National Expansion of '4+7' Centralized Drug Procurement: 25-Province Alliance Launches Tender for 25 Drug Products
VCBeat has learned that on September 1, 2019, the Shanghai Sunshine Pharmaceutical Procurement Network issued the “Procurement Document for Centralized Drug Procurement in Alliance Regions,” extending procurement invitations to 25 provinces and autonomous regions across China. Following the implementation of volume-based procurement, the 11 pilot cities achieved remarkable results, and this new measure for controlling drug costs is finally set to be rolled out nationwide. The content of this centralized procurement in the alliance regions differs little from that in the pilot cities. VCBeat has summarized seven key points worth noting:
>>>>
1. Alliance Region: 25 provinces and autonomous regions
The alliance region includes Shanxi, Inner Mongolia, Liaoning, Jilin, Heilongjiang, Jiangsu, Zhejiang, Anhui, Jiangxi, Shandong, Henan, Hubei, Hunan, Guangdong, Guangxi, Hainan, Sichuan, Guizhou, Yunnan, Tibet, Shaanxi, Gansu, Qinghai, Ningxia, and Xinjiang (including the Xinjiang Production and Construction Corps), excluding the 4+7 cities within the alliance region.
The Alliance region comprises the 25 provinces and autonomous regions, excluding the four municipalities directly under the Central Government, Fujian Province, Hebei Province, and the Hong Kong, Macao, and Taiwan regions.
2. Procurement Catalog: 25 out of the 31 items on the list
Comparison between the Current Centralized Procurement List and the “4+7” Centralized Procurement List (yellow highlights indicate newly added specifications)
The procurement list includes 25 varieties, such as the oral immediate-release formulation of atorvastatin. All of these are among the 31 drug varieties covered in the "4+7 City Centralized Drug Procurement Document," with the addition of entecavir oral immediate-release tablets (5 mg), escitalopram oral immediate-release tablets (5 mg/20 mg), and risperidone oral immediate-release tablets (3 mg).
Six drug varieties from the original catalog were not included in this centralized procurement catalog, namely amoxicillin oral immediate-release formulations, azithromycin oral immediate-release formulations, tramadol oral immediate-release formulations, alfacalcidol oral immediate-release formulations, captopril oral immediate-release formulations, and azithromycin injections.
3. Procurement Cycle and Procurement Agreement
For varieties with no more than two (inclusive) selected enterprises, the procurement cycle for this round shall in principle be one year; for varieties with three selected enterprises, the procurement cycle for this round shall in principle be two years. The procurement cycle may be extended by one year depending on actual circumstances. Procurement agreements within the procurement cycle shall be signed annually.
4. Agreed Procurement Volume: 50%/60%/70% of the procurement volume shall be purchased depending on whether 1/2/3 suppliers are awarded the bid.
The centralized procurement clearly stipulates the rules for the agreed purchase volume in the first year: if only one enterprise is selected, the agreed purchase volume shall be 50% of the calculation base for the first year's agreed purchase volume; if two enterprises are selected, it shall be 60%; and if three enterprises are selected, it shall be 70%.
The agreed procurement volume for the following year will be calculated based on the actual procurement volume of the first year. The procurement ratio shall remain consistent with that of the first year.
5. Bid Price: Must not exceed the final price of the previously selected product
The declared price shall not exceed the price of the winning drugs from the “4+7 City Centralized Drug Procurement (Procurement Document No.: GY-YD2018-1)” after conversion according to the current drug price comparison rules, and in principle, shall not exceed the lowest provincial centralized procurement price for the same variety offered by the same enterprise in the alliance regions in 2019 (as of July 31).
6. Selection Principle: Priority to the Lowest Bid
Submitted products will have their quoted prices compared across different manufacturers’ main specifications in accordance with the current rules for price comparison of pharmaceutical products. The three manufacturers with the lowest quotes will be granted provisional selection status. Manufacturers and their submitted products that obtain provisional selection status will uniformly proceed to the supply region confirmation process.
7. List of Violations: Any entity involved in commercial bribery, malicious declarations, or failure to fulfill supply commitments shall be disqualified without exception.
If declaring enterprises, selected enterprises, or distribution enterprises engage in misconduct, those deemed by relevant authorities to have committed serious violations will be included in the “List of Violations.” The document lists 12 types of misconduct, including commercial bribery, malicious bidding below cost, fraud, relinquishing selection status after being selected, and failure to fulfill supply commitments.
Applicant companies listed on the “Non-Compliance List” shall be disqualified, and depending on the severity of the violation, may be barred from eligibility for the following two years.
The following is the full text of the document.
