Several Chinese central government authorities are involved in the implementation of and revisions to the NRDL, including MOHRSS as the primary stakeholder, NDRC (the National Development and Reform Commission www.ndrc.gov.cn), CFDA (China Food and Drug Administration www.sfda.gov.cn), MOF (Ministry of Finance www.mof.gov.cn) and NHFPC (National Health and Family Planning Commission www.moh.gov.cn).
Make essential drugs accessible and affordable in China
The NRDL aims to make essential drugs accessible and affordable to most Chinese patients as well as to support innovative development in the pharmaceutical market in China. Being listed on NRDL allows Swiss pharmaceutical companies to bring their innovative products to a broader consumer population and expand the potential market of a drug in the Chinese market.
Opportunities for Swiss SMEs
- Drugs in the NRDL are divided into two categories: “Category A” and “Category B”. Drugs in “Category A” are widely-used in clinical treatment with good efficacy and lower prices. They cannot be adjusted by any province and are 100% reimbursable. “Category B” includes premium and innovative drugs, often for specialized purpose. They are not 100% reimbursable. Every provincial government can revise up to 15% of the drugs in “Category B” and decide the reimbursement ration for those drugs. Since China has a nationwide medical insurance program which covers 95% of its population and because the inclusion of a drug on the list reduces the burden of self-pay, the reimbursed drugs could gain wide market access and have a significant competitive advantage in the Chinese market.
- Compared to the previous NRDL, 339 new drugs have been added into the list. The updated NRDL has a total number of 2535 western drugs (i.e. chemical and biological drugs) and Traditional Chinese Medicines (TCMs, also including folk medicines, for example Tibetan medicine). The release of the updated NDRL is a major pharmaceutical policy development in China and it shows promise for healthcare development and pharmaceutical innovation. As reflected in the NRDL update, the Chinese government has increased recognition of innovative drugs, which will greatly improve the patient access and affordability of innovative western drugs through China’s growing pharmaceutical market, which is today the 2nd largest in the world.
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Drugs in Category A and Category B; Western drugs 1297 (133 new); Traditional Chinese Medicines (TCMs) 1238 (226 new)
Drugs in Category A: 402 Western drugs, 192 TCMs
Drugs in Category B: 895 Western drugs, 1046 TCMs
- The updated NRDL gives top priority and support to drugs for work-related injury insurance, pediatric drugs, innovative drugs, drugs to treat major diseases, and folk medicines. 91 new pediatric drugs are added into the list, so that the total number of pediatric drugs grows to 540. Meanwhile the list primarily includes drugs to treat cancer, serious mental illness, haemophilia, diabetes, hepatitis, and kidney diseases. Furthermore the vast majority of innovative chemical and biological drugs, which have been approved by CFDA in the period between 2008 and the first half of 2016 are included into the list or on the “to-be-negotiated” list.
- Drugs in “Category B” are identified by the active chemical molecules, not by the specific brand or pharmaceutical company. This policy makes many western drugs more affordable to Chinese patients, because the imported and the local made drugs will receive the same percentage of reimbursement. In general the Chinese prefer foreign drugs rather than the locally made ones. Since the price difference will be substantially lowered, Chinese patients more likely will choose the imported drugs.
- According to the update, for local disease trends or provincial hospital demand, every provincial government is allowed to make adjustments (add or remove drugs and adjust payment limits) to the varieties of drugs in Category B within 15% of the total number. The revision at provincial level has been done by 31st of July 2017. Afterwards, the implementing of the new list should be started within 1 month. If a drug fails to get listed into the NRDL, it is still possible to get listed on the various Provincial Reimbursement Drug Lists (PRDLs) to enjoy local reimbursement. On the one hand, this policy could be very challenging, because the pharmaceutical company needs to approach all 31 provinces in China one by one, on the other hand, the pharmaceutical company may have an advantage in the province where they have local production or well established communication, sales & distribution channels.£
- Increasing the access of clinically beneficial targeted cancer drugs is a hot topic in China. Most patients are forced to turn to unregulated channels to get treatment due to high costs. With the update of the NRDL, MOHRSS also announced that 45 drugs are set on a “to-be-negotiated” list, half of which are targeted oncology therapies covering leukemia, lung cancer, gastric cancer, colorectal cancer and other common tumors. The rest are mainly drugs used to treat major diseases, like cardiovascular and cerebrovascular diseases, rare diseases, diabetes etc. Most of these drugs are on-patent with high clinical value and high costs. If the relevant pharmaceutical companies confirm their willingness to negotiate a lower price, MOHRSS will make the list public and start the negotiation process. Once the agreements on price reduction are reached, the drugs will be added into the NRDL.
- Although the update of the NRDL pertains to drugs that already got approved or will soon be approved by CFDA and available on the Chinese market, it also allows the pharmaceutical companies which are not yet active in China to draw a clearer picture of the current status and future directions of Chinese policy in the pharmaceutical sector, especially in regard to which types of drugs are assigned a higher priority by the Chinese authority to get listed in the NRDL. Pharmaceutical companies may use this information to properly plan their market entry strategy accordingly in order to take the most advantage of future opportunities.
How can Swiss SMEs benefit from these opportunities?
If you would like to further understand and evaluate the Chinese pharma market, we suggest you to contact our consultant responsible for China. Switzerland Global Enterprise, together with its network of experts, is able to support companies with both the strategic and practical aspects of a new market entry. We would be pleased to discuss with you on how to we could support your company on their next steps in China.
- China’s update on the National Reimbursement Drug List for Basic Medical Insurance, Employment Illness Insurance, and Maternity Insurance (NRDL 2017 edition) published by the Ministry of Human Resources and Social Security of the People’s Republic of China (MOHRSS),http://www.mohrss.gov.cn/gkml/xxgk/201702/t20170223_266775.html (in Chinese); http://www.mohrss.gov.cn/SYrlzyhshbzb/dongtaixinwen/buneiyaowen/201702/t20170223_266787.html (in Chinese)
- People's Daily (Renmin Ribao): http://paper.people.com.cn/rmrb/html/2017-02/24/nw.D110000renmrb_20170224_1-08.htm (in Chinese)
- Costello Medical Consulting: www.costellomedical.com
- AmCham Shanghai’s Healthcare Committee: https://www.amcham-shanghai.org/en/committees/healthcare
- FiercePharma: China updates national drug list, adding some blockbuster Western meds http://www.fiercepharma.com/pharma-asia/china-updates-basic-medical-insurance-drug-list-adds-133-western-style-meds
- CBPartners: CHN’s NRDL Update – Worth the Wait (and Heavy Discounting)? http://cbpartners.com/blog/chns-nrdl-update-worth-the-wait-and-heavy-discounting.html