Like healthcare systems around the world, China is not immune to the "impossible triangle" of quality, cost, and accessibility: providing high-quality and affordable medical services inevitably requires limited healthcare resources to meet infinite medical demands, resulting in long wait times and stringent triage systems. Recently, the National Medical Products Administration (NMPA) announced the cancellation of 80 drug registration certificates, with over 55% being products from foreign or joint-venture companies. The phrase "multiple imported drugs withdraw from China" has once again sparked public discussion.
According to media reports, this list includes several well-known medications, such as Fexofenadine tablets from Fexofenadine Pharma, Ventolin from GlaxoSmithKline, and Tanshinone injections from Xi’an Janssen, as well as some variety of drugs subject to collective procurement, rare disease medications, and GLP-1 class drugs. Based on the specific directory published by the NMPA, the reason for the cancellation of these 80 drugs was "cancellation upon request." In other words, they were voluntarily requested for cancellation by the companies, suggesting a business decision rather than revocation due to health risks.
However, the reality behind the withdrawal of imported and original drugs from China is far more complex than we imagine.
The same original and generic drugs have identical molecular structures In terms of chemical drugs, whether original or generic, their active ingredients are undoubtedly the same. (Note: The sequence structure of biological agents and biosimilars differs slightly.) From the elementary principles of chemistry and biology, as long as the drug molecules have the same structure, whether synthesized in a lab in Switzerland or India, they will achieve the same therapeutic effect. This is pure science, and there is no room for any mystical "ancient methods."
Moreover, many generic drugs use active pharmaceutical ingredients (APIs) sourced in the same way as original drugs; some generic manufacturers even originate from supplying APIs to original manufacturers or starting as OEMs, with only differences in packaging and labeling. However, the actual clinical applications are much more nuanced, as no one swallows the API solution directly. Finished drugs require crystallization and granulation, involve various excipients with differing functionalities (like formulation, controlled-release, antioxidant properties), and undergo various preparation processes to become tablets, capsules, dispersible tablets, controlled-release pump tablets, etc. The crystallization form of the drug, the choice and ratio of excipients, and the complexity of the formulation process can all impact the drug's absorption, distribution, metabolism, excretion, and toxicity properties (ADMET).
Although after the original drug is marketed and patent information disclosed, generic manufacturers grasp the chemical composition of the drug, original manufacturers have never been obliged to share their unique synthesis and preparation techniques. Generic manufacturers can only approximate the original's processes and formulas through reverse engineering. In some cases, because the original drug's crystalline form and dosage form processes have not yet expired or are restricted by clinical trial data protection systems, generic manufacturers must resort to alternative technical routes to achieve the original's process effects. These differences can accumulate and potentially affect the drug's clinical effectiveness.
There is an old joke in the pharmaceutical community: a researcher compared the impurity levels in original imports and domestic drugs and was shocked to find that the impurity level in domestic drugs was only 60% of that in originals, indicating better quality. However, it quickly became apparent that the effective ingredient in the domestic drugs was only half of that in the originals. In 2005, the pharmacy department of Peking Union Medical College Hospital tested 18 kinds of compound amino acid injection solutions from 3 manufacturers and found that generic drugs contained excessive antioxidants, which could harm patients' liver and kidneys. Additionally, the insoluble particles in domestic cefotaxime sodium powder injections reached up to 500 times that of originals, highlighting significant quality issues, whether intentional or not.
For a long time, the domestic pharmaceutical industry in China had indeed been somewhat reckless, to the extent that former NMPA head Zheng Xiaoyu was sentenced to death for bribery and dereliction of duty. In 2015, the newly appointed director implemented mandatory consistency evaluations for generic drugs, gradually tightening quality requirements for domestic generics, and instituting strict regulation through inspection and credit ratings.
Today, Chinese generics are not what they used to be; many products are now of quality capable of entering the EU and US markets. However, regaining lost trust will take years, and progressing in the industry requires time.
