Drug price reform has four questions to answer

the | Wu Jing Professor of The School of Pharmaceutical Science and Technology of Tianjin University held a series of seminars on the focus issues of higher social concern and wider influence in the Opinions of the State Health Insurance Administration for deepening the spirit of the Opinions on Deepening the Reform of the Medical Security System (the Opinions).
With the theme of "Perfecting the Drug Price Formation Mechanism", Professor Wu Jing made an in-depth discussion on how to establish a market-led drug price formation mechanism, form the correct way for the government to regulate and guide drug prices under market conditions, promote the effective market and better combine the government.
reviewing the reform of drug price formation mechanism in China in the past ten years, we find that the role of market in drug price formation mechanism has gradually increased from the basic role to the decisive role.
2013, the Third Plenary Session of the 18th Central Committee of the Communist Party of China pointed out that "economic restructuring is the focus of deepening reform in an all-round way, and the core issue is to deal with the relationship between the government and the market so that the market can play a decisive role in the allocation of resources and better play the role of the government."
, the basic role of the market in the allocation of resources has been transformed into a decisive role, which has laid the main tone for China's drug price reform.
In order to deeply implement the spirit of the Third Plenary Session of the 18th CPC Central Committee, in May 2015, the National Development and Reform Commission and seven other ministries jointly issued the Notice on the Issue and Promotion of Drug Price Reform, proposing to "gradually establish market-oriented drug price formation." mechanism to minimize direct government intervention in drug prices" and to clarify that from 1 June 2015, the maximum retail price limit for the vast majority of medicines (except narcotic drugs and psychotics in category I) will be abolished, and the actual transaction price of pharmaceuticals will be mainly caused by market competition.
five years, on March 5, 2020, the Opinions of the State Council of the CPC Central Committee on Deepening the Reform of the Medical Security System (NO. 5) once again stressed the need to "improve the price formation mechanism for medical services."
to establish a market-oriented drug, medical supplies price formation mechanism."
this further clarifies the national tone of China's drug price reform, the main task is still to establish a market-oriented drug price formation mechanism.
At the same time, in November 2020, in the Recommendations of the CPC Central Committee on the Development of the 14th Five-Year Plan for National Economic and Social Development and the Vision for 2035, it was clearly stated that "the decisive role of the market in the allocation of resources should be given full play, the role of government should be better played, and the effective market should be promoted and the government should be better integrated".
The introduction of the above-mentioned years and a series of important documents has put forward clear directions and requirements for government departments to formulate and implement drug price management policies, but how to establish a market-led drug price formation mechanism is still a scientific issue that needs to be studied.
in this in-depth exploration of the establishment of market-oriented drug price formation mechanism, we need to answer a few basic questions, that is, how the market mechanism originally worked? Why is the market mechanism in the pharmaceutical sector not working? What are the government's goals for managing drug prices in a market-led context? Only by answering these questions can we further explore the combination of effective market and government, so that the government can create a decisive environment for the "invisible hand" of the market to play a decisive role in the allocation of resources, so as to carry out the relevant requirements of the CPC Central Committee for drug price reform.
, how did the market mechanism work? Microeconomic theory tells us that in a fully competitive market, resource allocation can be carried out in the most efficient way, i.e. supply and demand equilibrium (equilibrium) to maximize social welfare at this price.
a fully competitive market requires four conditions, namely, numerous buyers and sellers, no market barriers, unimpeded product quality and adequate availability of market information.
Under these conditions (Figure 1), if the current market commodity price is lower than P1, the quantity Q1 in the market demand is higher than the quantity Q2 in supply, some demanders are willing to buy at a higher price in order to buy the goods in need, then the commodity price will rise to the optimal price P of supply equal to demand;
in either case, through numerous free trades between buyers and sellers, the market will eventually reach the equilibrium point of supply demand (i.e. point C).
Therefore, the free market is characterized by prices moving in numerous transactions to the equilibrium point of "no buyer can buy goods, no seller can not sell goods" until this equilibrium point is reached, that is, the equilibrium price of the most efficient allocation of social resources.
therefore, commodity prices under the market mechanism will not be affected by any one buyer and seller, but by the supply and demand of the market, which is the role of the market competition mechanism.
the formation of reasonable drug prices under the market competition mechanism of Figure 1, why does the market mechanism in the field of drugs fail? In the pharmaceutical market, the conditions for full competition are not available.
the past 40 years, the phenomenon of seller monopoly in the drug market has become prominent.
