context: Following drafts released in early July, NHSA (National Healthcare Security Administration) has updated the rules for renewing NRDL (national reimbursable drug list) contracts. New changes better balance the need for innovation with the goal of affordable drug prices, raising the market prospects of PRC's biotechs, a group that has been grappling with revenue.
Updated regulations for NRDL (national reimbursable drug list) contract renewals bring more predictability to the pharma sector by lowering the extent of price reductions during renewals, reports Caixin. Medications are put into three groups after their agreements expire: they can be placed under routine catalogue management, simply renewed, or renegotiated. For the first two cases, a second negotiation is not required, streamlining the process.
Under new rules, certain drugs can be managed through the routine catalogue, which applies to
- drugs that have exclusive marketing rights and have maintained unchanged payment standards and scope for two consecutive contract cycles
- drugs without exclusive licences
- drugs that have been in the catalogue for eight years
The last condition, a new provision, aims to elicit steady expectations from drug companies and help reduce the pressure of further price cuts.
Pharmaceutical companies can also opt for an easy two-year renewal, but only under specific conditions. For example, the actual BMI (basic medical insurance) expenditure not exceeding 200 percent of the estimated value and a reasonable increase in fund expenditure forecast for the next two years.
This new policy aims to strike a balance between lowering patient costs and encouraging innovation in the pharma sector. Industry insiders believe these updated rules will lead to a more reasonable and moderate price reduction, promoting the sustainable growth of the innovative drug industry.
Nevertheless, Chen Yi 陈怡 Tsinghua University Institute for Hospital Management professor points out two challenges in pricing innovative drugs. First, the PRC's pharmaceutical sector predominantly creates ‘me too’ drugs, leading to little variation in clinical values as perceived by healthcare authorities during price negotiations. Efforts should be geared towards diminishing competition among homogenous drugs, Chen argues.
Second, the healthcare system heavily relies on basic medical insurance, often the principal or sole payer, which is contrary to its essential protection role and hampers the bargaining power of pioneering innovative drugs. Thus, developing commercial insurance to diversify payment becomes crucial, Chen adds.