Drug price limit or make local drug companies lose the basic market

The business agency reported on January 2 that the National Development and Reform Commission issued a notice to reduce the maximum retail prices of individually-priced pharmaceutical products, including some foreign-funded drugs, on December 12. It involved 17 categories of 174 drugs, including antibiotics and cardiovascular and cerebrovascular diseases. Adjustments were made based on estimates. After the drug price is lower than the previous price by an average of 19%. It is expected to reduce the cost of nearly 2 billion yuan for the people each year.

The "Notice on Reducing the Maximum Retail Prices of Some Ceftriaxone and Other Drugs" issued by the National Development and Reform Commission was implemented on December 12. The market responded strongly. This limit order is really "Sword" foreign high-priced drugs? Will it cause "delisting tide" again? Does it mean good for domestic drug companies? Will foreign drugs fall to the grassroots after price reduction?

Limit order triggered "delisting tide"?

The National Development and Reform Commission issued a notice, starting December 12th, reducing the maximum retail prices of individually-priced drugs, including some foreign drugs, covering 17 categories and 174 drugs, including antibiotics and cardiovascular and cerebrovascular diseases. According to calculations, the adjusted drug price has been reduced by an average of 19% from the previously specified price. It is expected to reduce the cost of nearly 2 billion yuan for the people each year.

Regarding the possible impact of this policy on the market, the reporter interviewed Jia Haibin, deputy director of the Chinese Medicine Information Center of the Chinese Medicine Association. He thought: “This time cancelling some individual pricing, not all, how the effect remains to be seen.”

According to him, for a long time, price cuts meant exiting the market, and hospitals and doctors would not directly use cheap drugs. For this reason, the previous rounds of price cuts did not benefit the average person, but forced doctors to use those separately priced high-priced drugs (the industry commonly known as "wearing gold clothes"), so that the market share of such high-priced drugs to become bigger and bigger.

The reporter randomly investigated a number of pharmacies and found it difficult to find some of the new limit of the price of drugs. The pharmacy staff told reporters that most of the medicines for this price reduction belonged to prescription drugs, and they had no sales. These high-end drugs were basically sold in hospitals. Some pharmacy staff members said: "The pharmacy has this drug, but it still needs a prescription to sell it. Its sales volume is very small and it has already lowered its price."

Mr. Zhang, who is engaged in drug business, also confirmed that many hospitals take various measures to restrict “prescription outflow” and generally require patients to purchase drugs in hospital pharmacies. Therefore, retail pharmacies rarely purchase prescription drugs at ordinary times. This limit order involves the pricing of drugs in 174 different specifications. However, even the large-scale pharmacies in Beijing have no more than 30 types of products on weekdays.

The reporters found that drugs such as amoxicillin and azithromycin currently sold in retail pharmacies are mostly produced by manufacturers that are not subject to price restrictions. The pharmacy personnel explained that some large-scale pharmaceutical companies have stricter management of the retail market, and that drugstores have limited profit margins. Therefore, pharmacies will generally choose drugs from some low-priced pharmaceutical companies.

"Sword refers to" foreign research medicine?

The 174 medicines that this price cuts have a common characteristic: It is all alone to price the medicine. In 2001, the “Circular on Issues Concerning the Pricing of Separately Pricing Drugs” promulgated by the State Development Planning Commission (formerly the National Development and Reform Commission) stipulated that: “The pharmaceuticals produced and managed by enterprises are included in the pricing scope of the government because their product effectiveness and safety are significantly better than or If the treatment cycle and treatment costs are significantly lower than those of other companies and are not suitable for pricing according to the general parity relationship stipulated in Article 6 of the “Government Pricing Measures”, they can apply for separate pricing.”

According to the reporter’s understanding, in 2005, the National Development and Reform Commission, in order to encourage technological advancement of enterprises, began to implement “privileged policies” for the pricing of “original research drugs” manufactured by foreign pharmaceutical companies and domestic well-known brand enterprises. In China, the "original research drug" mainly refers to imported drugs that have passed the patent protection period.

This type of medicine is vividly called “noble medicine” in the private sector. Earlier media reports said that according to a “comparison of the basic pricing of domestic basic foreign drugs for original research drugs and the uniform pricing of domestic drugs”, a The prices of the nine foreign-invested original research drugs listed in the survey are on average ten times higher than that of the domestically produced drugs of the same product, of which captopril with the highest price difference is 2319% more expensive than the domestically produced drugs of the same type.

"As an original research product, it is reasonable to enjoy certain preferential treatment within a certain period of protection. After all, people invest so much basic R&D work, but if they always allow foreign capital to control the pricing and speaking rights of medicine, it is very scary for China. According to Jia Haibin, deputy director of the Chinese Medicine Information Center of the Chinese Medicine Association.

