China’s 2023 NRDL update: a leap forward in drug pricing and accessibility

In a critical move towards healthcare reform, China's National Healthcare Security Commission (NHSA) has unveiled the 2023 update of its National Reimbursement Drug List (NRDL). The successful negotiations (84.6%) have led to an average price reduction of 61.7% for the newly listed drugs, similar to 2021 (Figure 1), reflecting the Chinese government's commitment to enhancing the accessibility and affordability of innovative treatments for all its citizens. With a total of 126 new drugs added in the updated list, and the removal of one, China demonstrates a strategic shift in its healthcare policy, focusing on expanding patient access to essential medicines, including rare disease treatments and advanced cancer therapies. The 2023 NRDL is set to be officially implemented in January 2024, and it will include 3,088 drugs, comprising 1,689 international pharmaceuticals and 1,390 Chinese medicines.

Figure 1. The trend of price reduction for drugs listed in China’s NRDL in recent years.

Source for Figure 1: nhsa.gov.cn, Clarivate, GlobalData; Abbreviations: APR, average price reduction; NRDL, National Reimbursement Drug List

Expanding access to rare disease, diabetes, and cancer treatments

The 2023 NRDL update has marked a significant increase in the inclusion of orphan drugs, with an emphasis on rare diseases. This strategic decision to broaden the list of rare disease treatments from 7 in 2022 to 15 in 2023 indicates a robust commitment to addressing unmet healthcare needs due to the rarity and complexity of these conditions. In the realm of oncology, the NRDL has added 21 new anti-cancer drugs (Figure 2), though it's notable that this update did not include any new programmed cell death protein-1/programmed cell death-ligand 1 (PD-1/L1) inhibitors, chimeric antigen receptor T-cell therapy (CAR-T) therapies, or antibody–drug conjugates (ADCs). However, the four domestically-produced PD-1/L1 inhibitors already listed have gained approval for additional indications, including Chinese Innovent Biologics' Tyvyt (Figure 2), demonstrating a continued emphasis on evolving cancer treatments.

Figure 2. Key inclusions and alterations [TD1] in the 2023 update of China’s NRDL

Source: GlobalData; Abbreviations: EGFR, epidermal growth factor receptor; NSCLC, non-squamous non-small cell lung cancer; *Rare disease; †Additional indication reimbursement approval

The NRDL's 2023 update has made considerable advancements in the management of diabetes. The inclusion of Sanofi’s Soliqua and AstraZeneca's Xigduo XR for type 2 diabetes reflects an acknowledgment of the growing healthcare burden posed by diabetes in China. Furthermore, Novo Nordisk's semaglutide maintains its place on the list, though its indication for weight loss remains excluded, demonstrating the balancing act between broadening drug access and managing healthcare costs effectively.

Healthcare funding and NRDL negotiations: strategic implications for the pharmaceutical industry

China's healthcare funding has seen a substantial increase, with public healthcare spending soaring from RMB 4.06 trillion in 2015 to RMB 7.23 trillion in 2020, representing 7.12% of the nation's gross domestic product. This outcome is predominantly driven by increased investment in social health insurance schemes, including the basic medical insurance for urban employees (BMIUE) and the basic medical insurance for urban and rural residents (BMIURR), covering over 95% of the population. The rise in private health insurance, from 6% in 2015 to 11% in 2019, also illustrates a diversifying healthcare funding landscape.4 The NRDL's 2023 update is expected to yield significant economic benefits and patients could see a reduction in costs of about RMB 40 billion ($5.6 billion) over the following two-year period. This cost-saving measure aligns with China's broader goal of providing high-quality healthcare services while ensuring economic sustainability.

The NHSA has launched confidential discounts for select novel therapies, aiming to reinforce the global competitiveness and export potential of domestic drugs. This approach reflects China's growing role in the global pharmaceutical market and its ambition to become an exporter of innovative drugs. By offering confidential discounts, China aims to make Chinese-produced drugs more attractive in international markets without disrupting the pricing structure within its own healthcare system. This method allows for competitive pricing in global markets, while maintaining the drug’s perceived value domestically. The NRDL's approach to drug pricing and inclusion increasingly mirrors international health technology assessment (HTA) practices. This alignment demonstrates China's dedication to both enhancing health outcomes and spending its healthcare money wisely.

Despite these advancements, challenges persist, particularly in rural health insurance systems where declining enrolment is a concern. The growing gap between increasing healthcare costs and unchanging salaries shows the complexity of managing a rapidly evolving healthcare system. Professor Hu Shanlian of the Fudan University School of Public Health proposes a pricing strategy for China's pharmaceutical industry rooted in the concept of drug life cycles. Under this approach, newly developed medications would receive increased insurance funding to ensure accessibility, while older drugs would undergo substantial price reductions to enhance affordability.

The most recent NRDL negotiations have marked a shift from previous practices, featuring extended discussions that allow for a more comprehensive evaluation of each drug's merits. The NRDL updates and pricing negotiations are critical indicators for the global pharmaceutical industry, offering insights into market entry strategies and the importance of strategic pricing. While China continues to refine its drug pricing and reimbursement policies, it remains a key player in the global healthcare arena, influencing how the world adapts to its healthcare policy shifts.

Conclusion

The 2023 update of China's NRDL is a significant step forward in the nation's healthcare reform; it not only reflects China's dedication to making innovative treatments more accessible and affordable, but also shows its intention to align with global healthcare practices. The NRDL's evolution presents both opportunities and challenges for pharmaceutical companies, yet its primary aim is to enhance the quality of healthcare for the Chinese population. As China continues to advance its healthcare policies, it will undoubtedly remain at the centre of worldwide discussions on healthcare reform and pharmaceutical innovation.

Written by Boon Yap and Theoni Demcollari

Decisive Dialogue 21st December 2023

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