How should innovative drugs be priced?

Since the second half of 2021, innovative pharmaceutical companies seem to be in a bit of "internal and external difficulties"
.

The registration and access of domestic new drugs in overseas markets are frequently frustrated.
The experience of many companies such as Conrad, Wanchun, Pioneer, and Cinda have made local innovative pharmaceutical companies realize from different levels that it is more difficult than imagined to enter the overseas mainstream pharmaceutical market
.

The results of the drug price negotiation in 2021 were announced, and 67 of 85 exclusive drugs were negotiated, with a success rate of 78.
82% and an average price reduction of 61.
71%, especially the status quo that the new PD-1 indications still need to be reduced in price before being included, diluting innovative drugs The joy brought by the company's approval for listing
.

How do innovative pharmaceutical companies break through? What support can be provided at the policy level, especially in the pricing and payment of innovative drugs? It has become one of the key contents that the representatives and committee members paid attention to during the "two sessions" this year
.

01.
Pricing policies need to be close to the real world

01.
Pricing policies need to be close to the real world

In 2015, after the National Development and Reform Commission released the management of the country's highest retail price, the price of medicines returned to the market, and the price of the drug was determined by the enterprise itself
.

However, as we all know, after the medical insurance bureau has included the drug price negotiation measures into the medical insurance catalog, there is a huge gap between the price set by the company and the price paid by the medical insurance.

Fang Laiying, member of the National Committee of the Chinese People's Political Consultative Conference and vice president of the Chinese Hospital Association, said in the proposal, "The pricing policy for innovative drugs is not only a medical insurance access policy, nor is it a micro-technical issue, it is related to the national strategy and economic lifeline
.

"

In the "14th Five-Year Plan" for the Development of Pharmaceutical Industry jointly issued by the nine departments at the beginning of this year, it is clearly pointed out that China's pharmaceutical innovation has entered the fast lane, and "innovation-driven transformation" has become the core task of industry development.
By 2035 In 2018, to realize "the innovation-driven development pattern has been comprehensively formed, original innovative drugs and 'leading' products have increased, and become an important source of world pharmaceutical innovation", which is the key goal of China's pharmaceutical industry during the "14th Five-Year Plan" period
.

On the one hand, in the predicament of being "stuck" by Western developed countries in the high-tech field, innovative biomedicine is one of the few fields in China that has the ability to run alongside developed countries (some areas have already taken the lead)
.

However, China's leading innovative biopharmaceutical companies and their partners have not only been reviewed by the relevant U.

On the other hand, in response to the increasing downward pressure on the economy, innovative biomedicine is a strategic emerging industry that is expected to form a trillion-dollar industrial transformation and capital transformation
.

However, due to the blind pursuit of the "world's lowest price" and the vicious competition of "running bidding" in the pricing of innovative drugs, after several consecutive rounds of the stock market's pharmaceutical sector plummeting, the innovative pharmaceutical industry faces huge risks of capital ebb, industrial decline, and loss of scientists

Therefore, Fang Laiying believes, "In order to enhance the international competitiveness of China's innovative biopharmaceutical industry, maintain the follow-up R&D strength and the spark of 'enterprise going overseas', the Chinese government, especially the medical insurance department, urgently needs to optimize the price policy and smooth the pricing mechanism
.

"

How to achieve? Fang Laiying gave three suggestions:

The first is to build a real-oriented cost monitoring mechanism
.

For a long time, the price monitoring and evaluation work of the pharmaceutical industry chain has been scattered in different competent departments of industry and information (manufacturing caliber), commerce (circulation industry caliber), health care (clinical service caliber), and medical insurance (medical insurance payment caliber).
The rules and scope of publication vary
.

After the establishment of the Medical Insurance Bureau in 2018, it has become the single largest buyer of domestic medicines and public medical care, and oversees the pricing, payment, and procurement rights of pharmaceutical products and services
.

If the National Medical Insurance Administration acts as the leading party of the medical price monitoring project, it will help to overcome the interest tendency of market consulting agency data, solve the data quality problems caused by "Kowloon Treatment Medicine", and form the world's largest, most complete and up-to-date pharmaceutical The whole industry chain database

This will help the pricing of new drugs to be more in line with real market conditions
.

The price of new drugs is different from that of generic drugs.

The second is to build an international-oriented price assessment mechanism
.

In the drug price negotiation, there is a well-known "hidden" rule in the industry, that is, "over 500,000 will not be discussed, and over 300,000 will not be entered"
.

However, this administrative price limit model has the meaning of "take for the low price" and "one size fits all"

Therefore, Fang Laiying suggested that the price evaluation mechanism should be based on the academic consensus of the International Society for Pharmacoeconomics and Outcomes Research (ISPOR), the experience and lessons of price policy in major developed and developing countries, and with the growth of China's gross domestic product (GDP) and urban and rural areas.
The price ceiling is raised year by year as the net income of residents grows
.

In addition, it is recommended that the National Medical Insurance Bureau, together with the National Health Commission, the Ministry of Industry and Information Technology and other departments, compile a "National Drug Value Evaluation Index System", solicit opinions from the entire industry, and apply it to the national drug price negotiation in 2022

In addition, it is also possible to learn from the German experience, requiring companies to provide files of added value of innovative drugs, and comprehensively evaluate their output in terms of innovation incentives, public welfare, social ethics, and system economy
.
For major and difficult diseases such as rare diseases and end-stage diseases, the National Medical Insurance Bureau can conduct special negotiations separately to determine the payment thresholds that are different from common chronic diseases
.

