China's State Council has passed a reform plan for the country's healthcare sectors as part of its 13th Five-Year Plan from 2016 to 2020, according to the official CCTV media outlet.
Implications | Chinese authorities aim to focus on two main areas: improving healthcare and medical services; and stepping up efforts to move ahead with the ongoing national healthcare reform – including the simplification of the approval process for new and urgently needed treatments and stricter price control for medicines, medical equipment, and health consultations. |
Outlook | The reform plan offers a mixed bag to pharmaceutical multinationals; in particular, pricing pressure for innovative treatments is expected to rise in conjunction with greater access to lower-tier markets. |
Under the plan, Chinese authorities have approved guidelines that focus on two main areas: improving healthcare and medical services; and stepping up efforts to proceed with the ongoing national healthcare reform in order to expand access to comprehensive care to both urban and rural residents.
In particular, Chinese authorities will focus on improving control and treatment of "major diseases", including chronic diseases such as hypertension, stroke, diabetes, and contagious and mental health illnesses diseases. In addition, the government aims to improve paediatric care as well as for the elderly.
Furthermore, China plans to raise the quality of medical treatment at the grassroots level, including improving access to lower-tier medical institutions, with a particular focus on people with disabilities, the elderly, and low-income families.
A third point of focus will be the simplification of the approval process for new and urgentlyneeded treatments, through greater use of online services and expanded access to healthcare. This would also entail stricter price control for medicines, medical equipment, and health consultations, with the goal of implementing reimbursements of hospitalisation fees. In addition, the authorities aim to ensure the supply of low-price, urgently needed, and children's medicine.
Outlook and implications
The State Council's wide-ranging guidelines touch on several aspects of China's ongoing healthcare reform. However, most noteworthy for pharmaceutical multinationals are the mention of stricter price control for medicines, the simplification of the approval process for new and urgently needed treatments, and the aim of ensuring the supply of low-price, urgently needed, and children's medicines.
Firstly, the goal of stricter pricing control and expanded access indicates an expansion of the authorities' national drug price negotiations with overseas drug makers (see China: 23 May 2016: China cuts prices of innovative drugs by two-thirds, including GSK's Viread and AstraZeneca's Iressa). Although details of the pricing negotiations remain confidential, it is expected that drug makers will continue to be attracted by the prospect of expanded volume sales at lower-tier cities in China, in return for lower drug pricing. However, it remains to be seen to what extent pricing pressure will increase for drug makers entering into the negotiations, especially given China's ongoing efforts to reduce costs to patients (see China: 7 December 2016: China to define drug reimbursement standards, revise NDRL by year-end).
Secondly, the simplification of drug approval processes to new and urgently needed drugs is expected to come as a positive for the pharma industry, and as an extension of recently implemented fast-track processes (see China: 28 April 2016: China to grant priority-review status to innovative hepatitis C treatments).
Thirdly, the focus on maintaining supply of urgently needed and children's' medicines comes in the wake of a highly publicised counterfeit vaccine scandal in China, which in turn highlighted the country's lack of basic vaccines. This is expected to increase momentum to granting market access to overseas vaccine manufacturers – as reflected for example by China's marketing approval for Pfizer (US)'s Prevenar 13 (pneumococcal vaccine) after authorities failed to renew the company's import licence for the bestseller vaccine last year (see China: 3 November 2016: China grants marketing approval to Pfizer for Prevenar 13 vaccine).