Stabilize Clinical Use, Ensure Quality, Prevent Bid Rigging, Anti-Involution! Understanding the Ten Highlights of the 11th Batch Drug Procurement

Deep News
Sep 20

On September 20, the National Drug Joint Procurement Office released the "National Drug Centralized Procurement Document," confirming that 55 drugs will be included in the 11th batch of national organized drug centralized procurement with volume commitments, with bidding scheduled to open in Shanghai on October 21, 2025.

According to sources from the National Healthcare Security Administration, the plan has twice solicited opinions from industry associations, enterprises, and relevant departments. The National Healthcare Security Administration has attached great importance to the opinions and suggestions raised by all parties, repeatedly simulating relevant data, organizing expert discussions and demonstrations multiple times, and maintaining regular communication with related enterprises, fully incorporating reasonable opinions and suggestions from all parties.

The National Healthcare Security Administration pointed out that during the formulation and revision of this procurement plan, the principles of "stabilizing clinical use, ensuring quality, preventing bid rigging, and anti-involution" were fully followed. Overall, based on incorporating opinions from all parties, the plan for the 11th batch of national organized drug procurement has received support and understanding from all sectors of society.

The relevant person in charge of the Drug Joint Procurement Office indicated that the volume commitment ratio for this procurement is similar to previous rounds, generally taking 80% of the volume reported by medical institutions as the agreed procurement volume, with appropriate reductions in volume commitment ratios for varieties with 3 or fewer selected enterprises. Based on this, adopting departmental and expert opinions, the volume commitment ratios for glucocorticoid drugs, antimicrobial drugs, varieties with limited indication reporting, and key monitored drugs were appropriately reduced by 10-20 percentage points,降to 60-70%.

The following are the ten highlights of the 11th batch procurement compiled by reporters.

**1. 46,000 Medical Institutions Participated in Volume Reporting, with 77% Specified by Brand**

For the first time, this procurement allows medical institutions to report volumes by brand. According to relevant officials from the National Healthcare Security Administration, medical institutions can either report volumes by generic name as before or by specific brands. If a brand reported by medical institutions is selected, it will directly become the supplier for that medical institution, improving the matching between clinical demand and supply. The improvement in volume reporting rules has received support from medical institutions and enterprises. A total of 46,000 medical institutions participated in volume reporting for this procurement, with 77% of reported volumes specified by brand.

The official also stated that the procurement takes 60%-80% of medical institutions' reported volumes as the competition target for enterprises, which is also the agreed procurement volume for medical institutions, with the remaining portion still allowing medical institutions to autonomously choose brands. For enterprises with high demand from medical institutions but whose quotes did not make the shortlist, if they accept the selected price, they can be "revived" to obtain selection qualification, better meeting clinical needs.

**2. 25 Varieties Have Reference Preparations (Original Research Drugs) Participating, Accounting for About 30% of Volume Share**

According to the Drug Joint Procurement Office, a total of 46,359 medical institutions nationwide participated in volume reporting. Of the medical institutions' volume reports, 77% were specified by brand and 23% by generic name. Among the 55 varieties in this procurement, 25 varieties have reference preparations (original research drugs) participating, accounting for about 30% of volume share.

**3. Requiring Bidding Drug Production Lines to Have No GMP Violations Within 2 Years**

Regarding the "quality assurance" principle of the 11th batch procurement, relevant officials from the National Healthcare Security Administration stated that this procurement fully solicited and adopted opinions from drug regulatory departments and market supervision departments, raising higher requirements for the quality control level of bidding enterprises while ensuring fairness.

First, requiring enterprises to have certain production experience. Bidding enterprises or their contract manufacturing enterprises must have more than 2 years of experience producing similar dosage forms, and the production line for bidding drugs must pass Good Manufacturing Practice (GMP) compliance inspection.

Second, regarding production quality inspection requirements. The original requirement that "bidding drugs" had no GMP violations within 2 years was expanded to "bidding drug production lines" having no GMP violations within 2 years.

Third, prioritizing clinically recognized enterprises with stable quality. When enterprises quote the same price, those with more medical institution volume reports or those that have not undergone major changes in production processes, raw materials, or main excipients take priority.

**4. Bid Rigging Erodes the Institutional Foundation of Procurement, Introducing "First Report Leniency" Mechanism**

Regarding the "prevent bid rigging" principle of the 11th batch procurement, relevant officials from the National Healthcare Security Administration stated that bid rigging behavior not only affects the price levels of one or two drugs but fundamentally erodes the institutional foundation of centralized volume-based procurement. This procurement further improved measures to prevent bid rigging behavior.

