As China’s strong domestic drug R&D programs lead to many new drugs, there will be increased integration between drug companies and China’s health insurance program. Basically, commercial insurance will help Chinese patients pay for high-priced innovative drugs. By the end of 2023, commercial insurance payments reached about $1 billion dollars for high-priced innovative products. This was only a small percentage of the overall market. However, over the last five years, commercial insurance for high priced drugs has grown about 24% per year. Some cities have introduced policies for high priced innovative products, but the specific implementation policies and timelines are still unclear. Some doctors are optimistic that multi-layered payment systems will grow. One commercial program to pay for innovative ultra-high drugs is called the Million Yuan Medical Insurance program. However, this program excludes patients with anamnesis, which means all applicants must be in good health.
If China wants to continue to be a major player in global drug development, mechanisms to compensate drug developers must be in place to allow patients to buy their products. Over the last 5 years, China’s drug price reduction efforts including volume-based procurement (VBP), diagnostic intervention packet (DIP), and DRG systems have constrained drug prices and high-priced innovative products. Also, as reported earlier this year in our newsletter, new pricing programs by some public payors will not help the situation.
Written by: Ames Gross – President and Founder, Pacific Bridge Medical (PBM)
Mr. Gross founded PBM in 1988 and has helped hundreds of medical companies with regulatory and business development issues in Asia. He is recognized nationally and internationally as a leader in the Asian medical markets. Mr. Gross has a BA degree, Phi Beta Kappa, from the University of Pennsylvania and an MBA from Columbia University.