The clinical monitoring of selected drugs still faces shortcomings.
A strategic medical insurance purchasing mechanism, centered around volume-based procurement and drug price negotiations, is reshaping the landscape of China's pharmaceutical industry.
A recent report titled "China's Medical Security Development Report (2025) - China's Pharmaceutical Industry Development Report," released by the China Society of Social Security, indicates that since 2018, China's pharmaceutical industry policies have entered a new phase characterized by value orientation and coordinated governance. Medical insurance has transformed from a passive payer into an active strategic purchaser. Generic drugs have entered an "era of thin margins," while rapid access to medical insurance has created new development opportunities for innovative drugs in China. Industry concentration is accelerating, and internationalization has become a key direction.
Drug negotiations and volume-based procurement highlight this value orientation. The report states that the core of current policy has shifted from simple cost control to pursuing "cost-effectiveness" and "value-based healthcare." Volume-based procurement emphasizes "trading volume for price, with dual control over quality and price," while negotiations and reimbursement list adjustments focus on clinical value, patient benefit, and cost-effectiveness. The establishment of the national drug price negotiation mechanism provides strong support for the accessibility of innovative and high-priced drugs. Volume-based procurement has evolved from pilot programs to a regular practice, leveraging centralized bargaining and economies of scale to effectively reduce the prices of generic drugs and medications for chronic diseases.
After its establishment, the National Healthcare Security Administration (NHSA) changed the reimbursement list adjustments from an irregular schedule to an "annual dynamic adjustment." In 2018, it negotiated the inclusion of 17 new anti-cancer drugs into the Category B section of the national reimbursement drug list (NRDL).
In 2023, the NHSA further tilted its support towards innovative drugs and drugs for rare diseases during negotiations. The proportion of drugs newly listed within five years that were included in the NRDL in the same year increased from 32% in 2019 to 97.6%. The time lag between a new drug's market approval and its inclusion for reimbursement was shortened from about five years to just over a year. More than 80% of innovative drugs can now enter the medical insurance system within two years of launch.
Among the 91 newly negotiated drugs added in 2024, oncology drugs accounted for 28.6%. Drugs for rare diseases filled coverage gaps for 10 conditions. Medications for chronic diseases, such as various insulins, were also reduced to prices around one thousand yuan through special negotiations.
The report noted that domestically developed innovative drugs accounted for 71% of the newly added varieties, with biologics making up 18%, indicating the industry's rapid advancement into high-value sectors. The "volume-for-price" strategy, while ensuring reasonable profits for enterprises, is projected to reduce patient financial burden by over 50 billion yuan by 2025 and improve the utilization efficiency of the medical insurance fund by 22%. This aims to achieve a sustainable development pattern involving coordinated efforts from the pharmaceutical industry, healthcare providers, and the medical insurance system.
As the largest purchaser in China's pharmaceutical sector, the medical insurance fund accumulated expenditures of approximately 13 trillion yuan during the 14th Five-Year Plan period, maintaining an average annual growth rate of around 10%.
Gu Hai, the report's author and Director of the Center for Health Policy and Management at Nanjing University, stated that negotiation and volume-based procurement are two mechanisms for drug pricing in China. For drugs within their patent period, prices are reduced through national drug negotiations. For off-patent drugs, volume-based procurement is used, allowing prices to be formed through sufficient market competition.
Since the launch of the "4+7" city pilot program for volume-based drug procurement in 2018, China has established a dual procurement system involving both national and local levels. To date, eleven batches of centralized procurement have been organized at the national level. Concurrently, a network of provincial and cross-regional joint procurement has been advancing, continuously expanding the policy's coverage.
Data from the NHSA shows that the first ten batches of nationally organized drug procurement covered 435 drug varieties. With the 55 drugs from the eleventh batch, scheduled to take effect in February 2026, a total of 490 drug varieties will have been procured through national centralized procurement over eight years. These procured drugs cover various therapeutic areas, including chronic diseases, anti-tumor drugs, and anti-infectives.
Regarding rare diseases, China's basic medical insurance system focuses on providing "basic coverage." The payment demands for rare disease drugs pose significant challenges to the resource allocation of the existing medical insurance fund. To incentivize innovation and meet urgent clinical needs, China has established four fast-track approval channels. This measure shortens the adjustment cycle for drugs to enter the reimbursement list, accelerates the entry of new drugs, and significantly improves patient access to medication. The NRDL included 7 rare disease drugs in 2020, 15 in 2023, 13 in 2024, and the latest version includes 10.
Rare disease drugs are typically characterized by "severe conditions, good efficacy, high cost, and small patient populations." Their high clinical value and novel mechanisms of action can fill gaps in clinical treatment. However, the pricing of these drugs is often high, with annual treatment costs frequently exceeding one million yuan, far surpassing the price thresholds for medical insurance access. Consequently, a large number of these drugs still fail to enter the reimbursement list.
**Promoting Coordinated Development Between Medical Insurance and the Pharmaceutical Industry**
Recent pharmaceutical reforms have also exposed deeper issues, such as an inadequate quality supervision mechanism for volume-based procurement, insufficient synergy between medical insurance payment and pharmaceutical innovation, and the need to improve the efficiency of rare disease drug access. The report recommends improving the drug value assessment system, establishing a classified payment mechanism for innovative drugs and devices, strengthening quality control throughout the entire process from production to use, and promoting better coordination between the high-quality development of the pharmaceutical industry and the multi-level medical security system.
Challenges and limitations persist in drug consistency evaluation. For instance, evaluation efforts have primarily focused on oral solid formulations of chemical generic drugs, while progress on evaluating injectables, complex formulations, and biosimilars has been relatively slow, or relevant standards are still being refined. The "real-world equivalence" of some varieties that have already passed evaluation, particularly in special populations and long-term medication patients, still requires continuous monitoring and verification.
Regarding volume-based procurement, the report points out that China's current policy lacks a robust clinical usage monitoring system for selected drugs during implementation. Although the policy emphasizes "price reduction without quality reduction," clinical monitoring of winning bids remains a weak spot.
In terms of pharmaceutical innovation, the ecosystem is underdeveloped, lacking sustainable momentum. Weak original innovation capability, insufficient investment in basic research, and low conversion efficiency lead to a scarcity of first-in-class drugs, with innovation mostly concentrated in fast-follower and improved drugs. Furthermore, homogenization in research and development is a significant issue.
The report suggests strengthening the clinical usage monitoring of drugs selected in volume-based procurement by establishing a nationally unified drug use tracking system. This would enable medical insurance departments to monitor hospitals' procurement and usage of selected drugs in real-time. Simultaneously, implementing clinical pathway management would ensure that physicians prioritize prescribing drugs selected through volume-based procurement, thereby enhancing policy execution efficiency.
The report also recommends strengthening the supplementary role of commercial health insurance and building a multi-level payment system. This involves constructing a composite payment system based on "basic medical insurance as the foundation, supplemented by tiered commercial insurance," focusing on solving the accessibility challenges of innovative drugs.