First, countries around the world have strict controls on the safety and effectiveness of drugs, making them not as easy to market as general merchandise, thus limiting the number of products competing; The principal-agent relationship between patients leads to information asymmetry in the process of consumption, and finally, because of the particularity of drugs in maintaining health, the price elasticity of their commodity demand is small, while the introduction of medical insurance aggravates the consumer price elasticity continues to become smaller, and consumers are relatively insensitive to changes in drug prices.
academics believe that these theoretical factors lead to insufficient seller competition in the pharmaceutical market.
to this problem, numerous academic studies have emerged and proved that the government can reduce the seller's monopoly by encouraging the development and listing of new drugs and increasing the degree of competition in the market.
nearly 20 years, the drug market has emerged a new market pattern, that is, buyer monopoly.
, especially in Europe, the continuous optimization of universal health care, as well as the basic construction of China's universal health insurance system.
2019, China's basic medical insurance coverage rate reached 97%, the drug market buyers appear a single trend.
, the dual monopoly of sellers and buyers will lead to further failure of drug market mechanisms.
how to effectively guide the seller's competition, pay attention to and study the buyer's singleness is a new problem facing the government and the academic circles.
, what should be the government's drug price management objectives? The author believes that under the background of double monopoly in the drug market, the government's price management objectives need to be weighed between the current and future accessibility of drugs.
On the one hand, high drug prices make many patients unable to afford drugs, reduce patient drug compliance, affect the effectiveness of treatment, so the government needs lower drug prices to protect the current availability of drugs, while ensuring the smooth operation of health insurance funds.
to achieve this goal, China has implemented policy practices such as the basic drug system, the negotiation of access to basic medical insurance drugs and the centralized procurement of medicines in recent years.
, on the other hand, in the long run, the government also needs higher drug prices to further support new drug research and development and stimulate industrial innovation to meet the higher demand for drugs in the future.
real problem is, the health insurance catalog to be updated, the base drug catalog to be updated, if there is no more and better drugs in the future, how to update? How to further let ordinary people live longer and better? Thus, finding a balance between low prices that guarantee current (short-term) access to medicines and high prices that meet future (long-term) access to medicines has become a difficult target for government drug price control.
. Through the above analysis, we fully realize that the establishment and improvement of market-led price formation mechanism can not be separated from the effective market, but also from the government.
In order to achieve the short- and long-term accessibility of medicines to government regulatory objectives and to respond to changing market conditions, effective regulatory instruments need to be constantly studied, considered, tried and adapted.
the author believes that there is a need for the government to try to develop and use a variety of innovative management tools, in the new situation to better play the role of market mechanism to create an orderly competitive environment.
is to play the role of drug economics, in the field of inadequate market competition to value assessment anchor price changes, the establishment of value-based strategic purchase mechanism of health insurance.
The emergence of the tool of pharmacoeconomics is an innovative management tool developed by the international community in order to cope with the emergence of a single buyer, to address the asymmetry of efficacy information in the field of drug purchase, and to deal with insufficient competition in innovative drugs.
present, china's innovative drug prices of medical insurance payment standards are mainly determined by the way of national drug negotiations, in which the drug economics tools anchor drug value is the key.
only by using the scientific means of pharmacoeconomics can we quantify the relative value of innovative drugs, thus creating an orderly competitive environment and guiding effective investment and fair competition.
is to use the drug price index tool to establish a price monitoring publicity system in the field of adequate market competition, and effectively monitor the dynamic changes in market competition.
reasonable drug prices are formed by the invisible hand of the market, no one can know where the reasonable price level is.
to restore the market mechanism, we first need to understand, monitor the price level and grasp the trend of change.
innovative application of the traditional tool, the Price Index, can help us monitor the dynamic changes in the price levels of medicines in different therapeutic areas, drugs at different levels of control, and drugs in different market competition.
and transparent price levels are conducive to governments and social sectors adjusting micro-policies and decisions to dynamic changes and to helping markets function in a targeted way.