Expert Analysis | The Proposed Results of the Tenth Batch of Centralized Procurement Have Been Announced: What Changes in Medication Accessibility for Patients?
On December 12, the bidding for the tenth batch of national organized drug procurement was opened in Shanghai. According to the National Healthcare Security Administration, 62 types of drugs were successfully procured, with 385 products from 234 companies qualifying for selection, covering areas such as hypertension, diabetes, tumors, and cardiovascular diseases.
Since 2018, the National Healthcare Security Administration has organized ten batches of national drug procurement, successfully procuring a total of 435 types of drugs. Through centralized procurement, a large number of classic “old drugs” that have expired patents are supplied nationwide by companies that have passed quality and efficacy consistency evaluations. The National Healthcare Security Administration stated that it will guide local governments and selected companies to implement the results of the selection, ensuring that patients across the country can access the selected products by April 2025.
Late on December 12, the Shanghai Sunshine Pharmaceutical Procurement Network released detailed information about the proposed selection results for the tenth batch of procurement. Media reports indicated that this procurement set historical records in both the number of varieties and the number of participating companies. Previously, the National Drug Joint Procurement Office published the announcement of the “National Drug Centralized Procurement Document (GY-YD2024-2),” indicating that this procurement involves 62 varieties and 263 specifications, making it the largest national organized drug procurement to date.
Additionally, there were certain changes in the rules for this procurement. In December, the National Healthcare Security Administration and the National Health Commission issued a notice on improving the centralized procurement and execution mechanism for pharmaceuticals, further refining the existing policies. The notice emphasized strengthening price management for the procured varieties, requiring selected products to be promptly listed at the selected price, and implementing measures such as suspending procurement and delisting for products with prices exceeding relevant policy regulations.
What are the main characteristics of this procurement? What trends can be expected in future drug procurement policy changes? In response, The Paper interviewed Jin Chunlin, Director of the Shanghai Health and Health Development Research Center, and Cao Yiping, National Market Access Manager of Shanghai Pharmaceutical Technology Company.
The Paper: Compared to previous batches, this procurement has undergone significant changes. What are the main characteristics of this procurement?
Jin Chunlin: This year’s procurement has three characteristics: first, there are thresholds for the number of companies, with higher entry standards; second, the selection rules have changed from allowing a 50% price reduction for selection to a maximum of 1.8 times the lowest comparable price for the same variety; third, management has been strengthened to prevent collusion among companies; fourth, there is a greater emphasis on supply assurance, requiring companies to guarantee supply after winning bids.
Cao Yiping: This procurement has significant highlights in stabilizing market expectations and supply, while also promoting reforms in the pharmaceutical industry. The procurement cycle lasts from the execution of the selection results until the end of 2027. Currently, the annual procurement demand from medical institutions nationwide reaches 9 billion pieces, and through a substantial market scale, the “volume-based procurement” method links quantity and price, stabilizing the production capacity of pharmaceutical companies and market expectations in the upstream and downstream supply chains for the next three years.
In terms of stabilizing market supply, an average of more than six companies won bids for each drug, promoting a more stable and diverse supply; at the same time, a supply method of “one main supplier and two backup suppliers per province” was implemented, enhancing the choice and resilience of clinical supplies.
The Paper: The industry has indicated that this procurement is of a large scale. How significant is the price reduction in this procurement?
Jin Chunlin: The price reduction in this procurement is indeed substantial; for example, the lowest quoted price for enteric-coated aspirin is only 0.03 yuan per piece. Overall, due to the cancellation of the 50% price reduction for selection and increased competition, the overall price reduction is quite significant, with some drugs experiencing particularly large price drops.
Cao Yiping: This procurement covers a wide range, including hypertension, diabetes, tumors, cardiovascular diseases, infections, and mental illnesses. The participation and enthusiasm of companies are high, with 385 products from 234 companies qualifying for selection. The overall price reduction trend is expected to be stable, with several classic “old drugs” in the fields of diabetes and cancer seeing price reductions of around 90% based on the procurement price limits.
The Paper: The tenth batch of procurement is also referred to as the one with the strictest qualification review. What trends can be expected in future drug procurement policy changes?
Cao Yiping: Against the backdrop of promoting the construction of a unified national market, there is a requirement for high-standard connectivity of market facilities, as well as high-level unification of factor and resource markets, and goods and services markets. I believe that future drug procurement policy rules will also trend towards higher standards, higher levels, and greater regulation.
Jin Chunlin: Future procurement rules may emphasize the need for accurate reporting after bidding, improving execution rates, and possibly implementing reward and punishment measures. Good execution may allow companies to continue participating, while poor performance may lead to certain measures. In addition to price management for non-selected drugs, the National Healthcare Security Administration is also promoting the “three entries” of procured drugs: into village clinics, private medical institutions, and retail pharmacies, further expanding the market coverage of procured drugs. The prices and quantities of non-selected drugs may be restricted.
The Paper: After the announcement of the tenth batch of procurement results, how will the accessibility of medications for patients change? What measures can further improve patients’ medication experience?
Cao Yiping: The tenth batch of drug procurement includes more effective and convenient medications. Moving forward, the National Healthcare Security Administration has stated that it will guide local governments and selected companies to implement the results of the selection, ensuring that patients nationwide can access the selected products by April 2025.
In late November, six departments, including the National Health Commission, the Ministry of Industry and Information Technology, and the National Healthcare Security Administration, issued a notice on reforming and improving the grassroots drug linkage management mechanism and expanding the variety of grassroots drugs. The notice emphasized focusing on the national essential drug list, the national medical insurance drug list, and the drugs selected in national centralized procurement to standardize and optimize the types of drugs used at the grassroots level. This indicates that many measures have been proposed in China to standardize and optimize grassroots medication, which will significantly enhance the accessibility of medications for patients with chronic and common diseases.
The Paper: What impact will the results of this procurement have on the future development of the pharmaceutical industry?
Jin Chunlin: The impact is that it clearly tells companies that the profits from generic drugs may be limited in the future, as generic drugs will only have general manufacturing profits, pushing companies to transition towards innovative drugs. Additionally, with the reduction in drug prices, quality supervision must be strengthened, such as requiring drug regulatory departments to conduct random inspections and hospitals to report adverse reactions promptly.
Cao Yiping: The tenth batch of drug procurement involves 62 varieties, with an average of more than six companies winning bids. This high level of market competition will encourage relevant pharmaceutical companies to focus more on cost control and price competition, which I believe will have far-reaching implications for the future development landscape of the industry.
First, this price competition not only tests companies’ cost control capabilities but may also prompt some companies to adjust their development strategies, focusing on more cost-effective product lines or market segments.
Moreover, there will be changes in market supply and patient burden. The drugs in the tenth batch of procurement cover areas such as hypertension, diabetes, tumors, cardiovascular diseases, infections, and mental illnesses. Through the “volume-based procurement” method that links quantity and price, the prices of these drugs will significantly decrease, greatly alleviating the medication burden on patients while ensuring the stability of drug supply. The ten batches of drug procurement will reduce the financial burden of “old drugs” on the public while creating space to support the inclusion of new drugs in medical insurance, further enhancing the effect of “replacing old with new” in medical insurance.
Outcome orientation is a crucial consideration. Since 2018, the National Healthcare Security Administration has organized ten batches of national drug procurement, successfully procuring a total of 435 types of drugs. The relevant policy measures have shown significant results in maintaining quality while reducing prices. With the continuous improvement of related procurement policy rules, we can anticipate a better medical security environment.