The third is to build a compensation-oriented policy linkage mechanism
.

For example, in response to the difficulty of entering the hospital, a group of pilot demonstration areas for the implementation of medical insurance drugs will be collected, selected, and praised, and will be replicated and promoted nationwide in 2022
.

In addition, he also suggested that in terms of negotiating corporate incentives, a price protection period of more than 3 years should be set for 1.
1 new drugs that meet the "breakthrough therapy" conditions of the State Food and Drug Administration, during which centralized procurement, price negotiation and related package payments (such as : Payment by disease type, payment by disease diagnosis-related grouping, payment by disease type score); The evaluation standard of the national major new drug creation special project and fiscal and taxation support policies has been changed from "only (patient) quantity theory" to "comprehensive value assessment" , to avoid the exclusion of “niche” innovative drugs such as rare diseases and rare tumors; the securities regulatory authorities and the China Stock Exchange do not recognize the universal and normalized medical insurance price reduction policy as a “systemic risk” for listed innovative drug companies.
Its additional issuance is improperly restricted
.

02.
The price reduction of new indications needs to be combined with clinical value

02.
The price reduction of new indications needs to be combined with clinical value

During the "two sessions" this year, Zhu Tongyu, member of the National Committee of the Chinese People's Political Consultative Conference, vice chairman of the Shanghai Democratic League Shanghai Municipal Committee, and vice president of Shanghai Medical College of Fudan University, and Wu Depei, member of the National Committee of the Chinese People's Political Consultative Conference and director of the Department of Hematology of the First Affiliated Hospital of Soochow University, all expressed their commitment to the sustainable development of innovative drugs.
The perspective of development lies in the reasonable pricing mechanism when negotiating new indications of drugs in the catalog and new access to medical insurance for similar drugs in the catalog
.

As the number of macromolecular drugs on the market increases and immunotherapy technologies become more and more mature in the development of new drugs, the number of multi-indication drugs on the market is also on the rise
.

According to data from the Organization for Economic Cooperation and Development (OECD), more than 50% of the main anti-tumor drugs used in 2014 had more than one indication, and this proportion has risen to 75% in 2020, with an average of 5 indications per drug
.
In China, multi-indication drugs have also shown rapid growth, especially in the fields of oncology and rare diseases
.
At present, the proportion of monoclonal antibodies and tumors with more than 2 indications in the clinical development stage is close to 80%
.

When new indications are included in medical insurance, the current method adopted by the Medical Insurance Bureau is to conduct a new round of price negotiation on the original basis to determine the payment standard for the inclusion of new indications into medical insurance
.

Taking domestic PD-1 tislelizumab as an example, after the negotiation of the drug price for new indications in 2021, the annual cost will be adjusted to 50,405 yuan, a drop of 34%
.
Previously, the price of PD-1 drugs in China has become the lowest price in the world, and if new indications are included in medical insurance, the price will still need to be reduced.
"In today's global drug market implementing international reference prices and a highly informatized era, the price of domestic innovative drugs in China has hit the lowest price in the world.
Given the relatively open negotiated price information on the Internet, Chinese companies will face challenges in pricing new drugs in major international markets
.
" Wu Depei said
.

New indications for drugs under medical insurance negotiation in 2021

Based on this, Wu Depei suggested reforming and simplifying the access rules for new indications of drugs in the catalog
.
For drugs with high clinical value of new indications, if the company's expectation is higher than the current payment standard, it can participate in the negotiation according to the complete process of the existing medical insurance negotiation, and redefine the payment standard; if the new indication is moderate innovation and secondary innovation Or the same level of innovation, and the company's pricing expectations are equivalent to or do not require higher payment standards for the drug indications on the existing list, it is recommended to refer to the existing negotiated drug contract renewal rules
.

Zhu Tongyu’s view is similar.
He suggested referring to the price-volume agreement in the first negotiation as the principle of price adjustment for renewals, so that drugs with new indications and products with renewed contracts can enjoy indiscriminate treatment
.
For new indications, within the expected range of medical insurance fund expenditure, the original price or a small reduction can be directly included in the medical insurance catalog
.

In addition, Zhu Tongyu also found that for drugs with the same mechanism of action, local innovative drugs are generally late in the market, and most of the foreign-funded drugs are the first to enter in the medical insurance negotiation
.
In an environment where the current medical insurance negotiation policy is mainly oriented to "negotiations for every advance" and "lowering for every negotiation", new drugs from local pharmaceutical companies need to be significantly reduced in price before they can be included in the medical insurance catalog
.
"As a latecomer, local pharmaceutical companies are struggling to cope with continuous and substantial price cuts, and are forced to "survive by cutting their R&D and production costs", squeezing the space for innovation and development in the industry
.
"

2021 Negotiating price comparison between domestic drugs and similar imported drugs in the catalog

Therefore, he suggested that latecomers in medical insurance should keep basically the same price as the products already in the catalog, so as to form a level playing field with foreign-funded products, and provide a good policy soil for local innovative pharmaceutical companies to continuously obtain market returns
.