China updated its National Reimbursement Drug List (NRDL) in December 2020 to include 119 new medicines, with an average price cut of 50.64% agreed by pharma companies. The price negotiation mechanism with steep price cuts drives the inclusion of drugs in NRDL, says GlobalData, a leading data and analytics company.

The 2020 NRDL update is the sixth one since its inception in 2000. Since 2017, China has updated the NRDL annually, and the price negotiation mechanism consistently results in substantial price cuts to marketed drugs. While the negotiated price cuts impact pharma companies’ bottom line, the program has benefitted the industry overall. A leading benefit has been a significant decrease in the average time from the launch to reimbursement of innovator drugs.

Bhavani Nelavelly, Pharma Analyst at GlobalData, comments: “The 2020 NRDL update revealed the increasing focus of swapping the previously included therapies with drugs that showed incremental clinical and economic benefits. While foreign multinational corporations and domestic Chinese firms were given equal opportunities for negotiations, the foreign firms lost to domestic players, which offered steeper discounts.”

The 2020 NRDL list contains 2,800 drugs, of which 1,264 are Western medicines. During the NRDL agreement period, 221 drugs were under negotiation, of which 119 drugs gained inclusion in  NRDL, reflecting a 73.46% success rate in negotiations. Of the 119 drugs included in the list, 96 are branded drugs. A total of 206 new drugs have been added to NRDL since 2017.

GlobalData forecasts the Chinese pharmaceutical market to grow from nearly US$166.7bn in 2020 to more than US$262bn in 2025.

Over the past few years, while cancer drugs have remained a focus of NRDL negotiations, emphasis has also been placed on chronic disease treatments due to the high cost of drugs. The highlights of 2020 additions include three home-grown PD-1 inhibitors – tislelizumab, camrelizumab, and toripalimab – from China biopharma, against blockbusters like Keytruda, Opdivo, Imfinzi, and Tecentriq.

Ms. Nelavelly concludes: “Based on the 2019 and the 2020 revisions of NRDL, it appears that negotiating on price has become obligatory for NRDL inclusion. The National Healthcare Security Administration, which is responsible for maintaining the NRDL, expects the price discounts to make the premium-priced drugs accessible for patients. To prepare for the national negotiation, companies are required to provide detailed evidence around clinical value and pharmacoeconomic evaluation, which are key payer considerations.

“The NRDL price negotiation process has led to expanded Chinese market access, and an opportunity to enter this market now exists for innovative products irrespective of their country of origin. Drugs developed by foreign pharma companies have an equal chance to participate in the price negotiation process and to launch in the world’s second biggest pharmaceutical market.”