Drug change under the new policy of the industry

With the deepening of pharmaceutical reform, the long-awaited new regulations for centralized bidding and procurement of medicines finally unveiled. Last weekend, the General Office of the State Council issued the "Guiding Opinions on Perfecting the Centralized Purchasing of Drugs in Public Hospitals" (hereinafter referred to as "opinions"), and mainly solved key issues such as "what to recruit, how to recruit, how to distribute, how to settle, and how to supervise". However, many people in the industry also frankly stated that the centralized tendering policy for drugs has entered its fifteenth year. The contradiction between the price killer and pharmaceutical companies in the Drug Bidding Office is becoming increasingly acute, and the new regulations are also difficult to mitigate.

A number of New Deal good pharmaceutical companies

Late arrivals are always less than strong. From last year, new regulations for the centralized bidding and procurement of drugs to be introduced were finally launched earlier this year. According to the Opinions, a new round of centralized drug procurement for public hospitals was launched in 2015. The people's government must strengthen the organization and leadership of centralized procurement of drugs in public hospitals.

With regard to the impact of the Opinions, the person in charge of the State Council's Health Care Reform Office analyzed that through various procurement methods, it would promote full market competition and would effectively reduce the price of drug excesses, while regulating clinical drug use behavior and reducing the average drug charges for outpatients and inpatients. Reduce Medicare funds and the people's drug expenditures.

The Opinions clarified that all medicines used in hospitals, except Chinese Herbal Medicines, should be purchased through the provincial-level drug procurement platform, encouraging provincial-level interregional and specialty hospitals to jointly purchase, and the procurement cycle should be conducted once a year in principle. In particular, it is worth mentioning that, for innovative drugs, it is always a big problem for them to enter health insurance in time after listing. In this regard, the “Opinions” suggest that drugs newly approved for listing within the procurement cycle may be organized separately. Concentrated procurement in provinces (autonomous regions and municipalities) means that innovative drugs can enter the health insurance list at any time.

“We also noticed that in accordance with the new regulations, many commonly used low-cost medicines, women and children specialists, and emergency (rescue) medicines do not have to participate in centralized bidding and procurement. In the payment of drug loans, the “Opinions” also gave rigid requirements and encouraged Hospitals and drug manufacturers directly settle drug payment, drug production companies and distribution companies to settle settlement costs. It can be seen that the country has realized that blind pursuit of low prices will eventually only lead to a dead end, so it will take more market in drug bidding. The means of transformation," Yu Mingde, president of the China Pharmaceutical Enterprise Management Association, said in an interview with a reporter from Beijing Commercial Daily. "But the current New Deal is still only a palliative and does not fundamentally solve the various problems in the procurement of pharmaceuticals."

The pharmaceutical industry is still in conflict

The facts also indicate that 15 years of concentrated bidding and procurement of medicines have always been aimed at drastically reducing drug prices, which has triggered drug companies to resist emotions. In early February of this year, the China Pharmaceutical Promotion Association published on its official website the article titled "The person in charge of the Hunan Drug Invitation and Administration Office threatened to sue the China Pharmaceutical Innovation Promotion Association and the China Pharmaceutical Innovation Promotion Association gave a solemn response" to reflect the pharmaceutical companies and tenders. The contradictions started to become open.

The above disputes originated on January 21st, Hunan Province announced the "Notice on Negotiation of Drug Centralized Purchasing Bargaining Negotiations and Bidding of Bidding Drugs," which clearly defined the expert committee of the Drug Concentrated Procurement Review Experts, consisting of 60 medical experts with higher professional titles, to be responsible for Hunan. The new round of subjective sub-assessment and bargaining for medicines for centralized procurement of medicines in the province has caused considerable turmoil in the pharmaceutical industry.

The China Pharmaceutical Promotion Association quickly wrote an article and pointed out that when the experts proposed the price, they did not give a clear, fair and open basis for science. They only used price reduction as their ultimate goal, and their subjective and casual colors were more intense. Some of the first round of expert recommendation prices cut 50% directly on the basis of the bid guidance price. Some experts do not consider the reason for the company to give a counter-offer, and the second round of recommended prices only go up a few points on the basis of the first recommended price. Or a few cents and other issues. Later, the Hunan Provincial Office for Drug Bidding called the “theory” of the Chinese Pharmaceutical Promotion Association, which also made the relationship between the two parties extremely nervous.

Not only that, in the past two years, a number of provinces have stipulated that the centralized bidding and procurement of medicines has caused dissatisfaction among drug companies. Enterprises have repeatedly confronted the bidding office by means of joint letters and denouncements.

Bidding and Disposal Competition

“I think the problem of centralized bidding and procurement of medicines is ultimately a matter of government. Imagine that the bidding department, the government department responsible for bidding, is equivalent to the fact that the government is both a referee and an athlete. This method also lacks legal support.” Yu Ming Germany pointed out that "drug bidding should be concluded between the hospital and the pharmaceutical company, and the parties are responsible for this."

Yu Mingde further explained that in the bidding for medicines, the government should not control the purchase price of medicines, who will distribute products, and the frequency of procurement. Instead, it should set up a service platform where buyers and sellers can make their own transactions. At the same time, the government should be responsible for the qualifications and drugs of medicines. Quality has supervisory responsibilities. Once disputes arise between buyers and sellers, the government should also intervene. Now, it is very easy for the bidding office to bid for drugs. For example, when the government department can specify what price to purchase drugs, it is likely to have the power to rent, and once the phytotoxicity incident occurs, it is difficult to determine the responsibility. .

“Before, after the fatal incident occurred, the hospital said that the problem drug came from centralized tendering and procurement. Therefore, the bidding office should be responsible for this,” said one pharmaceutical company executive who declined to be named. Niu Zhenggan, a senior medical expert, also suggested that in the future, the government bidding for medicines should decentralize and fully realize marketization. Cancel the government-led united bidding procurement control by the province as a unit, instead, the hospital or hospital consortium purchases the bids independently, or the medical institution commissions the third party to bid for the procurement, and establish the market body position of the medical institutions in the drug transaction. Instead of administratively controlled tenders.

In another development, due to the fact that the centralized bidding and procurement policies of individual provinces do not agree, a number of pharmaceutical companies are brewing to write letters to relevant management departments.

New Deal Reform Drug Centralized Purchasing

For the large amount of clinical use, high purchase amount, basic medicines and generic drugs produced by a number of companies, the provincial drug procurement agency adopts the double-envelope system for open bidding, and the hospital, as the purchasing entity, purchases drugs at the bid price.

For drugs that have a significantly low bid price and may have quality and supply risks, a comprehensive assessment must be conducted to avoid vicious competition. Priority procurement of generic drugs that meet international standards.

For some patented drugs and exclusive production of drugs, an open, transparent, multi-participatory price negotiation mechanism has been established.

For women and children specialist non-patent medicines, emergency (grabbing) rescue drugs, basic infusions, and clinically small doses of drugs, the implementation of centralized network, directly from the hospital procurement.