Remedies to reduce drug prices

China will launch a pilot program in March for pooled procurement of pharmaceuticals in 11 cities to bring about more affordable prices of key medicines and reduce financial burdens on patients, under a guideline published on Thursday.

The pilot program will be test marketed in the country’s four municipalities — Beijing, Shanghai, Chongqing and Tianjin — along with seven other urban areas, according to the guideline issued by the General Office of the State Council.

As part of the program, healthcare security authorities will conduct pooled procurement of drugs based on the amount required at public medical institutions in targeted regions. The total procurement amount stands at around 65 percent of the total amount of drugs required at such institutions in the regions, under the guideline.

Chen Jinfu, deputy head of the National Healthcare Security Administration, said at a news conference on Thursday that the large amount of drugs purchased in the procurement deals is a decisive factor in ensuring price declines.

He noted that the 25 pharmaceutical products already included in the program are expected to see an average price drop of 52 percent after implementation, with the price of certain products seen falling by as much as 90 percent.

The pooled procurement program will also benefit pharmaceutical companies as it helps them reduce intermediary costs which constitute a large portion of drug prices, Chen said.

“The reason we can achieve lower prices is because drugs from the selected companies go directly to hospitals. Additional costs will no longer be necessary, and thus this will not affect drugmakers’ cost of manufacturing and allows them to realize reasonable profit margins,” he said.

The pilot program will last for 12 months, he said.

Zhang Zongjiu, an official with the National Health Commission, said the authority will ensure that public hospitals prioritize the use of drugs from the pooled procurement so that the new program can truly benefit patients.

The pooled procurement program is based on efforts by public medical institutions to calculate their expected drug demand, he said.

Another priority of the program is to ensure the quality of the drugs purchased, said Yuan Lin, head of the drug supervision and management department under the National Medical Products Administration.

“The core of our job is to ensure the quality of procured drugs,” he said. “Products selected must strictly be produced through recipes and procedures already approved so that the quality of drugs will not decline.”