CITIC SECURITIES has released a research report stating that the General Office of the State Council issued the "Several Opinions on Improving the Drug Price Formation Mechanism," which clearly emphasizes a market-oriented approach to drug pricing. The policy aims to refine pricing mechanisms, promote price discovery, and simultaneously support innovation while ensuring basic public welfare. Specifically regarding innovation support, the state explicitly backs the development of innovative drugs and medical devices. The policy will provide a first-launch price and protection mechanism for high-level innovative drugs, fully leverage multi-level medical security systems such as commercial insurance to facilitate diversified payment methods for innovative drugs, and operationalize the China Drug Price Registration System to encourage the global development of innovative drugs. In terms of safeguarding basic public welfare, the state will also optimize the adjustment rules for the medical insurance catalog, improve centralized volume-based procurement rules, enhance listed price management and dynamic adjustment systems, and promote fair and reasonable pricing for essential drugs through open comparisons and online-offline price benchmarking. The healthcare industry is entering a period of intensive policy reforms, and it is recommended to continuously monitor investment opportunities driven by these policies. CITIC SECURITIES' main views are as follows:
Event: On April 14, the General Office of the State Council issued the "Several Opinions on Improving the Drug Price Formation Mechanism" (hereinafter referred to as the Opinions). On April 15, a regular State Council policy briefing was held to introduce the relevant situation regarding the establishment of a full-cycle, full-channel drug price formation mechanism (hereinafter referred to as the Briefing). To further advance the rational formation of drug prices, strengthen drug price governance, and support the innovative development of the pharmaceutical industry, the state has proposed a series of reform measures from the perspectives of full-cycle, full-channel, and comprehensive coverage.
Full-cycle: Improve full-cycle drug price policies, distinguishing between high-level innovative drugs, improved new drugs, and generic drugs, providing respective policy support and guidance. For newly launched drugs: According to the Opinions and the Briefing, the National Healthcare Security Administration is researching and formulating policy documents for a drug first-launch price mechanism. It will explore allowing companies to self-assess clinical value and degree of innovation. For high-level innovative drugs with significant innovation and high clinical value, they will be supported in setting initial prices commensurate with high investment and risk, maintaining relative price stability for a certain period. For drugs in the medical insurance catalog stage: Medical insurance payment standards will guide price formation, balancing patient benefits and innovation encouragement. The adjustment rules for the medical insurance catalog will be optimized, considering factors such as the reasonableness of the first-launch price, and negotiations with pharmaceutical companies will form payment standards that match socio-economic development levels and market size, reasonably reflecting the clinical value of drugs. For drugs in the volume-based procurement stage: Centralized volume-based procurement rules will be optimized according to the characteristics of different types of drugs. For conventional drugs: The listed price management and dynamic adjustment system for listed prices will be improved.
Full-channel: Promote the role of all channels in drug price discovery. Public medical institutions: According to the Opinions and the Briefing, all drugs should be purchased through provincial drug procurement platforms and sold at zero mark-up (excluding prepared slices of Chinese crude drugs), with a zero mark-up policy implemented for Chinese medicine formula granules. Retail pharmacies: Drug prices in retail pharmacies are autonomously determined by operators and formed through market competition. Public price comparisons for medical insurance drugs at designated pharmacies will be implemented to guide more reasonable pricing, and designated pharmacies will be encouraged to participate in centralized volume-based drug procurement. Online pharmacies: Regular online-offline price comparisons will be conducted to identify abnormal prices and promote fair and reasonable pricing across different channels.
Comprehensive coverage: Guide drug prices across all sectors to maintain reasonable levels. Innovative drugs: According to the Opinions and the Briefing, policies will promote diversified payment and price formation for innovative drugs, fully utilizing functions such as commercial health insurance to broaden payment channels and accelerate the implementation of innovative drug catalogs for commercial health insurance. Drugs in short supply: Supply guarantee and price stability for drugs in short supply will be strengthened, with dynamic adjustment management for national and provincial shortage drug lists and key monitoring lists for clinically essential but easily scarce drugs. The direct listing rules for shortage drugs will be optimized. Narcotics and psychotropic drugs: Government-guided prices will be implemented for narcotic drugs and Category I psychotropic drugs according to law. Active Pharmaceutical Ingredients (APIs): Promote the sharing of price information for drug raw and auxiliary materials, supporting the integrated development of "API + preparation." Traditional Chinese Medicine (TCM): Strengthen price guidance for Chinese medicinal materials, promoting high quality and appropriate pricing based on improved quality evaluation.
According to the Opinions and the Briefing, the state clearly advocates a market-led direction for drug pricing, improving pricing mechanisms and promoting price discovery, while simultaneously supporting innovation and ensuring basic public welfare. Regarding innovation support: The state explicitly supports the development of innovative drugs and devices. The policy will provide a first-launch price and protection mechanism for high-level innovative drugs, fully leverage multi-level medical security systems like commercial insurance to promote diversified payment for innovative drugs, operationalize the China Drug Price Registration System, and encourage the global development of innovative drugs and the construction of a globalized, diversified price system. Regarding basic public welfare: The state will optimize the medical insurance catalog adjustment rules, improve centralized volume-based procurement rules, enhance listed price management and dynamic adjustment systems, and promote fair and reasonable pricing for essential drugs through open comparisons and online-offline price benchmarking, while ensuring the supply and price stability of shortage drugs for clinical patients.
For offline pharmacies/online platforms: Drug prices sold by physical and online pharmacies are primarily determined autonomously by operators; price fluctuations and differences are normal. Designated pharmacy drug prices should not be significantly higher than other channels, and the public is encouraged to use public price comparison mini-programs to compare prices.
Risk factors: Risks of intensified geopolitical friction; risks of stricter regulation; risks associated with volume-based procurement; risks of declining financing热度 for primary market biopharmaceutical companies; risks of clinical R&D failure for innovative drugs and devices; risks of medical accidents; risks of industrial policy changes falling short of expectations; risks of commercial health insurance industry progress falling short of expectations.
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