Massive cuts to medicine prices announced by China’s national drugs procurement program

Business & Technology

China has published its latest list of price-controlled drugs that will be available cheaply at public hospitals. Pharma companies that make drugs on the list will make guaranteed profits, even if the cheaper prices mean margins are low.

elderly asian woman holding pharmacy prescription
Her meds just got cheaper.

In July, China added 56 generic medicines, “including some global blockbuster drugs, to its state bidding program aimed at procuring key treatments at big discounts in return for offering large-volume state contracts.” “Generic,” or “off-patent,” drugs are those whose patents have expired and can now be produced by any maker. The program was launched in 2018 with 31 drugs.

  • Representatives from foreign and domestic pharmaceutical companies met in Shanghai last week to pitch the government their drugs for use in public hospitals across China.
  • Many companies made bids far below the current market price of their products.
  • Today, 55 generic drugs were confirmed (in Chinese) to be on the final list.
  • Consumers will see massive price reductions. The average price drop of the drugs procured will be 53%, with one drug’s price plummeting 95%.

The list was a blow to many foreign pharmaceutical companies, with foreign firms being outbid by domestic companies across the board.

  • Global pharmaceutical giants Merck & Co and Novartis both failed to secure deals. Only three of the 125 companies that ultimately received deals are foreign (Eisai, Shibi, and Pfizer).
  • Many of the drugs Chinese companies received deals to sell were originally developed by foreign companies, such as AstraZeneca’s heart disease treatment Brilinta.