Med­i­cal Re­form: Generic Op­tions

A se­ries of in­cen­tive mea­sures and new poli­cies have been adopted by the cen­tral gov­ern­ment and lo­cal ad­min­is­tra­tions to pro­mote generic drugs

NewsChina - - CONTENTS - By Xu Dawei

Zeng Yixin, the vice min­is­ter of China's Na­tional Health Com­mis­sion, an­nounced in Septem­ber that generic drugs which have passed qual­ity and ef­fec­tive­ness tests would be pri­or­i­tized for in­clu­sion in the re­cently-up­dated na­tional list of es­sen­tial drugs. “Health de­part­ments are also en­cour­aged to pur­chase and use generic drugs,” Zeng added, say­ing the na­tional list would be ad­justed on a timely ba­sis to in­clude newly ap­proved, ef­fec­tive and rea­son­ably priced medicines.

Just two days be­fore the an­nounce­ment, Jiangsu Provin­cial gov­ern­ment re­leased 15 new mea­sures to pro­mote re­search and de­vel­op­ment of generic drugs to en­sure their qual­ity and in­clude them in the na­tional health in­sur­ance sys­tem.

In April, China's State Council be­gan to in­crease sup­port for generic drugs, with fa­vor­able poli­cies. Soon af­ter­ward, lo­cal gov­ern­ments from Shaanxi, Hei­longjiang and Guangxi prov­inces came up with their own lo­cal pro­mo­tion poli­cies for generic drugs.

“These mea­sures are not iso­lated,” said Jiang Rong, a re­searcher with the Na­tional Drug Pol­icy and Med­i­cal In­dus­try Econ­omy Re­search Cen­ter. Ac­cord­ing to Jiang, the new poli­cies rep­re­sent a con­tin­u­a­tion of on­go­ing Chi­nese health­care re­forms which be­gan in earnest in 2015. In­dus­try in­sid­ers say they could have im­me­di­ate im­pacts and com­pletely reshuf­fle the in­dus­try.

Con­gested Mar­ket

For a long time, the speed of drug ap­provals in China has lagged se­ri­ously, with a whop­ping 22,000 drugs cur­rently on the wait­list, the most in China's his­tory. Nor­mally, a generic drug takes three or four years to get to mar­ket. The long ex­am­i­na­tion and ap­provals time low­ers sig­nif­i­cantly the po­ten­tial in­come of drug com­pa­nies and de­lays con­sumers from ob­tain­ing ef­fec­tive drugs.

Back in Au­gust 2008, the State Council re­leased new poli­cies to re­form the ap­proval sys­tem for drugs and health­care equip­ment. Ac­cord­ingly, generic drug re­form be­gan in earnest with a raft of new poli­cies is­sued.

On one hand, a big num­ber of generic drugs are on the wait­list for ap­proval, while on the other hand, the mar­ket is con­gested with more than 187,000 ex­ist­ing drug ap­provals. Of these ap­proved drugs, fewer than 50,000 are be­ing man­u­fac­tured, while the rest have not even be­gun pro­duc­tion.

Take Digoxin, a kind of heart med­i­ca­tion. Eleven com­pa­nies in China have ap­proval to pro­duce it, but only two – in­clud­ing Shang­hai Xinyi Phar­ma­ceu­ti­cal – are do­ing so at present.

“For com­pa­nies, that ap­proval let­ter is a kind of re­source,” said Jiang. One drug com­pany owner, who asked not to be iden­ti­fied, told Newschina that many en­ter­prises have ob­tained ap­proval let­ters, and some even make pur­chas­ing deals for these let­ters. Be­hind this there are fre­quent price wars among drug com­pa­nies over sim­i­lar prod­ucts. A sig­nif­i­cant num­ber of do­mes­tic generic drug pro­duc­ers make sub­stan­dard drugs. At the same time, lack of new pack­ag­ing ma­te­rial, low qual­ity APIS (Ac­tive Phar­ma­ceu­ti­cal In­gre­di­ents – the ac­tive sub­stances in drugs), out­dated man­u­fac­tur­ing tech­niques, and a de­fec­tive qual­ity con­trol sys­tem haunt the in­dus­try. As a re­sult, the gross profit rate is less than 10 per­cent, far lower than the over­all in­ter­na­tional stan­dard of 40 to 50 per­cent.

