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Improving the multi-layered medical security system and supporting innovative development in the pharmaceutical industry

Bristol Myers Squibb

Innovation is an important driving force for social progress and development, and the capacity to conduct innovative pharmaceutical research and development (R&D) is one of the key indicators of a country’s scientific research and innovation capabilities. The Chinese government attaches great importance to pharmaceutical innovation and has for years promoted the advancement of the industry by setting goals for the development of innovative medicines in economic and industrial policy planning documents. Through these development goals, the government has been gradually improving the review and approval process for innovative drugs, pharmaceutical patent protections, and other mechanisms that support innovation.

After the establishment of the National Healthcare Security Administration (NHSA) in 2018, the government implemented a series of payment reforms to strengthen coverage for innovative drugs. By strengthening the management of the National Reimbursement Drug List (NRDL), the period between updates to the NRDL was shortened. National pricing negotiations on innovative drugs are now carried out on an annual basis instead of every few years, bringing into play the strategic purchasing role of China’s basic medical insurance (BMI) fund. As a result, an increasing number of innovative drugs are being covered under BMI, helping to expand patient access to innovative therapies. The introduction of new analytical methods, such as health economic evaluation to assess medical insurance payment standards, is expected to better reflect the value of innovative drugs in the NRDL. The structure of the multi-layered medical security system (MLSS) continues to be clarified and improved, which has promoted the rapid nationwide development of city supplementary commercial health insurance (CSCHI) – municipal-level commercial insurance plans that are customized to different regions and that broaden the payment channels for innovative drugs.

Through the support of an array of policies, China has achieved significant progress in pharmaceutical innovation. For example, the speed of getting innovative drugs to market has greatly accelerated. The number of approved innovative drugs has also significantly increased. In addition, China’s R&D capabilities for developing innovative drugs are increasingly recognized by international regulatory authorities. Most importantly, access to many innovative medicines has improved.

Despite all the positive progress, China still faces challenges in pharmaceutical innovation. Challenges in the domestic industry include an increasing homogeneity in products such as “me-too” medicines with only marginal clinical value, and declining innovation in pioneering first-in-class drugs. Based on international practices, the establishment of a comprehensive evaluation and payment system for innovative medicines plays an integral role in industry development. At present, the existing MLSS system in China remains inadequate and requires further refinement. The BMI is only designed to cover basic medical needs, and faces immense financial pressures with limited payment capabilities. These constraints on the BMI inhibit its capacity to empower pharmaceutical innovation. Therefore, this report recommends exploring multi-payment models to better support the development of pharmaceutical innovation:

1. Improve the price evaluation mechanism of innovative drugs for NRDL. Fully reflect the value of innovative drugs from multiple angles including the scientific innovation they represent as well as their impacts on patients, the healthcare system and society overall. In addition, considerations of clinical practice and patient outcomes can further inform value. Further clarify evaluation criteria for the safety, effectiveness, economic efficiency, innovation, and equity of innovative drugs. Involve stakeholders with different perspectives and roles in decision-making during the evaluation process for medicines. Finally, determine the evaluation criteria and parameters that are in line with China’s national conditions, and make appropriate adjustments for treatments of rare diseases, genetic diseases with a higher prevalence in specific regions, and other special diseases.

2. Expand pilot trials of commercial health insurance (CHI) and other supplementary funding and insurance mechanisms to support payments for innovative drugs. Encourage local authorities to implement pilot programs for multi-party co-payment mechanisms, and explore using co-payments combined with risk sharing agreements. In addition, clarify the boundary of coverage between CHI and BMI, such as by establishing and improving the drug reimbursement list for CHI. Encourage data sharing between BMI, medical service institutions, and commercial health insurers to support effective CHI product development, enabling insurers to create products tailored to specific diseases and populations. Broaden financing sources for CHI to include tax preferences, expanded flexibility to use personal BMI accounts to purchase CHI, and increased support from charitable funds to ensure the insurance system is sustainable in the long term. Concurrently, continue to carry out innovative payment models such as risk sharing agreements based on multi-layered medical security system in local areas.

3. Strengthen cross-departmental cooperation and improve the synergy mechanism between different layers within the medical security system. Strengthen collaborative cooperation among all relevant government departments, including between central and local governments, as well as between government and social organizations, to provide organizational and technical support for efficient coordination within the medical security system.

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