(Dec 7): Eli Lilly & Co, Pfizer Inc and Johnson & Johnson secured spots on China’s first innovative drug catalog, opening a new market channel and boosting sales prospects for costly, cutting-edge treatments.
In all, 19 medicines made the list — a formulary of drugs deemed too expensive for state insurance but recommended for commercial health coverage — officials said in Guangzhou on Sunday. The drugs are for a range of conditions including cancer and Alzheimer’s, as well as rare genetic disorders.
As China’s ageing population increases demand for therapies treating everything from cancer and diabetes to dementia, the inclusion of these drugs may ease the burden on state medical insurance. A steady transition to commercial insurance reimbursement is also expected to allow global and Chinese drugmakers to sell their drugs at a higher price, bolstering margins that have long been suppressed by deep price cuts required in the national programme.
To qualify, drugmakers negotiated discounted prices with government officials that would be offered to all private insurers.
In addition to Eli Lilly’s Kisunla and Eisai Co’s Leqembi — which both treat Alzheimer’s — the list also featured cancer drugs from Pfizer, Johnson & Johnson and Bristol-Myers Squibb Co. A host of local drugmakers also won spots on the list, including five makers of CAR-T cell therapies for cancer treatment. BeOne Medicines Ltd is the only company with two medications on the list.
The government didn’t immediately disclose average discounts. Local media reports previously cited 15% to 50% – smaller than the 60% cuts usually required for inclusion in the national reimbursement drug list, or NRDL.
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China’s state insurance system, covering 95% of its 1.4 billion people, has long used its bargaining power to demand steep concessions in exchange for NRDL volume. Multinationals like AstraZeneca Plc and Novartis AG embraced the NRDL strategy, while others avoided it, focusing instead on out-of-pocket or private insurance customers — a limited share of the market.
The unspoken price ceiling also excluded novel and expensive drugs from local firms, such as CAR-T cell therapies. Faced with slim profit margins, Chinese biotechs have long pushed for payment reforms.
The new catalog aims to expand commercial insurance’s role in funding innovative drugs. Its impact on drugmakers’ revenue and profitability remains to be seen.
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Both foreign and local drugmakers featured among the 121 drugs initially considered for the catalog, which was later narrowed down. While this year’s final list may be too small to shift the market, analysts at Macquarie Securities led by Tony Ren expect the catalog to grow to 300 drugs by 2027.
“Commercial healthcare insurance could be a great solution to the current shortcomings of a single-payer NRDL system,” they wrote prior to the announcement.
The drug catalog was unveiled alongside the latest NRDL update, which added 114 new drugs, including Lilly’s diabetes treatment Mounjaro. Both take effect Jan 1.
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