Since late April 2026, Wu Hao has frequently sought feedback from his company's risk control and compliance department regarding a new commercial health insurance product. As the business head of the product department at a health insurance company, a key selling point of this new product, which he helped design, is its plan to cover multiple innovative drugs listed in the 'Commercial Health Insurance Innovative Drug Directory' for reimbursement.

The risk control and compliance department raised several questions: Could data sharing on innovative drug usage be achieved with pharmaceutical companies and hospital management information systems to standardize the alignment of drug flow, capital flow, and information flow? Could a one-stop direct claim payment system be established with third-party service agencies (PTAs)? Could data on specific disease incidence rates, treatment courses, and clinical efficacy be collected to provide a basis for refined premium pricing for the insurer?

However, the most troublesome issue for Wu Hao is the problem of drug discounts. So-called drug discounts refer to a certain percentage of discount that insurance companies request from pharmaceutical firms when setting the reimbursement price for innovative drugs within the directory, based on considerations to alleviate their own claim payout pressure. To be included in the insurance reimbursement mechanism, many pharmaceutical companies agree to this request from insurers. In the view of both insurers and pharmaceutical companies, drug discounts are a risk-sharing mechanism. By compensating for potential claim losses, they enable insurers to 'dare to underwrite and can afford to pay' for high-priced innovative drugs in the directory, thereby reducing the financial burden of residents' massive out-of-pocket treatment costs.

Yet, the insurance industry has still not found a proper solution for granting drug discounts a compliant status. Zhao Quanlong, the health insurance business operations director at a large insurance company, has noticed significant differences in understanding among different government departments. Some government departments believe that negotiations over drug discounts between insurers and pharmaceutical companies constitute a commercial activity, serving to enable risk-sharing between the two parties. Other government departments worry that some pharmaceutical companies might use 'drug discounts' to push their own developed innovative drugs into the health insurance reimbursement scope, which could easily breed violations such as commercial bribery and off-book transactions (not recorded in financial accounts, transferred to other financial accounts), and thus should be strictly and cautiously managed.

'We are quite confused now,' Wu Hao admitted frankly. Due to the lack of a compliant status for drug discounts, the company's risk control and compliance department has repeatedly and explicitly stated that the insurer must not accept such discounts. This has led to the risk actuarial and claim terms for this new commercial health insurance product being completely overhauled twice, and it remains a considerable distance from being launched.

Zhao Quanlong stated directly that since the introduction of the 'Commercial Health Insurance Innovative Drug Directory,' many insurance companies have been exploring the inclusion of innovative drugs from the directory into the reimbursement scope as a major selling point for health insurance products. However, as of now, not a single health insurance product has completed registration and filing with the National Healthcare Security Administration's big data center. 'Behind this is the unresolved compliant status of drug discounts, leaving related health insurance products consistently facing risks such as commercial bribery and off-book transactions,' Zhao said.

**The 'Compliance' Controversy Over Drug Discounts**

At the end of April this year, during an internal company meeting, Wu Hao engaged in a debate with heads of the risk control and compliance department and the finance department over the nature of drug discounts.

The head of the company's risk control and compliance department emphasized that once an insurance company 'accepts' drug discounts, it easily faces risks such as commercial bribery, off-book transactions, and improper premium adjustments, which could lead to penalties from financial regulators.

The head of the finance department also concurred, stating that drug discounts still exist in a compliance vacuum. For example, within financial accounts, the classification of drug discounts remains unclear—whether they are handling fees, health management fees, or claim reductions—and there is still no definitive explanation. However, before the nature of the funds from drug discounts is clarified, the company cannot accept them.

Wu Hao felt quite aggrieved by this—the original intention of the product department in requesting drug discounts from pharmaceutical companies was to establish a risk-sharing mechanism. Wu Hao explained that through big data analysis, the actuarial department found that when including innovative drugs from the directory in health insurance reimbursement, the claim ratios for many high-priced specialty drugs fluctuate extremely widely, easily leading to situations where insurers' claim payouts far exceed expectations, resulting in underwriting losses for the health insurance product. Therefore, they thought of introducing drug discounts, which could both alleviate their own claim pressure and, through this risk-sharing mechanism, allow more innovative drugs from the directory to be included in the reimbursement scope. This would expand the selling points of the health insurance product while also benefiting residents.

Zhao Quanlong has encountered similar troubles. Since late last year, he has had multiple disputes with the company's risk control department over the compliant handling of drug discounts. Initially, he suggested to the risk control department that drug discounts be treated as risk compensation funds, included in the insurer's claim payout fund pool to directly offset claim expenses, rather than being viewed as a type of financial income. However, the risk control department rejected the proposal on the grounds that it had not yet received regulatory approval.

