China Drug Deal Will Slash Prices of Top-Selling Treatments by Up to 67%
May 20 2016 - 11:17AM
Dow Jones News
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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