Guangdong Provincial Drug Exchange Center and Foshan Municipal Human Resources and Social Security Bureau Launch 'Province-City Joint Initiative' for Innovative Pharmaceutical Centralized Procurement Model

Building a Healthy China: Guangdong Takes the Lead

VCBeat (WeChat ID: vcbeat) has learned that on April 8, the Guangdong Provincial Drug Exchange Center (hereinafter referred to as the “Provincial Drug Exchange Center”) and the Foshan Municipal Human Resources and Social Security Bureau held a signing ceremony for their “provincial-municipal joint development” strategic cooperation agreement in Guangzhou.

In accordance with the cooperation agreement and centered on the shared objectives of “benefiting the public, supporting enterprises, and ensuring integrity,” the Guangdong Provincial Third-Party Electronic Drug Trading Platform (hereinafter referred to as the “Provincial Platform”) will fully leverage its service capabilities to support Foshan City’s innovative needs in advancing healthcare system reform. Together, the parties will explore a “provincial-municipal co-construction” drug trading model, whereby a “Foshan Zone” will be established on the Provincial Platform with Foshan City as the unit, and the Foshan Municipal Human Resources and Social Security Bureau will organize centralized procurement for public medical institutions.

Attending the ceremony were relevant leaders, including Que Guangchang, Member of the Party Leadership Group of the Guangdong Provincial Department of Human Resources and Social Security and Director of the Provincial Social Insurance Administration; Liu Biru, Secretary of the Party Committee of the Provincial Social Insurance Administration; Qiao Yu, Vice Mayor of Foshan City; and Liu Wen, Secretary of the Party Committee and Chairman of the Guangdong Provincial Property Rights Trading Group.

“‘Provincial-Municipal Co-construction’ drug trading model will provide new measures and contribute new solutions to deepen healthcare reform in our province,” said Que Guangchang at the ceremony. He added that Guangdong would further expand its reforms and innovations, strengthening and expanding the drug trading platform in South China.

“Volume-based procurement with price-volume linkage” is a centralized drug procurement standard established by the World Health Organization, and it is also a drug procurement model currently encouraged by the Chinese government and widely implemented across China. In the future, cross-provincial joint procurement consortia that break down administrative barriers, along with national negotiations, will become part of a larger “volume-based” landscape and trend.

VCBeat learned from the signing ceremony that this round of “provincial-municipal co-construction” cooperation not only ensures volume-based procurement for bid-priced products, but also innovatively introduces a model where Foshan City organizes medical institutions to conduct centralized volume-based procurement for negotiable-price products. This initiative enhances pricing leverage for negotiable-price products and achieves dual volume-based procurement for both bid-priced and negotiable-price products among medical institutions in the Foshan region.

Industry experts believe that, under the guidance of the Provincial Department of Human Resources and Social Security, the provincial platform and the Foshan Municipal Human Resources and Social Security Bureau will fully leverage their role in controlling healthcare insurance expenditures. By jointly exploring cooperation to advance reforms such as unified healthcare insurance payment, they aim to further stimulate the initiative of medical institutions, enhance bargaining power, and discover market prices.

Guangdong has consistently been at the forefront of healthcare reform. In 2013, Guangdong took the lead in reforming the government-led pharmaceutical procurement model by adopting a third-party electronic drug trading platform. Aligning with the development of “Internet Plus,” it achieved “five online” functions—online bidding, online trading, online payment, online financing, and online supervision—thereby laying the foundation for informatization-enabled services and regulatory oversight.

In accordance with the agreement, both parties have reached a consensus on unified supervision for this round of “provincial-municipal co-construction” cooperation. Foshan City has established the “Foshan Drug and Medical Consumable Sunshine Procurement and Management Platform,” which interfaces with the provincial platform’s information system. This initiative implements a single-platform model with vertical coordination, enabling interoperability of information including drug transactions, enterprise and product data, shortage drug reserves, integrity lists, and verification of the “Two-Invoice System.” These measures aim to enhance the efficiency of pharmaceutical circulation supervision under the new provincial transaction framework, reduce regulatory costs, and ensure drug supply and safety.

The provincial property rights trading group operates 20 trading platforms, with annual transaction volume exceeding RMB 1.6 trillion last year, contributing the “Guangdong Solution” to China’s factor market trading.

Leveraging the mature trading expertise of the Provincial Property Rights Exchange Group, the Provincial Pharmaceutical Exchange Center, as the province’s third-party electronic pharmaceutical trading platform, is committed to building an international trading and service platform for the pharmaceutical (health) industry under the new “Internet+” business model.

This round of “provincial-municipal co-construction” cooperation marks a significant milestone for the provincial platform, as it diversifies its transaction entities from individual medical institutions to consortia, Group Purchasing Organizations (GPOs), and medical alliances. Meanwhile, transaction methods are expanding beyond electronic bidding to include consortium-based negotiation and entrusted negotiation, thereby fully demonstrating the inclusiveness and diversity of the “Guangdong Pharmaceutical Exchange” model.

Relevant experts believe that this “provincial-municipal co-construction” collaboration, under which Foshan City and the provincial platform maintain unified institutional rules, share information systems, and operate through standardized and transparent mechanisms to jointly build a unified and open pharmaceutical market system, not only reduces the institutional transaction costs for pharmaceutical enterprises but also leverages the decisive role of the market in the allocation of drug resources and price adjustment. This approach promotes fair competition among pharmaceutical companies, enabling survival of the fittest and optimized restructuring, thereby driving the healthy development of the entire pharmaceutical industry.