Pricing and Reimbursement for High Value Therapies in China

By Helen Chen, L.E.K. Consulting

(Re-posted from BIO Business Link – 10/3/13)

For the innovative biopharma and specialty pharmas considering the China market – the third largest pharma market in the world and still growing 15+% per year – the questions have shifted from whether to enter the market to more practical issues around pricing and reimbursement. Given all the news around branded generics, price controls, and essential drug lists, can the Chinese afford highly-valued innovative products?

As always, the answer is “it depends.” At launch, innovative drugs are not reimbursed, but can be offered on a self-paid basis, with the maximum retail price proposed by the manufacturer (or marketing license holder) to the National Development Reform Council (NDRC). Most international companies choose to propose a price at similar levels as those they are launching in the U.S. or Western Europe, given that prices generally go down and rarely go up. As innovative drugs which are self-paid by the patients and not funded by the government, NDRC generally accepts the manufacturer’s price proposal.

The trade-off of a high price but not-reimbursed product is that the patient’s economic status and affordability is a bigger consideration in access and the eventual patient usage and revenue. L.E.K.’s research shows that in generally only up to 25% of the patients who are clinically eligible to use a high-priced treatment can afford to pay for that treatment. Companies for many of the higher-valued therapies, such as Novartis’s Glivec, AstraZeneca’s Iressa and Actelion’s Tracleer, offer patient assistance programs through China-based charities such as China Charity Federation and Cancer Foundation of China. Private supplemental health insurance for critical illnesses, which is still nascent in China, is also now being promoted and gaining traction. Increasingly, there are also city-based reimbursement or support programs, particularly in the wealthier coastal cities, which may allow the patients in those cities some access.

Getting on the provincial and national reimbursement lists, which are reviewed every 2 to 4 years, opens up the patient access. This usually requires sufficient clinical track record in China, key opinion leader support, and a lower price. Pharmaconomic studies are also gradually being introduced as pharmas make their case for reimbursement. Typically the innovative therapies, if they are reimbursed, would be on the “B” list (the “A” list is typically for standard treatments which are often generic).  A new “C” list, meant for higher-priced therapies such as the oncology mAbs, is also being discussed.  Supporting critical illnesses (list of 20 defined diseases) for all population has also been promoted by the central government in 2013.

How will the simultaneous changes occurring in private insurance change your market strategy in China? Come hear experts explore the challenges for companies, providers, and private insurers surrounding these ongoing changes as well as other business focused sessions at next month’s BIO Convention in China.

Helen Chen is the Shanghai-based head of China life sciences at global strategy firm L.E.K. Consulting. She can be reached at

The 3rd annual BIO Convention in China, taking place November 11-13 in Beijing, will bring together executives from biotechnology, pharmaceutical companies and investment firms from North America, Europe and Asia to meet and explore business opportunities with China’s emerging biotech and rapidly expanding pharmaceutical sectors. For more information or to register, visit


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