First, continuing constraints on related enterprise bidding. Enterprises with close relationships in equity, management, registration certificate transfers, or contract manufacturing are treated as one entity when bidding.

Second, introducing a "first report leniency" mechanism. For enterprises that first provide bid rigging clues and effective evidence, as well as enterprises that first voluntarily admit participating in bid rigging during investigation, lenient treatment may be applied according to law and regulations, breaking the interest alliance among bid rigging enterprises.

Third, strengthening prevention and crackdown on bid rigging behavior. For enterprises involved in bid rigging and collusion in national organized drug procurement, in addition to being listed in the "violation list" according to procurement document provisions, they will also be subject to the strictest penalties according to pharmaceutical price and procurement credit evaluation systems.

**5. Lower Prices from "Exclusive Selection" in Provincial Procurement Not Included in Maximum Effective Bid Price Calculation**

Regarding the "anti-involution" principle of the 11th batch procurement, relevant officials from the National Healthcare Security Administration pointed out that procurement adheres to open, transparent, fair and just market competition mechanisms, with voluntary enterprise participation and autonomous pricing, while clearly opposing excessive involution.

Regarding optimizing the formation rules for maximum effective bid prices, relevant officials from the National Healthcare Security Administration stated that under "weak elimination" rules where most enterprises can be selected, the maximum effective bid price is an important measure to prevent extreme events of "significant price increase" selection. At the same time, fully incorporating suggestions from industry associations and enterprises, lower prices from "exclusive selection" in provincial procurement are not included in maximum effective bid price calculations, avoiding excessively low maximum effective bid prices for individual varieties.

**6. 11th Batch Procurement Optimizes Price Difference Control "Anchor Point" Selection, No Longer Simply Using Lowest Bid**

Regarding the "anti-involution" principle of the 11th batch procurement, the National Healthcare Security Administration proposed optimizing the price difference control "anchor point." Relevant officials pointed out that to ensure fairness, this procurement continues to control selected price differences to some extent. Meanwhile, to prevent individual enterprises from quoting abnormally low prices that "melt down" other normally priced enterprises, causing overall variety selection prices to be too low, this procurement optimized the selection of price difference control "anchor points," no longer simply using the lowest bid. When the "lowest price" is below "50% of shortlist average price," "50% of shortlist average price" will be used as the anchor point for price difference control.

According to the National Healthcare Security Administration, experts simulated the pricing situations of over 200 varieties from the 7th-10th batch procurements. Among varieties where the highest price was more than 1.8 times the lowest price, under current rules, about 1/4 of varieties would trigger anchor point adjustment, representing an average increase of 34% relative to the lowest price, with a maximum increase of 170%, effectively playing an "anti-involution" role.

**7. 11th Batch Procurement Requires Enterprises Below "Anchor Point Price" to Actively Address Social Concerns About Low-Price Selection**

Regarding the "anti-involution" principle of the 11th batch procurement, relevant officials from the National Healthcare Security Administration emphasized requiring enterprises not to bid below cost. Each bidding enterprise must commit not to bid below cost, and enterprises below the "anchor point price" must declare the reasonableness of their quotes, explaining specific cost components including manufacturing costs, period expenses, and sales profits, actively addressing social concerns about low-price selection.

**8. 11th Batch Procurement Adds 3 New Qualification Requirements for Bidding Enterprises**

Regarding qualification requirements for the 11th batch procurement, relevant officials from the Drug Joint Procurement Office pointed out that this procurement adds 3 new qualification requirements for bidding enterprises, strengthening quality control capability and production quality inspection requirements. First, the marketing authorization holder or contract manufacturer of declared drugs must have more than 2 years of experience producing similar formulations; second, declared drugs must be produced on production lines that have passed Good Manufacturing Practice (GMP) compliance inspection; third, the production line for declared drugs must not violate GMP requirements within 2 years.

Regarding production experience requirements, some enterprises suggested relaxing the time limit to 1 year or removing restrictions entirely. The official stated that considering the goal of procurement is to purchase high-quality, reasonably priced drugs, requiring 2 years of experience producing similar products reflects enterprise quality control capabilities. Overall, most enterprises and relevant departments consider this requirement appropriate and fair. Additionally, if enterprises that do not meet qualification requirements before bidding meet the requirements during procurement execution and accept the highest selected price, they may not be counted as non-selected drugs, encouraging more enterprises to participate in market supply at appropriate prices.

