Pricing and reimbursement

Price regulation

To what extent is the market price of a medicinal product or medical device governed by law or regulation?

According to the Opinions on Management of Current Drug Price issued by the National Healthcare Security Administration, except for narcotic drugs and first-class psychotropic drugs, which are subject to a government-guided price, all other drugs are priced by the distributors and the prices are market-adjusted. The market prices of drugs, especially commonly used and basic drugs, have fallen sharply because of the ‘two-invoice’ system and the ‘quantity purchase’ policy, which generally apply to drug procurement in public hospitals, and profit margins have radically decreased.

Compared with drugs, the prices of medical devices are less affected by policies. However, pursuant to the Guiding Opinions on Promoting the Reform of the Medical Security Fund Supervision System issued by the State Council, the state will improve the market-led price formation mechanism for medical devices. It is generally anticipated that the two-invoice system and quantity purchase policy will also be implemented in the field of medical devices, and the prices of medical devices will be greatly affected by them.

Negotiations between manufacturers and providers

Must pharmaceutical and medical device manufacturers negotiate the prices of their products with public healthcare providers?

The bidding and procurement process is mandatory for public medical institutions to purchase drugs and medical devices. In this process, price negotiations are generally involved. However, for private hospitals, this process is not applicable.

Reimbursement

In which circumstances will the national health insurance system reimburse the cost of medicines?

Expenses for drugs can be reimbursed if the drugs purchased are included in the National Drug Catalogue for Basic Medical Insurance, Work-related Injury Insurance and Maternity Insurance, and at the same time the medical institution providing the drugs or prescriptions is eligible for medical insurance coverage. Currently, some regions are piloting the direct reimbursement of retail drugs on a small scale. In addition, the cost of diagnosis and treatment items falling into the Scope of Diagnosis and Treatment Items of National Basic Medical Insurance and the cost of medical service facilities falling into the Scope of Medical Service Facilities of Medical Insurance can also be reimbursed by medical insurance.

Price adjudication

If applicable, what is the competent body for decisions regarding the pricing and reimbursability of medicinal products?

Except for narcotic drugs and first-class psychotropic drugs, the government has abolished the practice of setting drug prices. For the time being, the highest ex-factory prices and the highest retail prices for narcotic drugs and first-class psychotropic drugs are still managed by the National Development and Reform Commission. At present, the prices of medicinal products are set by the market against the background of two-invoice system and quantity purchase policy.

The National Healthcare Security Administration and the Ministry of Human Resources and Social Security are the competent authorities for determining the reimbursability of medicinal products.

Discount

Are manufacturers or distributors of medicinal products statutorily obliged to give a discount to health insurance schemes or third parties?

There is no such statutory obligation.