China's drug price reforms: Much of the same?

A series of pricing reforms have taken place in China's pharmaceutical sector. On May 6, the National Development and Reform Commission (NDRC) and six other departments issued the Opinions on Promoting Pharmaceutical Price Reform (Opinions), which lift price controls for most drugs. They took effect on June 1.

But despite the hype, most pharmaceuticals are in fact subject to new pricing mechanisms that still involve the government.

“This shows the back and forth nature of China's healthcare reform,” said Lewis Ho, who leads Dechert's Asia life sciences practice. “The government wants to liberalise the market but at the same time retain control. It has a goal in mind but doesn't know how to achieve it yet.”

Under the Opinions, all pharmaceuticals except narcotics and top-class psychotropics are now subject to new pricing structures, all of which involve the government. Prices of drugs on the government's reimbursement list will be set by the authorities and insurers. Patented drugs will be priced through a multiparty negotiation involving stakeholders of the industry. Blood products, vaccines, HIV/AIDS treatments and birth control drugs will undergo bidding or negotiation. The rest are market-set – but how many drugs fall under this category?