These 12 pharmaceutical industry leaders have spoken out—voicing the true feelings of those in the pharmaceutical sector!

　　The Two Sessions of 2016 have been underway for five days already. Which outstanding proposals have been submitted this year by NPC deputies and CPPCC members from the pharmaceutical industry? Cyberspace has compiled for you the hottest pharmaceutical topics from the Two Sessions that are of greatest concern to the industry—take a quick look now!

　　On the Nationwide Trend of “Second-round Price Negotiation”

　　Lei Jufang: Cancel Volume-Based Procurement for Traditional Chinese Medicines

　　Lei Jufang, a member of the National Committee of the Chinese People's Political Consultative Conference and Chairperson of Qizheng Tibetan Medicine Co., Ltd., pointed out that it is currently widely believed that traditional Chinese medicine (TCM) is merely an auxiliary treatment with limited effectiveness in addressing patients’ clinical issues and that it consumes a significant portion of hospitals’ medical insurance resources. Therefore, there is a pressing need to substantially reduce the number of TCM products included in the catalog. In most regions, the only approach available is a simplistic and forceful method—using volume-based procurement (secondary price negotiations) and assessing whether the required price reductions are met—as a means of screening and phasing out certain products. This practice is extremely detrimental to the development of TCM and will encourage enterprises to focus solely on cost reduction.

　　To this end, Lei Jufang, on behalf of her group, proposes: abolishing the practice of eliminating traditional Chinese medicines (TCMs) through volume-based procurement in pilot cities; establishing a provincial-level mechanism for clinical expert review of the TCM catalog; maintaining the 15% hospital markup on TCMs; and supporting the development of the TCM industry. Only by promptly reversing course and discontinuing volume-based procurement (including secondary price negotiations) for TCMs—and instead having the provincial health and family planning commissions lead a team of provincial experts to conduct clinical pharmacoeconomic evaluations of the TCM catalog—can we refine the catalog’s selection criteria, eliminate products with poor clinical cost-effectiveness, and ensure that only those products with proven efficacy and high quality find practical application in clinical settings. Only in this way can we truly stimulate innovation among Chinese medicine enterprises.

　　Xiao Wei: Abandon the practice of “only pursuing the lowest price,” and strictly prohibit “secondary bargaining.”

　　Xiao Wei, a deputy to the National People's Congress and Chairman of Jiangsu Kangyuan Group Co., Ltd., believes that since most pharmaceutical products had their government-set prices abolished starting June 1, the state has called for the establishment of an open, transparent, and multi-stakeholder negotiation mechanism to determine prices for patented drugs and exclusively produced medications. However, at present, provincial-level drug procurement tenders—regardless of whether the drugs are good or bad—universally demand a 20% price reduction, with even new drugs being subject to this requirement.

　　In response, Xiao Wei suggests that during the provincial-level drug procurement process, which employs a “dual-envelope” open bidding system, we should completely abandon the tendency to prioritize the lowest price and truly uphold the principle of “quality first, with reasonable pricing.” Specifically, we need to conduct a comprehensive assessment of both quality risks and supply risks, increase the weight given to economic and technical evaluation criteria, and thereby reduce malicious competition among enterprises. At the same time, he recommends that the national level impose a strict ban on “secondary price negotiations” in centralized drug procurement.

　　On the Monopoly of Raw and Auxiliary Materials in the Pharmaceutical Industry

　　Geng Funeng: Remove and Cancel Approval Numbers for Chinese Medicine Extracts

　　Geng Funeng, a deputy to the National People's Congress and Chairman of Sichuan Haoyisheng Pharmaceutical Group, pointed out that in recent years, the monopoly of active pharmaceutical ingredients in the pharmaceutical industry has become quite serious, and this is one of the main factors driving up drug prices.

　　There are two main reasons for the monopoly: First, some manufacturers and distributors of active pharmaceutical ingredients (APIs) exploit the provisions of the Drug Administration Law and related regulations—which stipulate that “for APIs subject to approval-number management, the production of their corresponding formulations must rely on APIs bearing approved numbers”—by leveraging their control over these approval numbers. They either raise the prices of APIs or refuse to sell them outside their own operations (reserving them exclusively for their own production), thereby driving up the prices of finished pharmaceutical products in the market or making it impossible for ordinary people to obtain these life-saving drugs. Second, certain traditional Chinese medicine extracts have been granted approval numbers despite not being required to undergo such approval-number management under the law.

