Recently, the National Health and Family Planning Commission of the People’s Republic of China (the “NHFPC”) announced the outcome of the first round of drug price negotiations (the “Announcement”). According to the Announcement, new drug prices for Viread, Conmana and Iressa were agreed during the negotiations and they will be discounted by more than 50%. The negotiated prices will be applied during the purchase process of public medical institutions for the period from 2016 to 2017. The above negotiated drugs will benefit from priority in the purchase, consumption and reimbursement processes. 

Shortly after the Announcement, the Notice of the Centralised Purchase of Nationally Negotiated Drugs (the “Notice”) was jointly issued by the NHFPC, the National Development and Reform Commission, the China Food and Drug Administration and other relevant authorities. The Notice aims to push forward the drug negotiation regime and further clarifies points which need attention. This includes the manufacturing companies of the negotiated drugs ensuring the quality and supply of the drug, local authorities listing all negotiated prices at the Provincial Drug Centralised Purchase Platform and medical institutions purchasing drugs at the negotiated prices online. 

According to the Opinions on Promoting the Drug Pricing Reform, which were issued on 4 May 2015, the drug price negotiation regime will be generally applied to patented and exclusively manufactured drugs. That is to say, most of the products of multinational companies will face a price negotiation process in the coming years. Companies will need to be well prepared , which will include gaining a deep understanding of the negotiation regime and designing a preliminary negotiation strategy which is based on a comprehensive consideration of the products’ patent terms, the market situation and substitutability. 

Please see the Announcement (Chinese only) here.

Please see the Notice (Chinese only) here.