Bulk buy program promotes competition, innovation

China’s drug bulk buy program has spurred fair competition and innovation among pharmaceutical manufacturers, a National Healthcare Insurance Administration official said on Thursday.

Since 2018, China has launched nine rounds of centralized procurement programs where drug manufacturers cut prices and bid for large-volume contracts to reduce drug prices and alleviate the financial burden on patients.

However, some have accused the drive of squeezing drugmakers’ profits and undermining their innovative prowess.

Ding Yilei, an official at the administration, said that many drugs used to be expensive due to marketing and promotion costs as well as other circulation fees.

He said that the bulk buy drive has pushed down prices of drugs that are no longer covered by patent protection, which usually lasts over a decade.

“Innovative drugs that see their exclusive patents expire are supposed to face fair market competition and their pricing should take social benefits into consideration,” he said.

Ding added that before the bulk buy drive, drug manufacturers were widely seen to be competing on high prices, lucrative kickbacks and maximizing sales volumes, rather than innovation, quality and operational efficiency.

“The centralized procurement approach has eliminated the need for sales representatives and helped nurture a clear industry environment,” he said.

Ding said that in the past few years, the annual growth rate of research and development investment in the pharmaceutical sector reached about 23 percent, and the number of new drugs in the pipeline in China now ranks second in the world.

China’s top drug regulators granted market approval for 40 types of innovative medicines last year, he added.