context: The much anticipated annual negotiations to update the National Reimbursement Drug List (NRDL), scheduled for December last year, finally convened on 5 January. NRDL is a major policy tool to slash drug prices for PRC patients who can use their BMI (Basic Medical Insurance) to cover a large proportion of medical expenses. For pharmaceutical enterprises, price cuts reward a bigger market and sales. Yet not all biotechs are keen on signing up to the list, more so this year, not least due to strategic consideration of the market outlook at home and abroad.
Improving existing rules, the latest NRDL (National Reimbursement Drug List) negotiations included two novel approaches to finalise drug prices, reports Healthcare Executive. Interpreted as a sign to encourage innovation, NHSA (National Healthcare Security Administration), the top authority in charge of NRDL, streamlined the contract renewal procedure. The other new change is tailored for drugs without market exclusivity. In brief, among the quotes from participating drugmakers for one type of drug, NHSA (National Healthcare Security Administration) will go for the lowest to set the BMI payment standard. This means the rest of the products of the same type, including those from enterprises offering higher prices, will be covered by BMI under a unified, cheap cost. Notably, 13 pharma companies with innovative drug products that qualified for NRDL applications decided not to join the price negotiations, China Merchants Securities estimates. Industry insiders analyse factors at play in biotechs’ decision-making, including the competitive edge of their products. NRDL is less appealing for drugs enjoying market exclusivity. How well the company is prepared for drug promotion also matters. The prospect of NRDL—a larger customer base—will diminish if, for instance, the company lacks the personnel to promote drugs to reach lower-tier hospitals. Innovative drugmakers also consider the market they are going to focus on. Whereas NRDL is a popular strategy to expand the domestic market, it is less so for markets overseas. In favour of a global pricing system when going abroad, biotechs may be less interested in the list which mandates a rather drastic price cut.