China Launches First-Ever National Joint Procurement of 21 Traditional Chinese Medicine Decoction Pieces Effective September 8

On September 8, Shandong Province implemented the results of China’s first centralized volume-based procurement (VBP) for traditional Chinese medicine (TCM) decoction pieces. The average price reduction for 21 types of TCM decoction pieces reached 29.5%, enabling patients to purchase higher-quality products at the same or even lower costs. At a press conference held by the Information Office of the Shandong Provincial People’s Government on September 7, the Shandong Provincial Healthcare Security Administration provided an update on the progress of this inaugural national VBP initiative for TCM decoction pieces.

Starting September 8, public medical institutions (including military medical facilities), private medical institutions, and pharmacies across the province participating in the centralized procurement of traditional Chinese medicine (TCM) decoction pieces shall implement the winning bid results in accordance with regulations and sell the awarded products to patients. Provinces such as Qinghai and Tibet, which participated in the first national round of centralized procurement of TCM decoction pieces, have simultaneously issued notices on implementation, all requiring commencement in early September.

China’s first batch of centralized joint procurement for traditional Chinese medicine (TCM) decoction pieces covers 21 varieties, including Astragali Radix, Angelicae Sinensis Radix, Codonopsis Radix slices, and Salviae Miltiorrhizae Radix et Rhizoma. The selected products comprise 782 items from 100 enterprises, with participation from over 6,000 medical institutions across 15 alliance regions, including Shandong, Shanxi, and Inner Mongolia.

The implementation of the results from the joint procurement of traditional Chinese medicine (TCM) decoction pieces is a critical step in ensuring that the public benefits from the outcomes of this collaborative purchasing initiative. Unlike volume-based procurement for chemical drugs, this joint procurement not only considers pricing but primarily focuses on leveraging market competition mechanisms to achieve “quality assurance, grade improvement, and stable supply” while exchanging volume for lower prices. Furthermore, to alleviate financial pressure on supplying enterprises, payments for the winning TCM decoction pieces will be included in the scope of direct settlement between medical insurance funds and pharmaceutical companies. This measure aims to enhance suppliers’ willingness to participate and ensure the smooth implementation of the joint procurement results.

Since the beginning of this year, the price index for traditional Chinese medicine (TCM) materials has continuously hit record highs, posing severe challenges to the implementation and supply assurance of centralized procurement for TCM decoction pieces. In response to these difficulties, various stakeholders in the TCM industry have actively launched initiatives and taken actions to curb unreasonable price surges and safeguard the healthy development of the sector. The China Association of Traditional Chinese Medicine has called on the industry to adopt scientific and rational procurement practices for raw TCM materials, overcome pressures to ensure drug supply throughout the procurement cycle, encourage direct docking between production and sales, and minimize speculative intermediaries. The Shandong Internet Traditional Chinese Medicine (Materials) Trading Center responded swiftly by launching the “TCM Production and Sales Consortium Action,” aiming to establish a normalized mechanism for the direct supply and sales of TCM materials and decoction pieces.

The “Joint Action for Integrated Production and Sales of Traditional Chinese Medicine (TCM)” calls on all stakeholders across the industry chain—including governments in authentic TCM herb-producing regions, TCM herbal slice manufacturers, and TCM medical institutions—to participate. Leveraging digital trading platforms, this initiative establishes a “Triple Transparency” system characterized by transparent pricing, quality, and production-sales processes for both suppliers and buyers. This enables a “direct supply and direct sales” model with full traceability of quality and transaction steps, thereby effectively eliminating multi-layered markups common in traditional market transactions and resolving information asymmetry. Since its launch, the first implemented variety, Ophiopogon japonicus (Maidong), has been directly supplied to six winning bidders of the national centralized procurement program for TCM decoction pieces. To date, a total of 36,600 kg of Maidong has been supplied at reasonable prices to ensure stable availability.

It is understood that the “TCM Production and Sales Consortium Initiative” will implement product-specific production and sales consortia on a variety-by-variety basis, engaging more authentic producing regions and manufacturers to jointly establish a direct-from-origin supply side with unified quality and pricing. This initiative will provide supply assurance services for the first batch of national centralized procurement of TCM decoction pieces, offer direct supply services for market-based transactions, and ensure long-term, stable supply in the markets for TCM materials and decoction pieces.