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China's State Council Issues Guidelines on Innovative Drug Pricing
China's State Council has released new guidelines aimed at supporting innovative drug pricing through value-based methods while reducing generic drug prices via market competition. A Citigroup analyst described the guidelines as the most significant in a decade.
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China's State Council published guidelines this month on pricing for innovative drugs, according to a South China Morning Post report. The guidelines support patented innovative drugs with value-based pricing and aim to lower generic drug prices through market competition and volume-based procurement.
Volume-based procurement involves the government purchasing drugs in bulk for public hospitals, which has placed price and competitive pressure on multinational companies.
The policy permits biotech companies to set higher prices in the private market, including private hospitals, retail pharmacies, and online platforms. It also encourages commercial insurance to take a larger role in funding innovative drugs.
John Yung, head of Asia healthcare research at Citigroup, stated in an April 16 research report that the guidelines provide more profitable channels for innovative drugmakers. He noted potential benefits for internet healthcare players, pharmacies, and private healthcare services, mentioning examples such as Alibaba Health, Yifeng, and Hygeia.
