IHS Global Insight Perspective | |
Significance | The MoH yesterday issued its much-delayed Essential Drug List, which consists of a total number of 307 drugs. |
Implications | TCMs have gained momentum in the latest essential drug list, which constitutes some 33% of the overall drugs on the list. |
Outlook | Multinational drug makers are not likely to gain competitiveness from this list as it includes mainly widely genericised products. |
Yesterday China's MoH released the country's latest Essential Drug List, which includes 205 chemical and biological medicines and 102 traditional Chinese medicines (TCMs), as part of China's ongoing national healthcare reform.
The list of drugs covers a broad variety of therapeutic areas with major and basic medical needs such as cardiovascular, immunology, urology, mental health, central nervous system and viral diseases. The list also includes drugs such as anti-HIV treatments provided by the country free of charge and vaccines already in national immunisation programmes.
Prior to the new essential drug list, China's latest version of basic drugs was released in 2004, which contained some 2,000 medicines. According to the health authorities, the list is subject to adjustment every three years.
Table: Selective Essential Drugs 2009 | ||
Therapeutic Area | Indication | Drug Name |
Urology | Benign prostatic hyperplasia | Terazosin |
Gastrointestinal Diseases | Peptic ulcer | Omeprazole |
Respiratory Diseases | Asthma | Salbutamol |
Cardiovascular Diseases | Cholesterol | Simvastatin |
Mental Health | Depression | Doxepin |
Mental Health | Schizophrenia | Haloperidol |
Central Nervous System | Parkinson's | Amantadine |
Central Nervous System | Epilepsy | Carbamazepine |
Musculoskeletal Disorders | Gout | Allopurinol |
Viral Diseases | Various viruses | Ribavirin |
Diabetes | - | Glibenclamide |
Immunology | Immunosuppressant | Azathioprine |
Source: MoH August 2009 | ||
The Establishment of Essential Drug System Kicks Off
With the release of the Essential Drug List, the Chinese health authorities have officially launched the establishment of the essential drug system in the county. All the drugs in the list will be included in the country's basic health insurance catalogue with a higher reimbursement percentage, which is expected to be finalised by the end of this year. Meanwhile, the pricing of the essential drugs will be decided by the governments through public tender at the provincial level. The target of the system in 2009 is to make sure that 30% of government-controlled community medical institutions will stock and sell essential drugs with zero profit margin. In addition, the distribution of essential drugs will also be carried out through unified channels by either drug manufacturers or drug distributors.
Outlook and Implications
The release of the Essential Drug List in China has been delayed from April due to the difficulty in balancing the interest of drug manufacturers and distributors. The number of drugs included in the list has also been reduced. However, its release is still a major step in China's healthcare reform, which has improved the affordability and accessibility of drugs as one of the five priorities. The requirement of the essential drug system is inevitably to largely reduce drug prices through measures like public tenders.
On the other hand, multinationals are less likely to benefit much from this list as the majority of the products are widely genericised drugs. Innovative drug makers will have to significantly compromise on price in order to secure a deal to supply essential drugs. In terms of domestic generic drug manufacturers, large-scale drug makers are likely to gain an advantage over medium to small ones as they can provide better deals in terms of price as well as unified distribution.