(Yicai) Aug. 3 -- Ten reference-listed drugs, most of them original treatments, secured supply contracts under the latest competitive tender from China’s centralized volume-based drugs procurement program, setting a new record high.

Some 521 products, covering 65 kinds of medication, made by 327 pharmaceutical companies won the bidding in the bulk-buying program’s 12th round that kicked off in Shanghai on July 31, bringing the total number of drug types to 555, according to the National Healthcare Security Administration. About 45,000 medical institutions took part in the process.

The program, launched as a pilot in 2018 and overseen by the NHSA, leverages the massive buying power of China’s public hospitals to secure huge guaranteed sales in exchange for steep price cuts on generic and essential medicines, with the aim of lowering the cost for patients, reducing healthcare spending, and curbing inefficiencies in the drugs market.

Fifteen drugmakers bid on average for each product in this round, with the most sought-after product having as many as 49 bidders, the NHSA noted, adding that patients nationwide will likely have access to these medications at lower prices within this year.

The standout feature of this round was the redesigned rules. All drug quantities were reported based on specific brand names, effectively returning clinical choice to hospitals, and bids more than two standard deviations below the average price were still eligible for selection but were excluded from guaranteed purchasing volumes and qualifying quotas, a measure intended to discourage irrational underpricing.

The program’s central aim is to ensure clinical needs, quality, and supply, so bids must be in a reasonable range, said Zhu Tongyu, deputy dean of Shanghai Medical College of Fudan University. He looks forward to the process shifting from cutthroat competition to a “new equilibrium,” ultimately achieving a win-win outcome for patients, hospitals, insurers, and the industry.

‘Revival Mechanism’ Expands Access

Industry insiders noted a more moderate approach to pricing in this round. “We could’ve won even with a 20 Chinese cents (3 US cents) higher,” the head of sourcing at one drugmaker said. “We were conservative this time, fearing we might lose the bid if we raised the price."

Yicai learned that out of more than 800 product specifications, only five were required to submit a statement justifying their pricing.

This round also optimized the so-called “revival mechanism.” If the prices pharmaceutical companies quoted for reference-listed drugs, typically original products, did not qualify initially, they could still do so if it accepted a price no higher than three times the trigger price and lower than the highest valid winning bid.

Among the 10 reference-listed drugs selected under this mechanism were Novartis' sacubitril/valsartan, Bayer's iopromide, Eisai's betahistine, Abbott Laboratories' dydrogesterone, and Guangzhou Green Cross Pharmaceutical's compound amino acids.

As long as original drugs and reference-listed products are submitted with reasonable bids, they can now effectively be “revived” and selected, said Liu Side, director of the Department of Gastroenterology at Nanfang Hospital of Southern Medical University. “Although they don’t get guaranteed volumes, hospitals gain greater flexibility in purchasing decisions, which is a very positive development for clinical practice,” he said.

Changes in the rules show a shift in centralized procurement to “comprehensive governance” from “price discovery,” said Jin Chunlin, director of the Shanghai Health Development Research Center. The focus has expanded from solely reducing prices to a multidimensional platform that includes market access, quality supervision, and supply compliance, he noted.

Editor: Futura Costaglione