Outlook of China’s NRDL – Have Things Changed?
The Chinese healthcare industry has witnessed significant transformations, particularly in market access and negotiations for the National Reimbursement Drug List (NRDL). These changes, observed from both consulting and industry practice perspectives, reflect a strategic shift in China's approach and attitude towards healthcare and access to innovative medicines. Here at Decisive, we managed to discuss some of these items with Eileen Li from the RareStone Group, who gave us first-hand experience in this year’s NRDL negotiations and shared her experience with the process. As an active practitioner within the market access industry, she has played a pivotal role in recent NRDL negotiations, contributing to successful listing of their product on the list.
The NRDL was established in 2004 and has been instrumental in shaping the Chinese healthcare policy. During the period 2015 to 2017, the National Health Commission played a central role and payer dominance became more evident, in particular, for its nationwide NRDL negotiations, which changed dramatically.
The market has seen significant changes, particularly since the negotiations in 2015 and 2017. The first batch of negotiated drugs in China resulted in two-thirds of the drugs to be imported, most of which have been available in global markets for over a decade. Eileen commented, "if we look at the first two batches of market inclusion drugs in the NRDL, Herceptin and Tarceva was included and their patents were about to expire, and thus multinational corporations reduced the prices to benefit patients.”
While previously the public and press commented that the focus of the negotiations was on achieving the lowest possible drug prices globally, recently there has been a dramatic shift towards valuing innovation in the healthcare sector. This was apparent in 2023, when the public and media began to discuss not just the cost reductions, but also the value and innovations incorporated into the NRDL, signifying a growing recognition and protection of innovation.
This move is further supported by the positive outcomes in recent biotech negotiations, where the prices of the final drug list were better than expected, suggesting a more favourable environment for innovative medicines, and reflecting a transformation in the Chinese government's stance on healthcare reimbursement.
A key factor in this evolution has been the change in leadership within the healthcare bureau. Recent talks at the government’s highest levels have shown a growing focus on removing barriers in the healthcare sector to encourage healthy industry growth. This mindset change is reflected in the moderate price cuts (relative to previous years) and the anticipation of higher final retail prices for pharmaceuticals.
In recent years, the market has seen an increase in the number of drugs, with major players entering the field. In China, the reduction in prices has created a low-cost environment, posing a challenge to globalisation. Consequently, the market dynamics in China have evolved, and adjustments have been made to justify higher prices and ensure sustainability.
As China takes the international reference price (including 12 regions or countries) as a priority price benchmark, manufacturers will need to consider the sequence of their product launches. This is because during negotiations, committee members are likely to inquire about available pricing information.
Globally, addressing challenged posed by the increased ratio of aging population over taxpayers is a priority. However, in China the situation is unique. Statistical data reveals a significant surplus of suppliers. Despite facing similar global challenges and budget constraints, this surplus allows China to implement more healthcare reforms and policy adjustments, led by the central government.
Private health insurance, which currently covers between 10%-20% of the population, has seen rapid growth in the past three years. China is expected to introduce a new form of government-endorsed products. With this endorsement, a larger patient population can be reached, and while some products face challenges, the sector is set for accelerated growth in the next decade. For instance, the CAR-T therapy is partially covered (some insurance products pay up to 80% of the cost) by private health insurance in China. Although the patient size is limited, this provides a model for how to implement such measures, which could be applied to the introduction of more products to address payment issues.
Furthermore, Eileen highlights the strategic considerations in NRDL negotiations, particularly with international reference pricing. Currently, China’s prices are becoming more closely aligned with those in the European Union (EU). Eileen disclosed that they “EU price is an important benchmark for Chinese payer, as most European markets use Health Technology Assessment (HTA) to negotiate with pharmaceutical companies. Chinese payer is adopting a very similar assessment framework”.
In January 2024, the new version of NRDL will be implemented, significantly increasing the number of orphan drugs included. This shows a strong dedication to meeting the medical needs of rare diseases in China. Over half of these drugs are novel and were just approved by the National Medical Products Administration (NMPA) in 2023. They took considerably less time (less than 6 months) to be listed in NRDL compared to previous years (more than half a decade). The National Health Commission of China manages rare diseases through a cataloguing system; in 2018, the rare disease catalogue listed 121 rare diseases, and in 2023, a second catalogue was released, including an additional 86 rare diseases. Further updates on rare disease drug approvals included a significantly reduced review time for overseas medicines when there is an urgent clinical need. Additionally, if a novel drug poses no genetic sensitivity and satisfies the standards for safety and clinical effectiveness, it will not require domestic clinical trials. Market exclusivity is also under discussion, novel rare disease drugs will be given an exclusive market period of up to 7 years, during which no other similar drug will receive marketing approval.
Looking to the future, exciting developments are expected in the healthcare sector in China. With changes in leadership and an increased focus on innovation, as well as changes in pricing and reimbursement, the stage is set for a significant evolution in healthcare policies and practices. As China continues to adapt its healthcare regulations, understanding these dynamics will be crucial for stakeholders worldwide.
Written by Boon Yap and Theoni Demcollari
Decisive Dialogue 29th January 2024
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