context: The 11th batch of national drug procurement opened enterprise registration on 11 September. Covering 55 varieties and 162 specifications, over 46,000 medical institutions participated in demand reporting, with bidding scheduled for 21 October in Shanghai. 2024's tenth batch procurement achieved record-high average price reductions exceeding 70 percent, intensifying discussions about selected drug quality and safety, physician and patient choice rights and enterprises bidding below production costs.
Reflecting on past experiences, the National Healthcare Security Administration conducted two consultation rounds whilst repeatedly emphasising 'anti-involution' policies.
Industry observers regard this as directionally significant. Hospitals previously could only report demand by generic drug names but now have options to report by specific brands. The National Drug Joint Procurement Office disclosed that 77 percent of hospitals currently report demand by brand.
Assessment thresholds for hospital demand reporting relaxed from minimum 80 percent of actual usage to 60-80 percent for agreed procurement volumes, key monitoring drugs reduced volume ratios to 60–70 percent.
The rule improvement this time completely respects clinical practice, physicians, and hospital choices by allowing both generic name and brand name demand reporting, said Jiang Changsong 蒋昌松 Capital Medical University's National Healthcare Security Research Institute assistant dean.
An enterprise winning the 10th batch said the changes likely consider long-standing patient and physician appeals, potentially reducing small enterprises' low-price market penetration possibilities whilst favouring established brands with existing market shares. B-certificate enterprises (responsible only for drug development while outsourcing production) may face greater challenges. Respecting physicians' clinical usage habits might create opportunities for original research drugs in public hospital usage.
Among 55 varieties submitted, 25 include original research drugs with approximately 30 percent demand shares. Selection conditions de-emphasise 'lowest price only' approaches. Rather than using 'lowest bid' as price differential control anchors, standards now reference '50 percent of qualifying average prices,' with drugs priced within 1.8 times this standard achieving selection qualification.
Enterprises bidding below '50 percent of qualifying averages' must submit rationality statements confirming proposed selection prices cover all costs including taxes, delivery fees and other expenses whilst remaining above enterprise cost prices. Costs include but aren't limited to research and development, production, circulation, storage management, and after-sales services including returns and exchanges.
Previous procurement selection thresholds often referenced 1.8 times minimum bids, fostering malicious competition including bid rigging, with some enterprises deliberately submitting ultra-low prices to exclude competitors.
To ensure selected drug quality, GMP (Good Manufacturing Practice) standards feature prominently in regulations. The National Drug Joint Procurement Office requires that listed drug marketing authorisation holders or contracted manufacturers possess over two years' experience producing similar formulations. Listed drugs must be produced on GMP-compliant production lines without GMP violations within two years.
The revised approach demonstrates significant policy evolution from purely price-focused competition toward quality assurance and clinical preference consideration whilst maintaining cost reduction objectives. The emphasis on brand-specific reporting and quality standards suggests recognition that sustainable drug procurement requires balancing affordability with clinical effectiveness and supply chain reliability.
These changes reflect broader healthcare policy shifts toward value-based procurement recognising that lowest-cost approaches may compromise patient care quality and market stability, particularly important given ongoing concerns about drug safety and supply security in critical therapeutic areas.