“Do­mes­ti­cally, in the past there was no reg­u­la­tion re­quir­ing generic drugs to match the brand-name drug. Drug pro­duc­ers were cer­ti­fied as long as they fol­lowed do­mes­tic stan­dards,” Jiang Rong told Newschina. He said generic drugs have lit­tle chance of repli­cat­ing the brand drugs. “Ini­tially, generic drugs may copy brand drugs, then generic drugs them­selves are copied two or three times, which re­sults in de­te­ri­o­rat­ing medic­i­nal ef­fects one gen­er­a­tion af­ter an­other.”

Do­mes­tic qual­ity is below Western stan­dards in most cases. In the US, reg­u­la­tions re­quire the to­tal quan­tity of five kinds of im­pure el­e­ments in Azithromycin, an an­tibi­otic, should not ex­ceed 0.1 per­cent. But in China, there is only one over­all im­pu­rity re­quire­ment.

On July 5, the Euro­pean Medicines Agency (EMA) an­nounced it had launched an in­ves­ti­ga­tion into Val­sar­tan, a drug used to treat high blood pres­sure and heart fail­ure. Val­sar­tan used an ac­tive phar­ma­ceu­ti­cal in­gre­di­ent (API) from a Chi­nese sup­plier, Zhe­jiang Hua­hai Phar­ma­ceu­ti­cals, af­ter batches were found to be con­tam­i­nated with a po­ten­tially can­cer-caus­ing sub­stance.

The EMA said the con­tam­i­na­tion would have oc­curred as a re­sult of “a change in the man­u­fac­tur­ing process.” The sub­stance, N-ni­trosodimethy­lamine (NDMA), is an or­ganic chem­i­cal from a fam­ily of po­tent car­cino­gens. An of­fi­cial from the Jiangsu Provin­cial medicine su­per­vi­sion de­part­ment told Newschina that phar­ma­ceu­ti­cal com­pa­nies of­ten pay lit­tle at­ten­tion to po­ten­tial car­cino­gens in med­i­cal re­search in China as there are no do­mes­tic stan­dards on this.

The Na­tional Drug Safety 12th Five-year Plan (2011-2015) clearly put for­ward en­hanc­ing the qual­ity of generic drugs and launch­ing a scheme to eval­u­ate them. On March 5, 2016, the State Council dis­trib­uted guide­lines on generic drug qual­ity and eval­u­at­ing ef­fec­tive­ness, the start­ing point for na­tion­wide eval­u­a­tion of generic drugs al­ready on the mar­ket.

This means the generic drugs al­ready ap­proved must have the same qual­ity and ef­fec­tive­ness as brand name drugs. On May 28, 2016, the for­mer State Food and Drug Ad­min­is­tra­tion (SFDA) re­leased a pend­ing list of 289 kinds of drugs to ob­tain such an eval­u­a­tion.

“This is in­deed a cor­rec­tion of past mis­takes,” said Sun Zhong­shi from the Cen­ter for Drug Ree­val­u­a­tion at the China Drug Ad­min­is­tra­tion. Sun told Newschina that generic drugs all re­quire eval­u­a­tion, re­gard­less of whether they are high or low-end prod­ucts, in or­der to im­prove the qual­ity of generic drugs and chip away at the dom­i­nant po­si­tion of brand drugs.

Cut­throat Com­pe­ti­tion

The for­mer SFDA re­quired 289 kinds of generic drugs to com­plete these eval­u­a­tions by the end of 2018 or fail to re­ceive a reg­is­tra­tion cer­tifi­cate. The re­quire­ment in­volves some 1,800 drug pro­duc­ers.

