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Pharmaceutical Policy in China Pharmaceutical policy in China Challenges and opportunities for reform Elias Mossialos, Yanfeng Ge, Jia Hu and Liejun Wang Pharmaceutical policy in China: challenges and opportunities for reform Pharmaceutical policy in China: challenges and opportunities for reform Elias Mossialos, Yanfeng Ge, Jia Hu and Liejun Wang London School of Economics and Political Science and Development Research Center of the State Council of China Keywords DRUG AND NARCOTIC CONTROL PHARMACEUTICAL PREPARATIONS DRUG COSTS DRUG INDUSTRY HEALTH CARE REFORM HEALTH POLICY CHINA © World Health Organization 2016 (acting as the host organization for, and secretariat of, the European Observatory on Health Systems and Policies) All rights reserved. The European Observatory on Health Systems and Policies welcomes requests for permission to reproduce or translate its publications, in part or in full. Address requests about publications to: Publications, WHO Regional Office for Europe, UN City, Marmorvej 51, DK-2100 Copenhagen Ø, Denmark. Alternatively, complete an online request form for documentation, health information, or for permission to quote or translate, on the Regional Office web site (www.euro.who.int/pubrequest). The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the European Observatory on Health Systems and Policies concerning the legal status of any country, territory, city or area or of its authorities, or concern- ing the delimitation of its frontiers or boundaries. Dotted lines on maps represent approximate border lines for which there may not yet be full agreement. The mention of specific companies or of certain manufacturers’ products does not imply that they are endorsed or recommended by the European Observatory on Health Systems and Policies in preference to others of a similar nature that are not mentioned. Errors and omissions excepted, the names of propri- etary products are distinguished by initial capital letters. All reasonable precautions have been taken by the European Observatory on Health Systems and Policies to verify the information contained in this publication. However, the published material is being distributed without warranty of any kind, either express or implied. The responsibility for the interpre- tation and use of the material lies with the reader. In no event shall the European Observatory on Health Systems and Policies be liable for damages arising from its use. The views expressed by authors, editors, or expert groups do not necessarily represent the decisions or the stated policy of the European Observatory on Health Systems and Policies or any of its partners. ISBN 978 92 890 5039 5 Printed in the United Kingdom Copy editing by Jane Ward Design by Sarah Moncrieff Contents Acknowledgements vi List of abbreviations vii List of tables, figures and boxes viii 1. Introduction and report overview 1 2. Introduction to Chinese health care reform and pharmaceutical policy 15 3. Regulatory structure and drug approval 25 4. Key health issues: ageing, urbanization and noncommunicable diseases 37 5. Trends in health care and pharmaceutical spending 51 6. Affordability and accessibility of pharmaceuticals 65 7. Pharmaceutical pricing and reimbursement 73 8. Drug quality and supply chain 91 9. Irrational prescribing 101 10. Hospitals and pharmaceutical policy 111 11. Primary care and pharmaceutical policy 125 12. Pharmacies and pharmacists 135 13. Traditional Chinese medicine 143 14. Industrial policy 153 15. Conclusions and policy recommendations 171 References 179 Appendix 1: Organizations participating in joint seminars 209 Appendix 2: Search terms for review of academic literature 211 PhArmACeutiCAl PoliCy in ChinA: ChAllenges And oPPortunities for reform Acknowledgements We would like to graciously thank Bo Wang and the Shanghai Medical Innovation Foundation for their support of this project. We would like to thank the Organisation of Economic Co-operation and Development, World Health Organization, Boston Consulting Group, IMS Health, Kieger, McKinsey, the Journal of the American Medical Association and Therapeutic Innovation & Regulatory Science for allowing us to reuse figures found in their reports and publications in this report. We would like thank the following section contributors for their assistance in research and drafting: Wrik Ghosh (Chapter 12), Raymond Kennedy (Chapter 14), Tyler Law (Chapters 5, 6 and 8), Austin Le (Chapters 4 and 9) and Angela Yu (Chapter 10). Finally, we would like to thank Jeffrey Moe, Shenglan Tang and Di Dong from Duke Kunshan University for reviewing the report and the collaboration with the Asia Pacific Observatory on Health Systems and Policies in facilitating their review. All remaining errors are those of the authors. – vi – PhArmACeutiCAl PoliCy in ChinA: ChAllenges And oPPortunities for reform list of abbreviations AIDS Acquired immunodeficiency syndrome API Active Pharmaceutical Ingredient BRICS Brazil, Russia, India, China and South Africa CDE Center for Drug Evaluation CER Comparative