　　Geng Funeng suggested perfecting and implementing the Anti-Monopoly Law, and enacting an Anti-Greed Law; immediately clearing up and abolishing the approval numbers for extracts of traditional Chinese medicine (natural medicines); introducing price controls (such as government-set prices) and production targets for certain active pharmaceutical ingredients; and establishing a system to encourage the registration and market entry of active pharmaceutical ingredients.

　　Li Zhenjiang: Strengthen the Identification of Monopolies in the Active Pharmaceutical Ingredient Industry

　　Li Zhenjiang, a deputy to the National People's Congress and President of Shijiazhuang Shenwei Pharmaceutical Group Co., Ltd., stated that the monopolistic control over the raw materials for some generic drugs has become an open secret within the industry—and is a major driver behind the inflated drug prices. Recently, the prices of certain low-priced medications have surged dramatically, and behind these price hikes lies a startling increase in the prices of raw pharmaceutical materials. For instance, the price of thymol has skyrocketed from 275 yuan per kilogram to 8,808 yuan per kilogram. Similarly, the price of glucosamine hydrochloride has risen from 310 yuan per kilogram to 4,800 yuan per kilogram.

　　Li Zhenjiang suggested that the government should implement moderate price controls in the chemical raw material pharmaceutical market, particularly stepping up oversight of those raw materials with few manufacturers. At the same time, relevant national authorities should strengthen their efforts to identify monopolistic practices within the raw material pharmaceutical industry. Once such practices are detected, they should be dealt with strictly and promptly to curb the severe price hikes and other behaviors that undermine the healthy development of the pharmaceutical sector.

　　For bulk drug substances that are produced by only two or three companies—or even exclusively by a single company—regulatory authorities should approve more companies to engage in their production. As for essential clinical medications among the essential medicines whose raw material costs exceed their selling prices, their raw materials should be assigned to designated manufacturers, thereby fostering healthy competition in the pharmaceutical market.

　　On the comprehensively promoted tiered medical care system

　　Xie Zilong: Hospitals at Level II and above will not offer general outpatient services.

　　Xie Zilong, a deputy to the National People's Congress and Chairman of Laobaixing Pharmacy Chain Co., Ltd., suggests that all non-profit secondary hospitals and all non-profit tertiary hospitals should be prohibited from offering general outpatient services. Secondary hospitals should only provide specialist outpatient services and emergency outpatient services; tertiary hospitals should only offer outpatient services for complex and difficult cases as well as emergency and critical-care services. He also recommends that the government step up efforts to streamline and consolidate public secondary and public tertiary hospitals. Medical insurance agencies should offer preferential policies—such as appropriately increasing the reimbursement ratio—for those medical institutions that voluntarily adhere to the overall requirements of tiered diagnosis and treatment.

　　In addition, Xie Zilong also suggested accelerating the revision of the "Drug Administration Law" to strengthen regulatory requirements for online drug sales and establish standardized guidelines for online pharmaceutical trading. Xie Zilong believes that an "Internet Food and Drug Trading Law" should be enacted, under which operators of online trading platforms would be required to rigorously vet both the merchants and the products listed on their platforms and bear joint liability for issues related to counterfeit and substandard goods. He pointed out that the current "Drug Administration Law" lacks a legal basis for regulating third-party logistics and online drug sales, leaving regulatory gaps that need to be addressed through accelerated revisions. Furthermore, a “blacklist” should be established for enterprises and individuals engaged in the online sale of counterfeit and substandard drugs.

