Dr. Vas Narasimhan, Chief Executive Officer of Novartis

A robust health security system is vital to address the many hurdles that face national leaders in improving the well-being of their populations and maintaining the foundations of a prosperous economy. Healthcare challenges can appear suddenly, such as the global COVID-19 pandemic, or develop over time, such as the advent of an aging population and an increase in non-communicable diseases. 

China’s latest Five-Year Plan recognizes healthcare and public health as central pillars of strategic development in the effort to improve the livelihoods of the population. Significant momentum has been gained toward this goal. For example, in the past two decades the proportion of Chinese protected by some form of healthcare coverage has grown from about 20% to about 95%. 

However, amid this progress, demographic changes, particularly an aging population and an increased disease burden, as well as the weight of fighting the COVID-19 pandemic have combined to strain the finances of China’s primary health insurance program, the BMI (Basic Medical Insurance). In addition, limitations in access to innovative medicines faced by patients today may increase, due to the focus on price when medicines are listed in the National Reimbursement Drug List. 

China’s healthcare leaders can build on the achievements they have accomplished so far by further enhancing the health security system. The new draft Medical Security Law in 2021 presents an opportunity to establish an overarching framework for further health security reforms. Novartis’ analysis and experience suggest two areas – stable financing and incentives for innovation – where changes in legislation can deliver noticeable improvements to the country’s healthcare system:Establish a stable and sustainable financing mechanism: A number of options could be considered to strengthen the system, such as further consolidation of administration and benefits of rural and urban health security programs, and exploring new funding sources, such as increased taxes on alcohol and tobacco or a levy on sugary drinks. In addition, reimbursement options including Commercial Health Insurance could be broadened, and China could bring government spending on healthcare closer to international norms. 

Increase incentives for innovation to support research and development: China’s healthcare system should ensure appropriate incentives to encourage investors of research and development. An assessment process could be established that, in addition to price, considers the value of innovation delivered to patients, the healthcare system, and society overall. Other elements to consider include reinvestment of some savings achieved in volume-based procurement to support access to innovative medicines and fostering the development of Commercial Health Insurance to cover innovative treatments and technologies to supplement the Basic Medical Insurance. 

China has achieved laudable successes in reforming the nation’s health security system in the past decades. Novartis is eager to continue its support of the Chinese government’s efforts to address the existing and new healthcare challenges it faces and to meet the needs of the people through innovation in healthcare.

Download the full report：Improving China’s health security law to enhance access to medicines and spur innovation