So far, 95 kinds of drugs have passed eval­u­a­tion. “In Jiangsu, up un­til now, the pass rate has been about 10 per­cent,” Wang Zong­min from Jiangsu Provin­cial Food and Drug Ad­min­is­tra­tion told Newschina. Wang said there were around 300 generic drug pro­duc­ers in Jiangsu, and a to­tal of 1,100 ap­provals would be re-ex­am­ined dur­ing this round of eval­u­a­tion. “By the end of this year, the best case sce­nario is that maybe 100 ap­provals will pass the exam,” he added.

Sun Zhong­shi es­ti­mated that around 60 per­cent of the ap­provals in­side China would be elim­i­nated. “But the over­all mar­ket will not shrink,” he claimed. Sta­tis­tics from the China Na­tional Phar­ma­ceu­ti­cal In­dus­try In­for­ma­tion Cen­ter sug­gest that by 2020, China's generic drug mar­ket could be worth some 1.4 tril­lion yuan (US$206B).

The generic drug in­dus­try faces cut­throat com­pe­ti­tion as new ap­provals speed up and eval­u­a­tions con­tinue. Ac­cord­ing to na­tional rules, once three pro­duc­ers of the same kind of drug have passed eval­u­a­tion, drug pro­cure­ment will not con­sider other kinds of drug that have not yet passed. That means other pro­duc­ers of the same kind of drug will be locked out of the mar­ket if they don't hurry.

On Au­gust 17, the Jiangxi provin­cial drug pur­chas­ing ser­vice plat­form an­nounced it would ad­just on­line pur­chas­ing qual­i­fi­ca­tions, claim­ing three pro­duc­ers of Am­lodip­ine, a blood pres­sure con­trol

drug, have passed, and that other pro­duc­ers would be elim­i­nated from the plat­form.

A tech­ni­cal di­rec­tor from a drug pro­ducer in Lianyun­gang, Jiangsu Prov­ince, told Newschina it was a fi­nan­cial chal­lenge for most drug pro­duc­ers to main­tain high-qual­ity man­u­fac­tur­ing and man­age­ment of all the kinds of drugs that it pro­duces.

“The pur­pose of the eval­u­a­tion is to re­duce the num­ber of generic drugs, and raise the qual­ity of the drugs, so a reshuf­fle of the mar­ket is un­avoid­able,” said Wang Zong­min, di­rec­tor of the Drug Reg­is­tra­tion Man­age­ment De­part­ment of Jiangsu Provin­cial Food and Drug Ad­min­is­tra­tion. Ac­cord­ing to Wang, the on­go­ing eval­u­a­tion will not lead to a shut­down of small- or medium-scale drug com­pa­nies, since they can still pro­duce other drugs not in­cluded in the na­tional list of es­sen­tial drugs.

No Time to Rest

But pro­duc­ers of generic drugs that have passed eval­u­a­tion can­not sit back and re­lax. Generic drugs are of­ten shunned by pub­lic hos­pi­tals, and it can take a long time for them to be in­cluded on an in­di­vid­ual hos­pi­tal's pre­scrip­tion list.

Af­ter a drug is in­cluded on the lo­cal on­line list for hos­pi­tal pur­chas­ing, the hos­pi­tals must hold a drug af­fairs con­fer­ence and ad­just their own pur­chas­ing lists. Only then can doc­tors pre­scribe it. The whole process can take years.

In Fe­bru­ary 2017, Qilu Phar­ma­ceu­ti­cal re­leased a generic Ge­fi­tinib tablet onto the mar­ket. Af­ter ob­tain­ing ap­proval, the can­cer drug was eval­u­ated and found to have equal qual­ity and ef­fec­tive­ness to the brand name ver­sion. But there was more wait­ing while hos­pi­tals held drug af­fairs con­fer­ences.