In terms of consistency evaluation standards, our current standards in China have been raised to a Cmax% and AUC0-t% ratio between 80% and 125%, with a 25% fluctuation range. In contrast, the European standards have been elevated to a range of 90% to 111%, indicating a persistent gap. Moreover, the consistency evaluation standards for generic drugs are based on the bioequivalence with reference formulations, reflecting pharmacokinetic properties rather than clinical equivalence. For most drugs, pharmacokinetic similarities can be correlated with efficacy. However, for certain drugs like polymorphic drugs and novel formulations, a bioequivalently compliant generic may not achieve the same clinical efficacy in real-world settings as the original.
Therefore, the US generic drug white paper advises caution in substituting original drugs with generic ones in critical patient and disease scenarios. Feedback from frontline domestic professionals often indicates significant variability in the effects of generic drugs in fields such as anesthesia and psychiatry.
The impossible triangle of health insurance: cheap, high quality, and meeting all needs Given that using original drugs seems more reliable, why do hospitals not continue to procure them? Although doctors serve patients, paying for the major portion are not the patients themselves. In the current public hospital setting, especially when hospitalized, health insurance covers the bulk of the costs.
In adherence to the principle of "extensive coverage and basic protection," the national basic health insurance system aims to ensure that over a billion insured individuals across the country can access essential medications, making this a daunting task. Is it reasonable to pay more for a potentially nonexistent clinical efficacy difference? This question is challenging to answer.
Moreover, the additional cost could be several times higher than that of domestic generics. In the hospital pharmacy, there are thousands of similar medications available; if each time the more expensive original drug is chosen for treatment and reimbursement, the resulting financial pressure on health insurance would be unbearable.
Like healthcare systems worldwide, China is not exempt from the "impossible triangle" of quality, cost, and accessibility: providing high-quality, low-cost medical services using limited healthcare resources to meet unlimited medical demands inevitably leads to long wait times and strict triage.
For instance, under the NHS system in the UK, most patients cannot see specialists, with surgical procedures being delayed until it is too late. High-quality and accessible medical services cannot come cheap; in the US, millions lack insurance and cannot afford even daily glucose-lowering medications.
In a vast country with a relatively low GDP per capita like China, where the population urgently demands medical accessibility, ensuring basic healthcare coverage through affordable generics is almost the only choice—first addressing the presence of medication, then considering its quality.
With quality assured through the consistency evaluation and a secure domestic supply chain, health insurance will naturally prioritize the reimbursement of generics. This aligns with the goals of national centralized procurement by requiring hospitals to prioritize selected generic products, fulfilling the procurement tasks, providing substantial expected sales for winning enterprises, and allowing for extremely low prices for the medications that citizens need nationwide.
For the sake of achieving this core "national strategy" of health insurance sustainability, high-priced original drugs will inevitably have to step aside. When two products are equally reimbursable in hospitals, patients tend to prefer the more expensive original drug for themselves, even if the efficacy of both is somewhat similar. If everyone pursues self-interest maximization, public interests will be harmed.
As a result, we observe rules to limit the use of pricey original drugs within health insurance, whether by strengthening assessment of prescriptions for catalog-winning products; applying the Diagnosis-Related Group (DRG) system to limit total treatment costs, incentivizing doctors to opt for cheaper procured medicines; demanding that original drugs’ procurement prices align with the average of similar products; or requiring original drugs to only be reimbursed at procurement winning prices, thus making hospitals liable for the funding gaps instead of transferring additional costs to patients. These actions all clearly imply that as "people's hospitals," clinical medication choices must lean towards more affordable options. Each small loss for a patient ensures that all patients gain their fundamental rights.
Using the savings from generics to subsidize innovative drugs However, are we limited to using cheap and mediocre drugs? The reality is far from that. When we debate between original and generic drugs, we often assume that these medications are actually old drugs with expired patents. Only because they are older drugs can generics appear in the market.
For innovative drugs that employ new mechanisms and formulations and hold exclusive patents, there is no competition from generics, and health insurance reimbursement policies for them are increasingly welcoming. Since 2017, the path for innovative drugs to enter the health insurance reimbursement directory has matured and become efficient thanks to annual negotiations. The average interval from a new drug being marketed in China to its inclusion in health insurance reimbursement has narrowed to less than two years.
