24.9 C
Karachi
Friday, March 29, 2024
- Advertisement -
 

China expands drug bulk-buy program to lower prices

TOP NEWS

Reuters
Reuters
Reuters is an international news organisation owned by Thomson Reuters

BEIJING: China has expanded a pilot drug bulk-buying program to almost the entire country in an attempt to negotiate lower prices from drug manufacturers, heaping fresh pressure on multinational pharmaceutical companies and their domestic rivals.

The program rolled out last year saw 11 Chinese cities, including Beijing and Shanghai, band together behind a tender process to bulk-buy 25 types of drugs. This caused the price of some medicines to plunge over 90%, state news agency Xinhua said.

The scheme will be expanded to 25 provinces and regions, who will form a league to look for suppliers for these drugs that will be stocked at public hospitals as well as some military and private medical institutions, according to documents released on Sunday by the drug procurement branch of the Shanghai Healthcare Security Administration.

The drugs on the list include off-patent blockbusters that are made by Western pharmaceutical giants, but which have generic made by local players, such as Eli Lilly’s cancer treatment drug Pemetrexed, which is sold under the brand name Alimta, and leukaemia therapy Imatinib sold by Novartis as Gleevec.

The tenders for the two drugs in last year’s pilot program were won by Chinese drugmakers’ generic products.

Beijing’s nationwide expansion measure could add strains on multinational drugmakers to consider larger price cuts for their off-patent blockbusters, a move that they have tended to refrain from in order to maintain their premium brand image, analysts said.

The documents also cited that as many as three winners of the tender for each drug could obtain as much as 70% share of the government’s purchase volumes, while the sole winner of a tender could win up to a 50% share of purchase volumes.

Under the new expansion plan, only the provinces of Fujian and Hebei are not involved in the program on mainland China.

“The 11 cities [in the previous pilot program] accounted for a relatively low market share in China,” John Yung, head of Asia healthcare research at Citi, told Reuters. “But as for the 70% market in the entire nation, the pressure is different.”

Novartis and Eli Lilly offered to cut prices for Gleevec and Pemetrexed by about 30% in some provinces earlier this year, according to releases on local governments’ drug procurement websites.

- Advertisement -
- Advertisement -
 

POLL

Will the PML-N led govt be able to steer Pakistan out of economic crisis?

- Advertisement -
 

MORE STORIES