Mainland China has gone through a series of regulatory and reimbursement reforms in recent years in an effort to keep pace with its dynamic economic and demographic landscape. Clarivate expert Karan Verma discusses how the Volume-Based Procurement program is transforming the generics landscape, increasing patient access and prompting manufactures to rethink strategies.
Remodeling Mainland China’s healthcare system to align with the country’s dynamic economic and demographic landscape
Mainland China’s healthcare system has undergone a series of major reforms to its regulatory and reimbursement policies in the last two years. One major market access reform is the Volume-Based Procurement (VBP) program. Launched in November 2018, this program aims to reduce generic drug prices and consolidate the fragmented system for procuring generic drugs. Since then, four successful rounds of the VBP program have streamlined generic drug prices while introducing a centralized system of quality control into Mainland China’s pharmaceutical industry.
How is centralized drug procurement changing Mainland China’s healthcare system?
The VBP program has led to significant improvements in Mainland China’s generic pharmaceutical industry – helping to close the gap for high-quality, cost-effective generics1. 157 drugs have been included in the VBP during the last four rounds of the program. Of these, therapies for nervous system disorders and infectious diseases constitute roughly 18% apiece, while therapies for cardiovascular and digestive/metabolic diseases account for 16% and 14%, respectively.
Figure 1. Overview of drugs negotiated successfully as part of VBP, by therapeutic area
Sources: GBI analysis, Clarivate analysis
With $2 billion2 in cost savings realized through the first four rounds of the VBP program, the Chinese government is expected to channel the bulk of these savings toward other key initiatives such as the National Reimbursement Drug List (NRDL)1. This should lower healthcare costs for the government and reduce strain on the country’s GDP.
Figure 2. Contract value of VPB rounds (USD million)
Sources: GBI analysis, Clarivate analysis
Positive response from patients on VBP winning drugs; authorities expected to shift focus towards inclusion of biologics
The early wave of reforms for the generic drug sector is yielding benefits, including price regularization, improved patient access to high quality medicines, fair competition between both domestic and multinational manufacturers and a significant reduction in overall healthcare costs 3. By the end of 2022, the National Healthcare Security Administration’s (NHSA) plans to expand the VBP program to include as many as 500 molecules2 that have high-quality Generic Quality Consistency Evaluation (GQCE)-certified generics.
The fifth round of VBP, which is expected to take effect on June 23, 2021, will include 58 molecules2, more than in any round so far. Molecules will include 12 digestive tract and metabolic disease therapeutics, 9 systemic anti-infectives and 8 immunomodulators We anticipate the inclusion of insulin biosimilars (such as insulin degludec, insulin as part, insulin detemir, insulin glargine and insulin lispro) and monoclonal antibodies (such as rituximab, trastuzumab and bevacizumab) in future VBP updates as authorities shift their focus towards biologics. In the two years since the start of the VBP program, multinational manufacturers have tailored their commercialization strategies to successfully compete in negotiations. Because of the pricing pressure and plunging profit margins in this highly regulated and competitive environment, domestic companies are now shifting their focus to R&D and innovation.
Doctors in public medical institutions are obligated to prescribe generics included in the program as branded originators, phase out due to restrictions on volume sales instituted as part of the VBP process1. Despite regional differences in the acceptance of generic therapies over branded originators, patients have welcomed the VBP program, and authorities have deemed it a powerful success. With average price reductions of 65% of the original cost in the latest VBP round, companies have minimal leeway when it comes to delivering product drug volumes, especially considering the immense supply and quality control pressure that bid winners now face.
Download complementary slides to learn more about the evolution of VBP and its impact on Mainland China’s pharmaceutical industry, and how you can shape your organization’s strategic direction in this new environment.
Insights provided in this article were developed by Clarivate analysts, using data and analysis from China In-Depth, which covers patient populations, access and reimbursement environment, treatment paradigms, pipelines and drug-level forecasts.
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- China In-Depth™, Clarivate, 2021
- GBI analysis
- 2021, China Lays Out Path Forward for Volume-Based Procurement, Tendering, viewed on June 10, 2021, <https://www.eversana.com/2021/03/10/china-lays-out-path-forward-for-volume-based-procurement-tendering/>.