Over the past two months, Zhao Quanlong began studying the relevant clauses of the Memorandum of Cooperation between the National Healthcare Security Administration and insurance companies (referred to as the 'Cooperation Memorandum'), hoping to find a proper solution from it. The 'Cooperation Memorandum' obtained by the reporter shows that regarding negotiated discount prices, the National Healthcare Security Administration will promptly inform insurance companies of the dynamic adjustments to the 'Commercial Health Insurance Innovative Drug Directory.' For 'commercial insurance products' registered by insurance companies with the National Healthcare Security Administration, the Administration supports relevant pharmaceutical enterprises in providing drugs to these 'commercial insurance products' at negotiated discount prices and will promptly inform insurers of adjustments to drug price discounts in the commercial insurance innovative drug directory.

Wang Pingyang, Vice President of the Zhejiang Provincial Healthcare Security Research Association, stated that this indicates the National Healthcare Security Administration views drug discounts as a commercial activity. Insurance companies and pharmaceutical enterprises can negotiate and set the drug discount ratio, how the drug discount is to be paid, and through which methods it is to be paid.

Zhao Quanlong admitted that he has not yet found a solution to the compliant status of drug discounts from the 'Cooperation Memorandum.' Recently, he also discovered that concerns among some pharmaceutical companies regarding the compliance of drug discounts are rapidly escalating. As the compliant status of drug discounts remains unclear, the compliance departments of these pharmaceutical companies have also issued corresponding risk warnings—regulators have not yet approved classifying drug discounts in accounting standards as 'claim support reduction' or 'risk management income.' If pharmaceutical companies return drug discount funds or grant drug discounts, they may face the risk of 'commercial bribery.' Therefore, before relevant policies are clarified, the sales departments of pharmaceutical companies cannot agree to insurance companies' requests for drug discounts.

**Alternative Approaches Also Hit Walls**

Faced with the issue of the compliant status of drug discounts, some insurance companies have opted for alternative approaches.

Since February this year, Wu Hao has visited three partner hospitals multiple times, trying hard to persuade them to purchase innovative drugs from the directory at the discount prices negotiated between the insurer and the pharmaceutical companies. After the launch of the new health insurance product, once insured patients require medication, the insurance company would then pay the relevant claim amount to the hospital at the discounted price.

'For example, if a listed innovative drug has a market price of 500,000 yuan with a discount rate of 20%, the hospital first purchases this innovative drug for 400,000 yuan. When the hospital uses this drug to treat an insured patient, the insurance company pays the relevant claim amount of 400,000 yuan,' he explained.

Wu Hao initially held high hopes for this direct and efficient solution. However, he was soon disappointed. The feedback from the three partner hospitals was that this operational model could only be applied to small-amount, short-duration situations. For high-priced innovative therapies like CAR-T, the process from patient hospitalization to completion of treatment and issuance of a full invoice often takes several weeks, and hospitals also face working capital pressure. Furthermore, the drug prices on hospitals' procurement platforms are linked nationwide, and specific drug discounts must remain confidential and cannot be shared with insurance companies.

Seeing that the direct hospital reimbursement model was not feasible, Wu Hao tried the pharmacy model. In March this year, he approached several large chain pharmacies, hoping they would purchase innovative drugs from the directory at the discount prices negotiated between the insurer and pharmaceutical companies. After the launch of the new health insurance product, insured patients would only need to take the out-of-hospital prescription issued by a doctor to a designated commercial insurance pharmacy, present the commercial insurance code to purchase the drug, and the insurer would directly pay the pharmacy the agreed discounted price for the relevant innovative drug.

Wu Hao found that while this approach seemed flexible, it faced significant operational hurdles. For instance, out-of-hospital drug purchases fall outside hospital pharmaceutical supervision, and whether doctors are willing to issue out-of-hospital drug prescriptions is uncertain. Additionally, whether certain specialty drugs in the directory can be procured out-of-hospital also faces uncertainty. Moreover, the systems of insurance companies and pharmacies are not standardized, making it very difficult to establish a direct drug payment system.

Since April this year, he has frequently engaged with third-party service platforms, attempting to find new solutions through the PTA advance payment model. The so-called PTA advance payment model mainly involves the PTA, authorized by the insurance company, first advancing the cost of directory-listed innovative drugs for insured patients to the hospital, with the hospital issuing a full invoice. The insurance company pays the claim amount to the PTA based on the discounted amount. Simultaneously, the PTA provides technical services such as patient medication management and clinical efficacy data analysis to the pharmaceutical company, allowing the pharmaceutical company to pay the discount amount to the PTA under the name of patient health management service fees.