Once included in the directory, particularly in recent years, innovative drugs continue to enjoy the support of health insurance and health departments: exempting them from the drug limit in hospital pharmacies; requiring hospitals to convene pharmacy meetings specifically to approve the procurement of innovative drugs post-negotiation; establishing a "dual-channel" mechanism allowing patients to purchase innovative drugs from designated pharmacies with health insurance reimbursements when they are unavailable in hospitals; exempting innovative drugs from the DRG system for standalone payments for two years without assessments. These measures have opened an admirable green channel for broader clinical applications of innovative drugs.
However, as cutting-edge technological outcomes, innovative drugs, particularly for rare diseases and groundbreaking therapies, remain expensive even after health insurance negotiations. The expenditure for new drugs has expanded from 5.949 billion yuan in 2019 to 48.189 billion yuan in 2022, a 7.1-fold increase, and is expected to double in 2023. Where does this money for purchasing new drugs come from?
Indeed, it is through "exchanging new for old," substituting expensive original drugs with low-cost generics. By 2021, the state centralized procurement had saved 150 billion yuan in drug costs.
As aging accelerates and healthcare demand soars, continuing to reimburse original drugs would lead to unsustainable expenditures that could collapse health insurance, let alone providing surplus funds to purchase innovative drugs. It is unreasonable to sacrifice the potential clinical benefits of original drugs in favor of buying new drugs with better clinical efficacy. All resources are limited—in one area they can be spent, and that spending cannot cover another. Achieving maximum cost-effectiveness for basic healthcare needs through generics frees resources for new drugs to reach patients more quickly, embodying the significance of strategic purchasing in health insurance: the government must strive to meet current patient needs while also preparing for sustainable public health in the future.
It is essential to know that a tribe of eternal people cannot develop because the elderly consume all resources. Only through the decline and yielding of original old drugs can the fire of innovative drugs be passed down through generations.
We should provide wealthy individuals with greater choices Of course, from the perspective of specific individuals, we do not care about national strategies but about the health of our relatives, friends, and ourselves. As the cold yet frustrated saying goes: everyone is their own health's first-responsible person. We understand that health insurance must provide coverage for the most basic needs of everyone while also promoting innovation. Therefore, for regular medication needs, it can only offer "pickled vegetables and watery rice." However, many still prefer to spend a little more to treat themselves better. In the current system, patients who wish to pay extra cannot obtain medications.
Striking a balance between overall cost control and individual needs is something governments worldwide struggle to perfect. In many European countries, governments contract for medicines, leaving neither doctors nor patients free to choose; the US system is even stricter, with pharmacists wielding the power to substitute prescribed original drugs with generics as mandated by insurance companies, leaving patients with no choice.
Perhaps it's fair to say the Chinese in some aspects are overly cared for and have not been educated by the "iron fist" of capitalism. However, the design of health insurance does leave room for multi-tiered demands: "extensive coverage, basic protection" is immediately followed by "multi-tiered, sustainable."
While health insurance can only reimburse original drugs at centralized procurement prices, considering whether the price difference can be made up by commercial insurance or whether individuals can take on some of the costs should not result in a binary exclusion of original drugs.
Now that the centralized procurement system has been established and the market landscape and expectations have been determined, we have the space and should allow a small outlet for multi-tiered medication needs. Wealthy individuals who can and are willing to pay more should have more choices. Under the premise of equitable medical protection, they could obtain medications meeting their needs through commercial insurance prepayment or by paying the price difference. Given the integration of health insurance into online medical platforms, this is a prime opportunity to explore diversified payment models beyond inpatient reimbursement.
Indeed, overly stringent cost control mechanisms harm not just original drugs but also generic companies with good technology, high quality, and relatively higher costs. Blind preference for low costs drives out quality products and damages the potential for sustainable industry development. If domestic pharmaceutical companies cannot generate cash flow from high-quality generics to support the development of innovative drugs, the hard-won innovative drugs will end up as formless drifters, easily harvested by multinational pharmaceutical companies.
We truly need a multi-tiered guarantee that effectively translates the diverse demands within China's complex community into quality fuel for the pharmaceutical industry's development. Let excellent products have opportunities, allowing genuine innovations to grow.