effectiveness research CFDA China Food and Drug Administration CHC Community health centre EDL Essential Drug List EU European Union GDP Gross domestic product GMP Good Manufacturing Practice HIV Human immunodeficiency virus HTA Health technology assessment IRP Internal reference pricing NCD Noncommunicable disease NCMS New Cooperative Medical Scheme NDA New drug application NDRC National Development and Reform Commission NHFPC National Health and Family Planning Commission NRDL National Reimbursement Drug List OECD Organisation of Economic Co-operation and Development OOP Out of pocket OTC Over the counter R&D Research and development TCM Traditional Chinese medicine THC Township health centre THE Total health expenditure TPE Total pharmaceutical expenditure UEBMI Urban Employee Basic Medical Insurance URBMI Urban Resident Basic Medical Insurance US FDA United States Food and Drug Administration WHO World Health Organization ZMU Zero mark-up – vii – PhArmACeutiCAl PoliCy in ChinA: ChAllenges And oPPortunities for reform list of tables, figures and boxes Tables Table 2.1 Comparison of China’s three main insurance schemes Table 2.2 Number and type of hospitals in China Table 3.1 Drug approval pathways for chemical drugs in China Table 3.2 Number of applications for a given generic molecule Table 5.1 Differences in health care spending in selected provinces, 2012 Table 6.1 Procurement and retail prices of generics/originators in public and private clinics in relation to the international reference price Table 6.2 Mean availability of generics and originator brands in public and private outlets Table 7.1 Summary of supply-side, proxy-demand and demand-side policies Table 7.2 Beijing tendering quality scorecard Table 7.3 Summary of effects of ZMU policies by level of health care facility Table 9.1 Key indicators of irrational prescribing in China Table 9.2 Influential factors driving irrational prescribing Table 10.1 NHFPC targets in health service infrastructure and resources, 2015–2020 Table 11.1 Government financing for primary health care facilities in six provinces, 2010–2011 Table 11.2 Summary of studies studying effect of EDL/ZMU on primary care facilities Table 13.1 Registration categories for TCM drugs seeking market authorization Table 13.2 Safety and quality concerns for TCM preparations Figures Fig. 1.1 Summary of information sources used in the review Fig. 2.1 Health expenditure as share of GDP in China and OECD countries Fig. 2.2 Percentage growth in health care expenditures and overall GDP, 2000–2012 Fig. 3.1 Key ministries and organizations involved in Chinese health care Fig. 3.2 Requirements for most common drug approval pathways in China – viii – PhArmACeutiCAl PoliCy in ChinA: ChAllenges And oPPortunities for reform Fig. 3.3 New applications, completed applications and backlog for review, 2011–2014 Fig. 4.1 Life expectancy by province per capita GDP, 2010 Fig. 4.2 Selected country populations aged 65 and over, 2015 and projected for 2050 Fig. 4.3 Proportion of China’s population aged 65 and over, 1990–2015 and projected to 2050 Fig. 4.4 Prevalence of risk factors for NCDs in China, 2010 Fig. 4.5 Causes of mortality in China, 2014 Fig. 5.1 Health expenditure per capita in China and other OECD countries, 2012 or latest available year Fig. 5.2 Health expenditure in China by source, 1990–2012 Fig. 5.3 Government, social and OOP expenditures as percentages of THE, 1990– 2012 Fig. 5.4 OOP expenditure as a percentage of total income in rural and urban residents, 2000–2011 Fig. 5.5 TPE and THE in China, 1990–2012 Fig. 5.6 Yearly spending on OTC drugs and annual growth rate, 1998–2010 Fig. 5.7 Annual drug expenditure and growth rate in drug expenditure in China, 2010–2015 and forecast for 2016–2020 Fig. 5.8 Breakdown of pharmaceutical spending by location, 2009–2011 Fig. 5.9 Drug costs as a percentage of total medical expenditure among inpatients and outpatients Fig. 5.10 Growth and projected growth of pharmaceuticals by hospital category, 2008– 2020 Fig. 5.11 Breakdown of pharmaceutical share by drug type in 2011 and projections for 2020 (based on sales value but excluding the retail channel and TCM) Fig. 6.1 OOP health expenditure as a percentage of total income among urban residents by development level, 2005–2011 Fig. 6.2 OOP health expenditure as a percentage of total income among rural residents, 2005–2011 Fig. 7.1 Drug movement from market authorization to patient use Fig. 8.1 Market share of the top three distributors for selected countries, 2008–2010 Fig. 8.2 Evolution of pharmaceutical sales in China by channel, 2005–2015 – ix – PhArmACeutiCAl PoliCy in ChinA: ChAllenges And oPPortunities for reform Fig. 9.1 Growth of sales value for antibiotics in selected hospitals, 2010 and 2011 Fig. 9.2 Sale value growth and volume growth for first-line (a), second-line (b) and third-line (c) antibiotics in selected hospitals for 2010 and 2011 Fig. 10.1 Hospital budget breakdown according to income stream, 2006–2012 Fig. 10.2 Breakdown of public hospital funding in China, 2010 Fig.
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