Jointly enacted by the National Development and Reform Commission (“NDRC”) and six other government departments, the Opinions announce the governments’ aim to lift current controls and establish a market-oriented drug pricing system, gradually shifting its focus from guiding to monitoring drug prices.

Main reforms:

  1. Drugs covered by medical insurance: prices will be set using reasonable medical reimbursement criteria established by the medical insurance authority and other relevant authorities.
  2. Patented drugs and drugs with only one source of supply: prices will be set through a transparent and multilateral negotiation mechanism including relevant stakeholders.
  3. Blood products not covered by medical insurance, immunization and vaccines centrally procured by the state, free HIV antiretroviral therapy drugs, and birth-control drugs and devices: prices will be set through government bidding and procurement, or through negotiations.
  4. Narcotic drugs and Type 1 psychotropic drugs:  relevant  government authorities will continue to determine the price.
  5. All other types of drugs: manufacturers will set prices based on costs and market demand.

The NDRC also abolished a series of government documents on establishing and adjusting drug prices to complement the implementation of the Opinions. This is the most significant reform of the drug pricing system in recent years and is expected to have a great impact on drug companies in China.

Date of issue: May 4, 2015. Date of effectiveness: June 1, 2015.