He explained to reporters that "non-national treatment" goes far beyond the enjoyment of individual pricing rights, and that its patent protection period is ten years longer than that of traditional Chinese medicine; it can be listed separately in centralized tender procurement or sunlight procurement, while domestic generic drugs must undergo brutal bidding. Access to medical institutions all the way to the green light, some of the top three hospitals and even more than 70% of the use of a single pricing drug or imported drugs.

How much can this price cut squeeze the “price moisture” of foreign drugs? Jia Haibin bluntly said that it has a certain role, but it is far from being able to talk about it. All the people in the industry interviewed by the reporter hold similar views and believe that the 19% decline is limited to more than ten times the average price.

In the latest "Drug Price Management Regulations" promulgated by the National Development and Reform Commission, the original research drug is required to be periodically reduced in price and the concept of its original research drug is abolished. According to industry insiders, this price cut may mean that the price of the original research drug will be gradually lowered.

Policy favors domestic drug companies?

The reporter learned that this adjustment of drug prices is the 26th price reduction that the NDRC has carried out since 1997. However, the country’s previous price reductions did not involve these foreign inventories, which also made the price of the original research medicine seriously out of line with the domestic price of generic drugs. What is special about this policy is that for the first time, foreign high-priced medicines have been chosen as the trigger point of the policy.

This round of price adjustments on the big list, involving production companies include: Roche, Sino-US Shanghai Shiguibao Pharmaceutical Co., Ltd., Pfizer, Xian Yangsen Pharmaceutical Co., Ltd., Sino-US Tianjin Shike Pharmaceutical Co., Ltd., Beijing Shuanghe Pharmaceutical [27.95 -0.11%], Inc., etc. The price of captopril produced by Sino-U.S. Shanghai Shiguibao Pharmaceutical Co., Ltd. dropped from 34 yuan to 22.1 yuan, a drop of 35%, ranking first; the price of Ceftriaxone produced by Roche dropped from 93.8 yuan to 65.7 yuan. It is 30%.

Does the policy force exert its influence on local drug companies?

Jia Haibin believes that for local companies that compete with the original foreign research drugs involved in this price cut, the pressure to open up the market will be smaller. Because if the foreign drugs continue to cut prices, in the overall situation of “taking drugs to support medical care”, the hospital’s enthusiasm for choosing foreign drugs will decline, which will be an opportunity for the local drug industry.

"But for proprietary Chinese medicines, it may be that 'city gates are in danger of catching fire and affecting pool fish'". Jia Haibin explained that the price of individual drugs for price cuts also involves some domestic drug companies, especially the cost of raw materials for Chinese patent medicines, which are constantly rising. This simple price reduction may result in further weakening of the competitiveness of domestic products in the international arena.

Some people in the industry are concerned that foreign pharmaceutical companies are large taxpayers. It is also questionable whether some local governments can really implement the regulation of price-cutting drugs.

An industry insider who did not want to be identified believes that if the price of foreign drugs really falls to the price of domestic drugs, some foreign companies may stop producing such drugs and instead produce another similar product and use innovative products. The name regains high-priced profits.

Foreign drug transfer to the "base"?

On the 13th, Shanghai was the first to publish a supplement to the list of essential medicines. At this point, all sorts of "guessing" that foreign high-priced medicines were the first to drop out of Shanghai's basic medicine catalog finally fell into disappointment.

The Supplementary Edition of the Shanghai Basic Drug List supplemented 307 kinds of the original National Drug List with 381 kinds of chemical drugs and Chinese herbal medicines, of which 236 were added to chemical drugs and 145 were added to Chinese medicines. Of the 236 chemical drugs, more than 20 foreign-invested companies such as Pfizer, Bristol-Myers Squibb, Novartis, Sanofi and their joint ventures in China had products listed, accounting for about 64, accounting for an additional list of chemical drugs. 27%, and some products are unique products of foreign capital.

“The prerequisite for basic drugs is the exact curative effect, reasonable price, and wide application. However, the high price threshold for foreign drugs is to keep ordinary people out of the door. Although the hospital forced out, it is not the actual people can afford it.” Obviously, foreign capital is high The drug runs counter to the basic drug policy widely implemented in China. Jia Haibin said.

According to industry sources, foreign high-priced drugs account for 65%-80% of the total cost of prescription drugs in the top three hospitals in the country. Some people had previously raised concerns that lowering the price of some foreign drugs may not bring negative advantages to foreign drug companies. Some foreign drug companies may use the opportunity to expand their market share in the primary pharmaceutical market in China in order to pay for premiums, while domestic similar drugs Instead, it will be affected.

According to the person in charge of the Shanghai Pharmaceutical Industry Association, the overall profits of domestic drugs are basically 7%-8%, while foreign drugs are generally 30%-40%, and the profitability of high-priced drugs is even higher.

Basic medicines not only provide basic medical institutions, but also supply large hospitals of Grade 2 and above. After the foreign drugs had firmly occupied the top three hospitals, they also pushed into the basic drug list, proceeded to the low-end market, and entered the grassroots level. For local drug companies, the pressure was huge and the future was unpredictable.