　　Guo Guangchang: Promoting China’s Hierarchical Medical Care System Through the “Internet Hospital” Model

　　Guo Guangchang, a member of the National Committee of the Chinese People's Political Consultative Conference and Chairman of Shanghai Fosun Pharmaceutical (Group) Co., Ltd., believes that relying solely on existing traditional offline reforms is clearly “too weak” to achieve an orderly, tiered healthcare system for the public. Therefore, against the backdrop of the nation’s comprehensive promotion of the “Internet Plus” strategy, leveraging the internet to advance the implementation of the “tiered medical treatment system” has become an indispensable trend and opportunity. Guo Guangchang suggests that, building on existing successful cases, relevant authorities should step up their research, support, and promotion of the “internet hospital” model.

　　In addition, Guo Guangchang also submitted a proposal titled “Establishing a Multi-tiered Specialized Pediatric Healthcare Service System.” The proposal suggests that to thoroughly address the difficulty children face in accessing medical care, we must first expand the supply of healthcare services and break through existing institutional and systemic barriers. Specifically, the government should introduce targeted support measures to ensure adequate emergency and outpatient pediatric services at general hospitals; encourage and guide social capital to provide pediatric healthcare services through various channels; fully leverage the potential of the internet to enhance the overall efficiency of the pediatric healthcare service system; and explore the establishment of pediatric internet clinics or hospitals.

　　Yang Wenlong: Gradually Promote Internet-Based Electronic Prescriptions

　　Yang Wenlong, a member of the National Committee of the Chinese People's Political Consultative Conference and Chairman of Jiangxi Renhe Group, suggested that internet-based electronic prescriptions should be gradually promoted, and restrictions on online purchases of prescription drugs should be lifted in phases. Priority should be given to easing restrictions on medications for chronic diseases that require long-term use. Additionally, policies for medical insurance reimbursement of online drug sales should be studied and introduced; pilot programs for mobile medical insurance payments should be launched and implemented, thereby creating a favorable competitive environment for the development of internet-based pharmaceutical services.

　　On the Adjustment of the Medical Insurance Catalogue

　　Yan Xijun: The national medical insurance catalog is adjusted once every six months.

　　Yan Xijun, a deputy to the National People's Congress and Chairman of Tasly Pharmaceutical Group Co., Ltd., stated that since its promulgation in 2009, the National Reimbursement Drug List has remained unchanged. As a result, many innovative drugs that have been launched in recent years—characterized by high technological content, proven efficacy, and few side effects—have been unable to enter the National Reimbursement Drug List for an extended period, thereby preventing their widespread use in clinical treatment. This not only wastes the substantial financial and material resources the country has invested in drug research and development but also deprives patients of access to more advanced medications, ultimately affecting treatment outcomes.

　　To this end, Yan Xijun, on behalf of the delegation, proposed accelerating the pace of adjustments to the National Medical Insurance Drug List. In particular, efforts should be stepped up and expedited to include innovative new drugs in the medical insurance catalog, enabling them to better serve the broader patient population. Adjustments to the medical insurance catalog should be timely; it is recommended that they be made every six months and strictly adhere to the prescribed timeframes.

　　Legislation should be enacted to standardize and regulate the adjustment of the medical insurance catalog, ensuring that the adjustment process is open, transparent, and subject to effective oversight. The drug selection criteria, standards, and procedures must be clearly defined. Selection experts should be familiar with relevant regulations and possess a background in pharmaceuticals or pharmacoeconomics. Enterprises and clinical physicians should be involved in the selection process, and their rights and channels for providing recommendations, engaging in communication, and lodging complaints must be guaranteed.

　　Xu Jingren: Include Innovative Drugs in the Medical Insurance System

　　Xu Jingren, a deputy to the National People's Congress and Chairman of Yangtze River Pharmaceutical Group, suggested that the state should as soon as possible include innovative drugs in the medical insurance system. He also called on the state to step up its support for the traditional Chinese medicine industry, thereby promoting the growth and development of this time-honored sector.

　　He also suggested strengthening quality development in the pharmaceutical industry and providing preferential treatment in policy to enterprises that have achieved outstanding results in quality enhancement. Furthermore, he called for accelerating the evaluation of generic drugs to ensure consistency in quality and efficacy, raising the entry barriers, maintaining a healthy competitive environment, enabling more high-quality medicines to benefit the public, and promoting the healthy and stable development of the pharmaceutical industry.

