(Yicai) April 16 -- China will optimize the initial pricing mechanism for newly launched medicines, allowing pharmaceutical companies to set prices based on clinical significance and the high investment and risk involved in the development of high-level innovative drugs.

Drugmakers will independently determine new medicines' initial prices by considering various factors, including clinical value, market supply and demand, competition landscape, and social affordability, according to a new policy document issued by the General Office of the State Council.

For innovative drugs with strong innovation and clinical significance, the Chinese government supports firms in setting launch prices aligned with high research and development investment and risks, as well as maintaining them for a certain period. Future adjustments may be made based on actual clinical effectiveness.

The new policy clarifies ambiguities surrounding independent drug pricing, Chen Yi, professor and researcher at Tsinghua University's Institute of Hospital Management, told Yicai. Although most new medicines adopt company-led pricing before inclusion in the national medical insurance catalog, the pricing basis was previously unclear and inconsistent, but the new policy has explicitly set it on clinical value, matched with high R&D costs and risks, Chen noted.

The phrase "high investment, high risk" essentially means regulators allow innovative drugmakers to factor R&D costs and failure risks into economic evaluations for pricing, Jin Chunlin, director of the Shanghai Health Development Research Center, said to Yicai. In addition, firms must prioritize patient benefits when assessing clinical significance, Jin added.

The stipulation allowing innovative drugs to "maintain relatively stable prices for a certain period after launch" reflects institutional protection for originator drugs during patent terms, Jin pointed out.

The new mechanism marks a further shift toward a market-led pricing mechanism in China, creating a more favorable policy environment for innovative drugs, according to Jin.

Editors: Tang Shihua, Martin Kadiev