Bulk-buying to help with health costs

Over 53 billion yuan saved, countless patients benefit each year under plan

China will take a step forward in its centralized bulk-buying program for drugs, and make it a regular and institutionalized practice in order to lower medical costs for the general public, a State Council executive meeting chaired by Premier Li Keqiang decided on Jan 15.

The country has undertaken a major reform of bulk-buying of key pharmaceuticals in recent years to make healthcare more affordable. By the end of last year, three rounds of such bulk-buying were conducted, and drugs under the program saw average price cuts of 54 percent. Over 53 billion yuan ($8.18 billion) was saved and several hundred million patients benefited each year. The fourth round of procurements will start soon, during which more high-value medical consumables will be covered.

"The bulk-buying program has worked well. It is a major step in reforming medical institutions. The plan has helped to lower, over time, medical costs for the public, and keep the operation of medical insurance funds sustainable," Li said.

The Friday meeting at the State Council, the country's Cabinet, resolved to advance coordinated reforms of medical services, medical insurance and pharmaceuticals, and carry out centralized bulk-buying on a regular and institutionalized basis.

Under the principle of ensuring essential and clinical needs, high-demand, expensive drugs listed in the basic medical insurance drug catalog will be prioritized in procurements. The program will extend over time to other necessary high-quality drugs and consumables available in the domestic market.

All public medical institutions are expected to participate in centralized bulk-buying. Special arrangements will be made for procurements regarding drugs for rare diseases.

Eligible drugs－both established brands and generics－are able to participate in centralized bulk-buying campaigns, and all are to be conducted using generic names. Drug manufacturers, specific pharmaceuticals and medical products will be selected through fair competition based on quality and price. Medical institutions will use selected drugs on a priority basis, and expand procurements according to actual demand.

Successful bidders must ensure that price cuts in no way compromise the quality and efficacy of their products. Tighter controls will be exercised over production, circulation and use of selected drugs.

"Essential drugs and consumables should be the mainstay of procurements as our basic medical insurance plan aims to meet primary medical needs. We must firmly bear this in mind. The program will not obstruct hospitals－third-tier hospitals in particular－from prescribing drugs of their own choosing," Li said.

While easing financial burdens on patients, corporate profitability will also be duly considered under the bulk-buying program. Pharmaceutical and consumable producers will be encouraged to develop sectoral concentration amid competition, and pursue product innovation and upgrading. Medical insurance costs saved under drug procurements will be given to medical institutions as incentives in accordance with relevant regulations. The goal is to make drug bulk-buying reforms beneficial for both patients and pharmaceutical companies as well as medical institutions.