China’s centralized procurement programme seeks the lowest prices for drugs. It was launched as a pilot in 2018 and has since gone nationwide. The programme is part of China’s efforts to drive down prices for off-patent drugs in order to release more funds for novel therapies.

At the end of the second phase of the programme, 77 pharmaceutical companies won contracts with the Chinese government by cutting their prices by an average of 53%, and in some cases by up to 93%. The list of drugs included treatments for diabetes, hypertension, viral infections and cancer.

As well as domestic companies, 24 foreign pharmaceutical firms also joined the bidding process. The winning companies cut the prices of their originator drugs by over 80% on average.

Bayer cut the price of its off patent acarbose, the first-line treatment for type 2 diabetes in China, by almost 90%. The final price is less than 80 cents for 30 tablets. This new price is also almost 80% lower than the price ceiling set by the government at the end of 2019. This move is likely to push Chinese competitor Hangzhou Zhongmei Huadong Pharmaceutical Co Ltd, who offered US$2 for 30 tablets, out of the market. Other successful foreign companies included Boehringer Ingelheim, Sandoz and Celgene Corp.

However, most contracts were actually given to local companies and it is expected that the programme will over time replace foreign originator firms with domestic generics manufacturers.

The government also added a price ceiling for each of the drugs in the bidding process, which were as high as 95% below current prices. The price-reduced drugs will be available in public hospitals from April 2020.

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