthcare security authorities, in conjunction with relevant departments, shall formulate payment standards for drugs covered by medical insurance based on investigations of actual market transaction prices for drugs, taking into account factors such as the affordability of the medical insurance fund and patients.” Some provinces have already formulated and introduced policies related to drug payment standards in light of local conditions.

Next, we will carefully organize relevant ideas and, on the basis of thoroughly summarizing local experiences and extensively soliciting opinions from all parties, gradually establish medical insurance payment standard policies that align with China’s actual conditions.

In 2018, the General Office of the State Council issued the Opinions on Improving the National Essential Medicines System (Guo Ban Fa [2018] No. 88), which clarified that essential medicines should align with basic medical and healthcare needs. Guided by the objective of meeting the fundamental medication requirements for disease prevention and treatment, and based on China’s disease spectrum and medication characteristics, equal emphasis shall be placed on traditional Chinese medicines and chemical drugs. An appropriate number of essential medicine varieties shall be selected to meet major clinical needs for common diseases, chronic diseases, and emergency care, while also taking into account the medication needs of special populations such as children and for public health prevention and control.

The selection and adjustment of the National Essential Medicines List comprehensively consider factors such as clinical application practices, changes in drug standards, and new drug market entries.For newly approved drugs that demonstrate significant therapeutic advantages over existing marketed products and are reasonably priced, the inclusion process may be initiated in a timely manner.For therapeutic drugs included in the National Essential Medicines List, the healthcare security authorities shall, in accordance with established procedures, prioritize their inclusion in the National Reimbursement Drug List or adjust their Class A/Class B classification during the periodic updates of the reimbursement list.

The “Guiding Opinions of the General Office of the State Council on Improving Centralized Procurement of Drugs in Public Hospitals” (Guo Ban Fa [2015] No. 7) stipulates that bidding shall no longer be conducted for non-patented drugs in gynecology and pediatrics, emergency (rescue) drugs, commonly used low-priced drugs, and drugs with small clinical usage volumes; instead, a centralized online listing system shall be implemented, with direct procurement by hospitals, to fully leverage market mechanisms and guide the formation of reasonable prices. However, due to the low quality and efficiency of supply for a few clinically essential drugs, insufficiently detailed supply assurance policies, and poor coordination among relevant links, clinical supply tensions and even shortages of certain drugs occur from time to time, affecting patients’ medication access and drawing significant public concern. In June 2017, the former National Health and Family Planning Commission and eight other departments jointly issued the “Implementation Opinions on Reforming and Improving the Supply Assurance Mechanism for Shortage Drugs,” adopting a package of targeted measures—including establishing a nine-department consultation and linkage working mechanism at both national and provincial levels, implementing a shortage drug list management system at both national and provincial levels, building a national multi-source information collection and supply business collaborative application platform for shortage drugs, implementing designated production, coordinating emergency production and imports, strengthening supply-demand docking and negotiated allocation, improving shortage drug reserves, cracking down on illegal and irregular activities, and refining policies for rare disease medications—to effectively ensure the supply of shortage drugs.

Since the establishment of the National Healthcare Security Administration, great importance has been attached to the procurement and pricing of medicines in short supply. The administration has guided local authorities in implementing the policy of direct online procurement for such medicines and has conducted assessments and analyses of drug price trends.

Next,The state will establish a monitoring and early-warning mechanism for the prices and procurement information of drugs in short supply. For such drugs that are clinically essential with poor substitutability, as well as those among similar therapeutic alternatives whose treatment costs are significantly lower, enterprises will be permitted to list their quoted prices directly on online procurement platforms. Medical institutions will conduct autonomous procurement through provincial-level centralized drug procurement platforms, thereby ensuring reasonable profit margins for enterprises.Meanwhile, improve the drug procurement and pricing mechanisms to bring drug prices back to reasonable levels.

Source: National Healthcare Security Administration