Doc­tors also shun the drugs. Due to their tar­nished rep­u­ta­tion, many doubt the use­ful­ness of gener­ics. One in­dus­try re­search re­port found that of 2,185 doc­tors sur­veyed, 87.5 per­cent be­lieved im­ported brand name drugs were of higher qual­ity than lo­cal gener­ics, and a with­er­ing 1.1 per­cent of par­tic­i­pants had more con­fi­dence in do­mes­tic gener­ics, while about 7.8 per­cent of the par­tic­i­pants think the two are the same.

One doc­tor from Nan­jing Med­i­cal Uni­ver­sity Hos­pi­tal told Newschina that doc­tors pre­scribe drugs based on the drugs them­selves. Some do­mes­tic generic drugs are sim­ply not ef­fec­tive, they said: “We dare not risk pa­tients' health.”

There is at present no pol­icy com­pelling hos­pi­tals to pri­or­i­tize pur­chas­ing generic drugs, which has posed a hur­dle for generic drugs to re­place brand name drugs in clin­i­cal set­tings. A doc­u­ment re­leased re­cently by the Jiangsu Provin­cial Gov­ern­ment Of­fice vowed to re­form sup­ply and adop­tion of generic drugs, stat­ing the health de­part­ment would en­force their adop­tion and re­quire doc­tors to pre­scribe drugs based on the drug name rather than the brand name.

An­other key as­pect of the push to re­place brand name drugs with low-cost gener­ics is re­form­ing China's health in­sur­ance pay­ment sys­tem. Con­sis­tency eval­u­a­tion could make pos­si­ble equal health in­sur­ance pay­ment for drug with the same China-ap­proved drug names no mat­ter if they are brand name or generic drugs. “A pa­tient then could only get an equal re­im­burse­ment through health in­sur­ance no mat­ter whether they are branded or generic,” Jiang Rong said.

Take the can­cer drug Gleevec as an ex­am­ple. The price for a pack of this drug (which typ­i­cally lasts a month) is 13,400 yuan (US$1,954) while the price of a pack of Xi­wei, a generic ver­sion pro­duced by Jiangsu Han­son Phar­ma­ceu­ti­cal Co. Ltd. is 1,499 yuan (US$219).

Ac­cord­ing to the 70 per­cent re­im­burse­ment rate of ex­ist­ing health in­sur­ance poli­cies, pa­tients who pur­chase Gleevec are re­im­bursed 9,380 yuan (US$1,369), while those who pur­chase Xi­wei are only re­im­bursed 1,049 yuan (US$153).

“So if a stan­dard­ized re­im­burse­ment could be set up, say 2,000 yuan (US$292,) peo­ple would need to pay 11,000 yuan (US$1,605) for Gleevec but noth­ing for Xi­wei,” ex­plained Wang Zong­min with Jiangsu Food and Drug Ad­min­is­tra­tion.

Wang Yue, deputy chief of the Jiangsu Provin­cial Food and Drug Ad­min­is­tra­tion, told Newschina that health­care in­sur­ance should start from the mar­ket, and re­flect per­sonal pay­ment abil­ity and con­sumer will­ing­ness. “The na­tional health­care plan should fo­cus on ful­fill­ing ba­sic needs and se­cur­ing drugs' avail­abil­ity to the gen­eral pub­lic,” Wang added.

In Jiang Rong's opin­ion, to con­tain surg­ing health­care in­sur­ance ex­pen­di­ture, the key is to re­duce spend­ing, and a tran­si­tion from per­cent­age re­im­burse­ment to fixed-amount re­im­burse­ment for drugs should be con­sid­ered.

“Whether con­sis­tency eval­u­a­tion be­comes a one-time thing will be de­cided by the im­ple­men­ta­tion of fol­low-up poli­cies,” said Kong Xiangsen of Jiangsu Food and Drug Ad­min­is­tra­tion's Drug Reg­is­tra­tion De­part­ment. Kong says the sup­ply of generic drugs, pric­ing and re­lated health­care in­sur­ance poli­cies will to­gether de­cide the fi­nal out­come of the re­forms.

Staff work­ing in the lab of a phar­ma­ceu­ti­cal com­pany in Jiangsu Prov­ince

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