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China’s New Essential Drug List: Quality + Price
publication date: Apr 7, 2013
author/source: Richard Daverman, PhD
Last week, China issued its new 2012 Essential Drug List, a list that will have a profound effect on the pharmaceutical scene in China (see story). Original research by ChinaBio® discovered a revolutionary change in the new rules: China’s Ministry of Health told provincial/municipal governments to consider quality – not just price – when choosing a drug supplier for the list. Under the new guidelines, provincial and local governments must provide their citizens with high quality drugs at a reasonable price. For drug companies, the change means that having one of their drugs included on the list can be a positive event, rather than a negative one.
The EDL establishes a minimum level of drug coverage for China’s citizens. Each drug included on the list should always be available at China’s medical establishments, including rural clinics. The products are also fully reimbursable under China’s Basic Medical Insurance.
Under the new rules, provincial and municipal governments will remain in charge of procurement of the products. But the old “Anhui Model,” which always chose the lowest bidder, is now officially out. Quality is a major factor, and drugs that meet cGMP certification will be preferred.
Also, if a company submits a very low bid, the submission will be subject to further evaluation. An unusually low bid could mean the manufacturer may cut corners in production and supply inferior products. Additionally, generics that meet international standards, such as cGMP, will be given priority during the procurement process. China will use this inducement to encourage companies to improve the quality of its most important drugs.
During the procurement process, government agencies will usually use a bidding process, which is often called a “tendering.” But the agencies can also set the price for the drugs on the EDL arbitrarily or they can negotiate directly with the manufacturers. These options will depend on whether there are multiple companies that can supply the drug and whether there is an issue with availability.
Changes in the List
Also from ChinaBio® research, we now know more about how the 2012 list for western-style drugs was changed from 2009. The following is a list of the major new inclusions:
The 520 drugs are comprised of 317 chemical/biological drugs and 203 TCM products. The new list will be in effect for three years.
The 2012 EDL, with its emphasis on quality, is a significant step forward for China. The country wants to have a vibrant, innovative pharmaceutical industry. To foster that sector, it cannot at the same time have an insurance plan that drives prices below cost – there needs to be sufficient profit in pharmaceutical products that encourages innovation, quality and the safety of consumers. The new EDL brings China’s drug procurement policies back in line with its national objectives – an innovative and safety-conscious pharmaceutical industry.