(Yicai Global) Feb. 25 -- Shanghai and two neighboring provinces have expanded the selection criteria for their regional centralized drug procurement alliance to not only seek the most competitive offer, but also to evaluate the good standing of the companies who apply.

Shanghai together with Zhejiang and Anhui provinces invited bids for 47 commonly-used types of cardiovascular disease drugs, antibacterial agents and antidepressants today, the alliance said. Successful bidders will gain access to the vast medical insurance program they run in the Yangtze River Delta region. These drugs are already part of the national drug procurement scheme.

“Price will be no longer be the only consideration in selecting suppliers,” Shi Lichen, a senior executive at Beijing Dingchen Management Consulting, told Yicai Global. “The evaluation has been made broader and will also take into account product quality, whether firms have broken anti-trust rules and whether they have a history of problems such as supply disruption. It will also look at past sales data, as those companies with larger sales tend to be more reliable, he added.

This is a direction that the national centralized drug procurement program will likely take in the future, Shi said.

Pharma firms need to be psychologically prepared to keep lowering their prices, said Zhao Heng, founder of medical consulting firm Latitude Health. Although the markdown in this regional scheme is not as steep as the national one, prices will need to keep coming down with each contract renewal, leading to smaller and smaller profits for companies.

Editors: Tang Shihua, Kim Taylor