SHANGHAI--China said it would cut the prices of three top-selling, patented drugs by up to 67%, part of efforts to make innovative medicines more affordable.

The three include lung-cancer drugs Iressa, from AstraZeneca PLC, and Conmana, from Chinese company Zhejiang Beta Pharma Co., and GlaxoSmithKline PLC's Viread, used for treating hepatitis B. The drugs will be subject to price reductions of 55%, 54% and 67%, respectively, according to a statement from the National Health and Family Planning Commission posted Friday on its website.

The monthly price of Iressa will fall from 15,000 yuan ($2,296) to 7,000 yuan ($1,070), Viread's will drop from 1,500 yuan ($229) to 490 yuan ($75) and Conmana's will be cut from 12,000 yuan ($1,834) to 5,500 yuan ($840), according to the commission.

Li Bin, head of the commission, said at a news conference during the National People's Congress, China's legislative session, in March that the commission was negotiating with drug companies in a pilot program to cut prices of five patented drugs for severe diseases.

Since October, the commission has been working with 15 central government departments to conduct several rounds of negotiations with drugmakers. The price cut is expected to prompt prices for other drugs in similar categories to fall to a reasonable range, the commission's statement said.

Participating drugmakers lauded the price cuts. Hervé Gisserot, general manager of pharmaceuticals and vaccines for GlaxoSmithKline China/Hong Kong, said Friday in a statement, "This represents a defining moment in the government's efforts to provide high-quality, innovative products at more affordable prices, and ultimately improve patient outcomes in China." Zhejiang Beta Pharma said in a statement on its website that its participation in the program will help the company expand Conmana's accessibility while helping the government cut health-insurance costs.

The lower prices will apply to all public medical institutions, including military hospitals. The three drugs won't be covered by the national health insurance program, but might be included in some provincial reimbursement lists, according to the statement.

Drug companies have long complained that China hasn't updated the National Reimbursement Drug List since 2009, which means that patients have had to pay out of pocket for most of the patented drugs approved in recent years. Only a few affluent provinces such as Zhejiang have covered some patented cancer drugs under additional provincial health insurance.

One of the main goals of China's overhaul of health care is to make it more affordable. Lower drug prices will also relieve the pressure on China's national health fund, as the country's aging population means higher strain on health services.

Many innovative medicines that aren't subject to large price cuts during the provincial tenders are missing out on the nation's huge public-hospital market, which accounts for more than 70% of total sales of prescription drugs in China. Meanwhile, cheaper drugs are often of lower quality and efficacy.

Since last year, China has launched a number of overhaul measures to promote the development of innovative medicines. The drug regulator also has tried to ease the path for foreign innovative medicines to enter China.

Global drugmakers have felt the effects of China's economic slowdown. Sales in China for big global pharmaceutical companies tracked by Sanford C. Bernstein increased by 2.4% in the first quarter, a drop from a 5.6% gain in the prior quarter.

"If the national negotiation works well, it will save drugmakers from going through negotiations with each province and further price cutting on the local level. And it's easier to reach agreement on the national level," said Yang Dongsheng, the tendering officer of the R&D-based Pharmaceutical Association Committee, or RDPAC, an advocacy group representing major international drug companies in China.

For international drugmakers, the willingness to cut prices on their best-selling products also represents a goodwill gesture, analysts say. The companies have come under increased pressure after a Chinese court fined GlaxoSmithKline almost $500 million in 2014 after the U.K. drugmaker's local subsidiary was found guilty of bribery.

Switzerland's Roche Holding AG, one of the five companies that originally participated in the negotiations, failed to reach an agreement over the price cut, according to people familiar with the situation. A spokeswoman for Roche said the company had actively participated in the first round of talks and received positive feedback from relevant authorities, but its cancer drug Tarceva wasn't among those chosen for the program.

The fifth company involved in the discussions was U.S.-based Celgene Corp. The people familiar with the matter said results of its negotiations would be announced later. Celgene didn't immediately respond to a request for comment.

Fanfan Wang

 

(END) Dow Jones Newswires

May 20, 2016 11:02 ET (15:02 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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