Regarding some GMP compliance inspection notices that do not specify particular variety names, relevant officials from the Drug Joint Procurement Office stated that after consulting relevant departments and considering practical operations, if compliance inspections do not specify variety names, enterprises may commit that bidding drugs are produced on GMP-compliant production lines and submit supporting materials.

The official also pointed out that regarding the requirement that production lines not violate GMP within 2 years, previously only emphasized the bidding drugs themselves, but this time requires the entire production line. This is mainly because relevant parties pointed out that drug quality control is a complete system built around production lines. If any drug produced on the production line where bidding drugs are located has violated GMP requirements in the past two years, it means there are problems with the entire production line's quality control system and cannot be viewed in isolation. After consulting relevant departments, the requirements were adjusted to more completely reflect enterprise quality control capabilities and be responsible to patients.

**9. 11th Batch Procurement Adds "Non-Shortlisted Revival" Opportunities**

Regarding the revival mechanism for the 11th batch procurement, relevant officials from the Drug Joint Procurement Office pointed out that to guide more enterprises to be selected at appropriate prices, this procurement added "non-shortlisted revival" opportunities based on previous "shortlisted revival."

First is "shortlisted revival." For enterprises that made the shortlist but were melted down due to exceeding 1.8 times, if they voluntarily reduce their quotes to the highest price of enterprises in the same variety that were not melted down and tentatively selected, they can be revived and participate in selecting supply provinces. If there is only one enterprise in the same variety that was not melted down and tentatively selected, the revival price is 1.8 times the melting anchor point.

Second is the newly added "non-shortlisted revival." Conditions are sufficient hospital volume reports, sufficiently low initial quotes, and sufficient determination for further price reductions. Specifically, three conditions must be met: first, hospital volume reports reach or exceed the average volume reports of all brands with hospital volume reports for that variety; second, initial quotes are not the highest price; third, voluntary price reduction to the level of shortlisted enterprises' tentatively selected prices. Enterprises meeting all three conditions can also obtain selection qualification but do not participate in selecting supply provinces.

**10. Each Region and Even Each Medical Institution May Have Multiple Selected Enterprises Supplying, Constraining Single Enterprise Volume Caps**

Regarding agreement volume distribution for this procurement, relevant officials from the Drug Joint Procurement Office pointed out that in previous chemical drug procurements, each region had only one selected enterprise as the main supplier. To better ensure clinical supply and meet diversified needs, this procurement allows each region and even each medical institution to potentially have multiple selected enterprises supplying.

The specific steps for agreement volume distribution are as follows:

Step 1: Volume commitment by brand. This is divided into two types of enterprises. The first type includes enterprises directly selected from shortlisting and those revived from shortlisting, which directly become suppliers for medical institutions that reported demand for that brand, forming agreed procurement volumes according to the volume commitment ratios mentioned earlier. The second type includes non-shortlisted revival enterprises, which receive volume commitments based on final price gradients. Among these, enterprises choosing the highest selected price receive at most 30% of medical institutions' agreed procurement volumes; those choosing the average of highest tentatively selected price and anchor point price receive at most 50%; those choosing anchor point price receive at most 80% of medical institutions' agreed procurement volumes.

Step 2: Distributing agreed procurement volumes by province. After deducting the portion committed by brand, there remains a portion including volumes reported by generic name, volumes from non-selected enterprises, and volumes not fully committed by non-shortlisted revival enterprises. Selected enterprises choose provinces in rotation according to initial pricing order, with enterprises quoting the lowest prices having priority selection.

Step 3: Confirming agreed procurement volumes for non-shortlisted revival enterprises. For non-shortlisted revival enterprises, secondary confirmation with medical institutions will be conducted, asking medical institutions to reasonably determine agreed procurement volumes based on "one variety, two specifications" drug allocation regulations and their clinical needs.

The National Healthcare Security Administration also pointed out that to avoid monopolies, single enterprise volume caps will be constrained. When any selected enterprise's agreed procurement volume exceeds 50% of that variety's total reported volume, it will be required to proportionally compress agreed procurement volumes at each medical institution until the agreed volume does not exceed 50% of the variety's total reported volume. The compressed volume will not be counted as agreed procurement volume and hospitals may choose procurement autonomously.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Most Discussed

  1. 1
     
     
     
     
  2. 2
     
     
     
     
  3. 3
     
     
     
     
  4. 4
     
     
     
     
  5. 5
     
     
     
     
  6. 6
     
     
     
     
  7. 7
     
     
     
     
  8. 8
     
     
     
     
  9. 9
     
     
     
     
  10. 10