Eli Lilly & Co., Pfizer Inc., and Johnson & Johnson were able to acquire positions on China’s first innovative medication catalog, creating a new market channel and increasing sales opportunities for expensive, cutting-edge therapies.
Officials in Guangzhou said on Sunday that a total of 19 medications were on the list, which is a list of medications recommended for commercial health care but considered too costly for state insurance. The medications treat a variety of illnesses, such as uncommon genetic abnormalities, cancer, and Alzheimer’s.
The addition of these medications may lessen the strain on state health insurance as China’s aging population raises demand for treatments for anything from diabetes and cancer to dementia.
It is also anticipated that a gradual shift to commercial insurance reimbursement will enable Chinese and international pharmaceutical companies to offer their products at a greater price, boosting profits that have long been repressed by significant price reductions mandated by the state program.
In order to be eligible, pharmaceutical companies bargained with government representatives for lower costs that would be made available to all private insurance.
The list included cancer medications from Pfizer, Johnson & Johnson, and Bristol-Myers Squibb Co. in addition to Eli Lilly’s Kisunla and Eisai Co.’s Leqembi, both of which treat Alzheimer’s. Numerous regional pharmaceutical companies, including five manufacturers of CAR-T cell treatments for cancer therapy, also secured places on the list. The only business with two drugs on the list is BeOne Medicines Ltd.
Average discounts were not immediately disclosed by the government. According to earlier local media reports, the cutbacks were between 15% and 50%, which is less than the 60% cuts typically necessary for participation in the national reimbursement medication list, or NRDL.
With 95% of its 1.4 billion citizens covered by the state insurance system, China has long utilized its negotiating muscle to demand significant concessions in exchange for NRDL volume. While some multinational corporations, such as AstraZeneca Plc and Novartis AG, adopted the NRDL approach, others shied away from it in favor of concentrating on out-of-pocket or private insurance clients, which account for a small portion of the market.
Additionally, new and costly medications from regional companies, such CAR-T cell treatments, were not covered by the unstated price cap. Chinese biotech companies have long advocated for payment changes due to their narrow profit margins.
The goal of the new catalog is to increase the contribution of commercial insurance to the financing of novel medications. It is unclear how it will affect the earnings and profitability of pharmaceutical companies.
The 121 medications that were first taken into consideration for the catalog, which was subsequently reduced, included both domestic and international pharmaceutical companies. Analysts at Macquarie Securities, lead by Tony Ren, anticipate that the catalog would expand to 300 medications by 2027, even if this year’s final list could be insufficient to change the market.
Before the announcement, they noted, “Commercial healthcare insurance might be an excellent answer to the existing inadequacies of a single-payer NRDL system.”
Alongside the most recent NRDL update, which included 114 new medications, including Lilly’s diabetic medication Mounjaro, was the drug catalog. Both go into effect on January 1.