'This operational model is not complicated,' Wu Hao said. For example, if an insured patient uses a 500,000 yuan directory-listed innovative drug during treatment, the PTA first advances the full amount. After the insurance company receives the full invoice from the hospital, it pays the PTA 400,000 yuan in claim funds based on the agreed 80% drug discount. Additionally, the pharmaceutical company pays the 20% drug discount amount (100,000 yuan) to the PTA under the name of patient health management service fees.

The benefit of this approach is that both the insurance company and the pharmaceutical company are relieved—free from the worry of 'pharmaceutical companies not daring to give drug discounts, and insurance companies not daring to accept them.'

However, the third-party service platform raised two thorny practical issues: First, does offsetting patient health management service fees against drug discount fees pose compliance problems—how should related tax compliance issues be resolved? Second, this type of cooperation between pharmaceutical companies and PTAs still requires a compliant definition at the policy level to avoid the fees paid by pharmaceutical companies being classified as 'drug sales rebates,' leading to new suspicions of 'commercial bribery.'

Currently, Wu Hao is communicating with relevant departments to see if they can explicitly recognize the intermediary role of PTAs in the management of risk-sharing funds, thereby constructing a compliance safe harbor that allows pharmaceutical company discounts to be legitimately converted into the insurer's claim hedging funds.

**Local Government Explorations**

The lack of a compliant status for drug discounts also affects the claims and operations of city-customized commercial medical insurance (commonly known as 'Huimin Insurance').

Li Wei, the Huimin Insurance business operations director at a third-party health management platform, has participated in the design of Huimin Insurance products in multiple regions. He found that as a commercially medical insurance supported by local governments, when Huimin Insurance includes multiple innovative drugs from the directory in its reimbursement scope, it also requests a certain percentage of drug discounts from pharmaceutical companies based on the need to reduce its own claim pressure. However, due to the inability to find a compliant status for drug discounts, some Huimin Insurance plans either have to fully reimburse high-priced specialty drugs, inadvertently increasing their own claim burden, or they do not include certain high-priced specialty drugs in the reimbursement scope, leading to a narrower medical claim coverage and failing to alleviate the out-of-pocket medical expense burden for some local residents.

Since the beginning of this year, Li Wei has visited multiple cities numerous times to discuss with local relevant departments and the insurance companies responsible for Huimin Insurance operation and claims how to resolve the compliant status of drug discounts. He discovered that some local governments have already provided some noteworthy practices.

In certain cities, the local healthcare security department first signs drug discount agreements with pharmaceutical companies for directory-listed innovative drugs, then files with the National Healthcare Security Administration to obtain the relevant discount ratios. Finally, the local finance department directly collects the drug discount funds from the pharmaceutical enterprises and incorporates the relevant discount funds into the Huimin Insurance fund pool to subsidize its claim payouts.

Additionally, some local governments convert drug discounts into a sharing ratio by constructing a risk-sharing approach. They agree with pharmaceutical companies that the local Huimin Insurance will set upper limits on the claim amount or the number of claimants for certain innovative drugs in the directory, with any portion exceeding the limit borne by the pharmaceutical company.

Currently, Li Wei is negotiating with multiple local government departments and insurance companies on whether local Huimin Insurance products can set separate reimbursement ratios and deductibles for certain innovative drugs in the directory, using this risk-sharing mechanism to resolve the compliant status of drug discounts.

'Many local government departments are quite interested in this, but whether this approach can be implemented still depends on whether pharmaceutical companies agree,' Li Wei said. Beyond the compliance assessment of the related operations, pharmaceutical companies have additional concerns—once the reimbursement ratio is too low or the deductible is too high, pharmaceutical companies feel they bear a higher proportion of the risk, making it 'not cost-effective' in terms of economic benefits.

Li Wei also found that although local governments grant drug discounts a compliant status through different practices, multiple local government department personnel admitted that to address the root of this problem, cross-departmental coordination is still needed to clarify the compliant status of drug discounts as 'risk compensation funds.' One effective approach would be for multiple departments to issue joint accounting/regulatory standards, clarifying the risk-sharing cost compensation nature of drug discounts and agreeing to classify them in accounting standards as 'claim expense reduction' or 'risk management income.'

(At the interviewee's request, Wu Hao is a pseudonym.)