Drugmakers pay big for places on insurance list

Business | Bloomberg and Stella Zhai 29 Nov 2019

Chinese drugmakers' shares slipped yesterday after some 70 new therapies were added for coverage by China's state-run medical insurance fund, which brought about average price cuts of 61 percent on the products.

Shares of CSPC Pharmaceutical (1093) were down 2.4 percent at one point before closing 0.4 percent lower at HK$19.7. Sino Biopharmaceutical (1177) slid 0.56 percent to HK$10.6, and Ascletis Pharma (1672) slumped 25 percent to HK$3.42.

Domestic and multinational drugmakers are eager to get their products on the accepted list -- even if steep discounts are required -- so they can gain access to the mainland's US$132 billion (HK$1.02 trillion) pharmaceutical market.

Costs of drugs on the list are met almost fully by the national medical insurance fund. The list has been updated annually since 2017, when Beijing accelerated its campaign to deliver best-quality drugs to its growing middle class as quickly and cheaply as possible.

The latest negotiated price cuts made the imported drugs "the cheapest in the world," according to a notice by the National Healthcare Security Administration.

The prices of three hepatitis C treatments dropped by an average of more than 85 percent while tumor and diabetes therapies fell by an average of 65 percent.

Drugmakers were responding to news about the reimbursement scheme, noted Kelvin Chen, an analyst at Bocom International. "It shows that they need to lower prices meaningfully to be able to join the list."

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