(Yicai) April 16 -- China plans to give pharmaceutical companies more pricing autonomy over newly approved drugs, including innovative medicines, to better reflect the clinical value and high investment risk involved in bringing new therapies to market.

According to a policy document issued by the General Office of the State Council, drugmakers will be allowed to set the initial pricing of new drugs based on factors that also include supply and demand, the competitive environment, and public affordability.

For innovative therapies that demonstrate a high degree of originality and clear clinical value, the government will support drugmakers in setting launch prices that reflect the substantial investment and risk involved in research and development. These prices may be maintained for a certain initial period, after which adjustments can be made based on real-world clinical outcomes and observed therapeutic effectiveness.

The new policy clarifies ambiguities around independent drug pricing, said Chen Yi, a professor and researcher at Tsinghua University’s Institute of Hospital Management.

While most new drugs have been priced independently by companies before inclusion in the national medical insurance catalog, the underlying pricing rationale had lacked clarity and consistency, Chen said. The new policy explicitly anchors pricing in clinical value and aligns it with the high costs and risks associated with drug development, he said.

The policy document’s reference to "high investment, high risk" effectively signals that regulators will now allow innovative drugmakers to factor in R&D costs and failure risks into pricing models, according to Jin Chunlin, director of the Shanghai Health Development Research Center. Firms must prioritize patient outcomes when evaluating the clinical value of novel therapies, he said.

The provision allowing innovative drugs to "maintain relatively stable prices for a certain period after launch" reflects a form of institutional protection for brand-name drugs during patent terms, Jin pointed out.

This new mechanism marks a further shift toward a more market-led drug pricing system in China, and signals a progressively more favorable policy environment for the development and commercialization of innovative medicines, according to Jin.

Editors: Tang Shihua, Martin Kadiev