　　On the Shortage of Pediatric Medications

　　Chen Baohua: The whole society should pay more attention to medications for children.

　　Chen Baohua, a deputy to the National People's Congress and General Manager of Zhejiang Huahai Pharmaceutical Co., Ltd., suggests that pediatric drugs should be defined as “specialized or suitable medications with clearly specified dosage and usage instructions for minors under the age of 14,” so that relevant national incentives and preferential policies can be effectively implemented. Both the central and local governments should establish special funds to encourage research institutions and pharmaceutical manufacturers to engage in the development of pediatric drugs, strengthen the construction of clinical trial sites for pediatric drugs, and enhance clinical research and validation of pediatric medications.

　　Meanwhile, the state should continuously improve children’s medical insurance policies by including commonly used pediatric medications as well as specialized, effective, and expensive drugs for rare diseases in the pediatric medical insurance catalog, and it is recommended that this catalog be updated annually. We suggest drawing on relevant U.S. practices to provide children’s medications with an additional one-year market protection period and a 50% tax reduction, among other preferential measures, building upon the existing framework.

　　Ding Jie: Appropriately increase pediatric medical service fees and expand the scope of medical insurance coverage for children.

　　Ding Jie, a member of the National Committee of the Chinese People's Political Consultative Conference and deputy director of Peking University First Hospital, suggests that pediatric medical service fees should be appropriately increased. The additional revenue generated could be offset by expanding the scope of medical insurance coverage for children and raising reimbursement rates. At the same time, a specialized compensation mechanism should be established specifically for children’s hospitals and comprehensive hospitals with pediatric departments, thereby alleviating the current predicament of pediatric departments operating at a loss.

　　On the Development of Traditional Chinese Medicine

　　Fang Tonghua: Strengthen the quality of Chinese medicinal materials and promote the global outreach of traditional Chinese medicine.

　　Last year, Tu Youyou was awarded the Nobel Prize in Physiology or Medicine, bringing international acclaim to China’s traditional Chinese medicine. To promote the “going global” of the TCM industry, Fang Tonghua, a deputy to the National People’s Congress and Chairman of Heilongjiang Zhenbaodao Pharmaceutical Co., Ltd., suggested incorporating the development of the Chinese medicinal material industry and TCM industry planning into national development strategies such as the “Belt and Road” initiative, “Internet Plus,” and “Mass Entrepreneurship and Innovation.” At the same time, efforts should be made to encourage TCM’s participation in international exchanges by establishing internationally standardized promotion methods and measures, developing internationally oriented industrial projects, and enhancing TCM’s global influence.

　　Meanwhile, Fang Tonghua believes that it is urgently necessary to address issues such as the standardized cultivation and scientific management and maintenance of Chinese medicinal materials. Relevant authorities should establish stricter and more rigorous quality standards for Chinese medicinal materials, elevating certain traditional identification methods for these materials to the level of quality-control standards, thereby ensuring the stability and controllability of their quality. Additionally, efforts should be stepped up to provide training on the cultivation of Chinese medicinal materials and to intensify market inspections and spot checks, effectively tackling problems such as poor quality of Chinese medicinal materials and persistently high failure rates in random inspections.

　　Guan Yanbin: The spring of Traditional Chinese Medicine is dawning.

　　In the view of Guan Yanbin, a deputy to the National People's Congress and Chairman of Kuihua Pharmaceutical, spring is dawning for traditional Chinese medicine. Guan Yanbin has two reasons for this assertion: First, in 2015, Tu Youyou was awarded the Nobel Prize in Physiology or Medicine; second, the State Council has issued an outline plan aimed at supporting the development of traditional Chinese medicine.

　　From the perspective of TCM enterprise development, Guan Yanbin believes that three key conditions are still needed for their growth and strengthening: First, on the basis of liberalizing Chinese medicine prices, we should provide price incentives and support, truly following market rules and ensuring that high-quality TCM products command premium prices; second, at the national policy level, we should encourage and support leading TCM enterprises to enhance industry concentration through mergers, restructuring, and acquisitions; third, we should encourage TCM enterprises to go global and expand their presence worldwide.

　　Reporting media: Cyberspace Blue

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