In November 2019, China updated its National Reimbursement Drug List (NRDL) to include 70 new medicines, with an average price cut of 61% agreed by pharma companies. This a promising opportunity for innovative drug manufacturers to foray into the second largest pharmaceutical market in the world after the US in terms of value, says GlobalData, a leading data and analytics company.

GlobalData forecasts the Chinese pharmaceutical market to grow from nearly US$132bn in 2018 to more than US$209bn in 2022.

Since 2017, China has been updating the NRDL every year. This more frequent assessment of reimbursement in China provides more opportunities to pharma companies for the inclusion in NRDL list, and is a departure from the historical norm of updates once in every five years.

The annual update cycle of the NRDL is a result of the Healthy China 2030 policy (unveiled in 2016), whose agenda puts health at the center of the country’s entire policy-making system.

Bhavani Nelavelly, Pharma Analyst at GlobalData, says: “The 2019 NRDL list covers 2,709 drugs. With the price negotiation mechanism, Chinese regulators are increasingly directing their attention to the prices of ‘premium priced’ drugs. Despite the implementation of higher price cuts, the opportunities for innovative medicines to achieve reimbursement and market access in China are certainly improved.”

Moreover, the 2019 update of NRDL involved health technology assessment (HTA), which is a new approach in China. These two critical changes in the reimbursement process present new challenges for pharma companies, in terms of gathering local data and the use of health economics.

Unlike the US, where the reimbursement process emphasizes clinical data and drug usage, the Chinese reimbursement process has greater focus on pricing and sales data in establishing the budget impact. Hence, using the right set of pricing and market access strategies in generating the value evidence package will help the pharma companies in achieving inclusion in the Chinese NRDL.

Nelavelly concludes: “The frequent update cycle of the NRDL should encourage pharma companies to rethink the launch sequence of new drugs. Prior to this development, the focus was historically towards launching in the US, then the EU, followed by Japan, Taiwan and Korea in the Asia-Pacific (APAC) region.

“The update of NRDL, coupled with the price negotiation mechanism, will not only improve patient access to ‘premium priced’ medicines, but will also benefit pharma manufacturers in achieving wider uptake of their drugs in the second biggest pharmaceutical market globally. As a result, prescription drugs are likely to achieve greater penetration in the Chinese market and to yield higher revenues despite the price cuts.”