Buying in bulk cuts drug prices by more than half in China

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As part of China's efforts to make life-saving medication cheaper, authorities say they have made headway with a pilot program that purchases certain drugs in bulk.

The trials for a drug procurement process in 11 cities across the country, including Beijing and Shanghai, saw drastic price cuts for medication such as gefitinib for lung cancer and imatinib for leukemia.

The effort is led by the State Medical Insurance Administration to eventually roll out a mechanism for hospitals and other healthcare institutions to buy certain drugs from suppliers en masse through government programs. This bulk buying scheme would presumably acquire large amounts of drugs at lower costs.

The agency released the preliminary results of prospective suppliers bidding for the rights to sell medicine indicated on the procurement list, of which 25 drugs have been successfully procured. The intention is to award contracts to drugmakers that can sell the medicine at the lowest prices and at a consistently high quality, among other factors.

The figures released show that costs for the listed drugs were cut by an average of 52 percent compared to those procured from 2017. Costs for the lung cancer medicine gefitinib were reduced by 76 percent from a year before.

Though the prospect of huge savings on life-saving drugs is enticing for many Chinese patients under the country's basic health insurance, there are concerns about profit plunges for the pharmaceutical industry as a result of government procurement. Bloomberg reported that Chinese drug stocks have dropped significantly due to investor concerns.

In response to these worries, the procurement authority said that drugmakers can still make money even though prices are lower, since those prices have long been inflated, according to Xinhua News Agency. Now, profits are more “reasonable,” the authority stated.

Making medication more affordable in the country has dominated public discussion this year, with a film about a Chinese businessman smuggling cheaper generic medicine for leukemia patients garnering critical and commercial acclaim. Chinese Premier Li Keqiang has also publicized the push for lower drug prices, while the central government eliminated tariffs on imported cancer drugs back in May.

(Cover: File photo of a hospital in Nanjing, east China's Jiangsu Province, February 3, 2015. /VCG Photo