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Last week, the unmanned Chang'e-5 probe was accelerated into
space, part of a mission which will see China become the first
country to retrieve lunar samples since 1976. With its Chang'e-4
mission completed last year, China became the first country to
achieve a soft landing on the far side of the Moon. Meanwhile, here
on Earth, China has witnessed a technological acceleration of a
different sort, seeing its push to climb up the pharmaceutical
value chain begin to bear fruit. Last month, Alphamab Oncology and
3D Medicines - both domestic companies - filed a new drug
application for PD-1 inhibitor envafolimab in the treatment of
microsatellite instability-high/deficient mismatch repair advanced
solid tumours. Local biotech CStone Pharmaceuticals also filed an
NDA in November for PD-1 inhibitor sugemalimab in combination with
chemotherapy in non-small cell lung cancer.
China's massive investment over the last couple of years to turn
the country from the fringes of the global biotech sector into a
world leader in innovative pharma has the potential to be a
gamechanger for multinationals operating in the domestic market.
Already, at least one homegrown asset has adopted an aggressive
pricing strategy vis-à-vis its competition, going in at less than
one-third the price of the imported market leader. At the same
time, for those companies not going head to head, such accelerated
growth in the domestic sector may offer increasingly attractive
opportunities for licensing deals or acquisitions. To mark the
fast-growing importance of the Chinese market, IHS Markit this week
launched a major expansion of its Chinese pharmaceutical pricing
data in PharmOnline International (POLI) to ensure the most
comprehensive data on the market is available, while at the same
time adding critical new data on China to our IRP Matrix, a toolkit
to assess international ripple effects of pharmaceutical price
changes.
Notably, China is reportedly aiming to include six PD-1
inhibitors - two imported, four domestically developed - in the
2020 revision of its National Reimbursement Drug List (NRDL), which
is currently underway. In September of this year, companies were
invited to submit negotiation and bidding materials for the annual
update. Applicants have since submitted dossiers to the National
Medical Insurance Center. In mid-November, it was announced that
the National Healthcare Security Administration had completed
expert review of a list of more than 700 treatments eligible for
inclusion in the NRDL, which is expected to be updated by the end
of this year.
Through an increasingly dynamic and formalized procedure for
NRDL revision, China appears increasingly eager to accelerate
market access in the country, positioning it to rival major pharma
markets as a top launch destination.
The evolution of the NRDL has been dramatic. 2017 saw the first
update of the list in eight years. China has continued to expand
the number of experts selected to review candidate treatments for
inclusion, with more than 20,000 such professionals involved in
2019. A focus on pharmacoeconomics as part of this evaluation will
continue to grow, with drug makers expected to marshal ever-more
robust data to defend proposed reimbursement prices.
Indeed, negotiations with authorities bring considerable
pressure to bear on prices. In the 2019 update of the NRDL,
regulators negotiated an overall average price reduction of 60.7%.
Still, even if reimbursement coverage generally entails steep price
negotiations, inclusion is coveted by multinationals due to the
sheer boost in volume that it can secure and the high-growth
potential of this segment.
One of the drivers of these pricing outcomes is China's
increasingly formalized use of international reference pricing
(IRP). Authorities tend to rely on the lowest price in the basket
of potential reference countries to set a ceiling for negotiations
with manufacturers, who are typically expected to propose an
additional discount on top.
As part of the primary research performed for the last edition
of our International Reference Pricing Guidebook,
policymakers confirmed that China has not operated a formally
defined reference basket as such. Rather, authorities have
referenced prices from among a variety of potential markets,
including neighbours such as Taiwan, South Korea and New Zealand,
as well as countries such as Germany, France and Canada.
During the 2019 NRDL revision, China is known to have made
changes which are gradually formalizing its approach to IRP.
Manufacturers were required to submit prices in a number of defined
markets, including new ones such as Turkey. It is now expected that
China may alter these rules on an annual basis. This rapidly
evolving framework places a premium on up-to-date market
intelligence and an understanding of what drives pricing outcomes
in China's reference markets in turn.
Posted 01 December 2020 by Cameron Lockwood, Consulting Associate Director, Life Sciences, IHS Markit and
Sophie Cairns, Senior Research Analyst, Life Sciences, IHS Markit