The Medical Insurance Bureau issued a "pricing mechanism" for new crown drugs: considering the cost and clinical value, but Lianhua Qingwei was not affected

The future of new crown treatment drugs is destined to be price for quantity
.

On January 6, the Health Insurance Administration issued the Notice on the Guidance on the Formation of Prices of Novel Coronavirus Treatment Drugs (Trial) > (hereinafter referred to as the "Notice") to guide
the pricing mechanism of new crown treatment drugs.

According to the Notice, the pricing of new crown treatment drugs needs to take into account cost factors, including "raw material costs, research and development expenses, and period costs", and also fully consider "innovation" and "economy"
.

If the cost calculation is too outrageous, the "job" is likely to be unqualified, and the pharmaceutical company needs to start over
.

According to the "Notice", if the "sales expense ratio, management expense rate and financial expense ratio of the initial quotation are more than 10 percentage points higher than the average level of pharmaceutical enterprises listed on the Science and Technology Innovation Board in the past three years, the applicant will be accepted to actively guide the applicant to adjust its quotation strategy
.
" ”

The signal from the Health Insurance Bureau is self-evident that what we really need is efficient, safe and affordable COVID treatment products
.

This also means that only therapeutic drugs that meet the efficacy and economic value can become the "hope of the people"
.
For many domestic companies entering the research and development of new crown oral drugs, how to price will become a "science"
.

After all, the Notice mentions that pharmaceutical companies should take the initiative to assume social responsibility and keep profit levels within a reasonable range
.

Of course, the "Lianhua Qingwei" do not need to think too much
.
According to the Notice:

The scope of new crown treatment drugs is drugs that directly target the virus or block the virus infection and replication, excluding drugs
that relieve symptoms such as high fever, cough, and pain.

So, what are the drugs that target viruses or block virus transmission and replication?

From the perspective of mechanism, it is mainly small molecule chemical drugs and neutralizing antibodies
.
Among them, neutralizing antibodies belong to therapeutic drugs that directly target "viruses"; Small molecule chemical drugs are products that block the infection and replication of
viruses.
At present, the mechanism of the new crown oral drugs under research by pharmaceutical companies including Junshi Biologics, Simcere Pharmaceutical, Zhongsheng Pharmaceutical, Grand Pharmaceutical, Qilu Pharmaceutical, Frontier Biologics, Genting Xinyao, CSPC Pharmaceutical Group, Ascletis Pharmaceutical, Salubris Pharmaceutical, Hansen Pharmaceutical, Real Biologics and other pharmaceutical companies is the latter
.

For domestic new crown treatment drugs, although most of them are in the clinical stage and avoid the ongoing medical insurance negotiations, they still cannot avoid "soul bargaining"
.
Next, they are about to face this
problem when they apply for listing.

According to the "Circular", the new crown treatment drugs entered the domestic centralized pharmaceutical procurement market for the first time, and the first price quotation was centrally accepted and accepted
nationwide.

The National Health Insurance Administration does not directly participate in price negotiations, but has delegated "bargaining power" to the health insurance bureaus
of six provinces and cities: Beijing, Tianjin, Hebei, Shanghai, Jiangsu and Sichuan.

On the date when the drug marketing application is accepted by the NMPA, the licensor of therapeutic drugs may submit the corresponding review materials of the "first price" to the medical insurance bureau of any of the above-mentioned provinces and municipalities to ensure that after the drug is approved for marketing, it can promote the drug into the market
with the highest efficiency.

Why is it "soul bargaining"? This starts with the determinants of the initial price
.

The initial price needs to be specifically specified
in the "price composition" of the therapeutic drug.

The so-called "price composition" means that enterprises need to explain in detail
the information and measurement methods of price components such as manufacturing costs, period expenses, sales profits, and taxes.

Among them, "raw material cost, R&D cost, and period cost" are the top priorities
of pharmaceutical companies.

First of all, enterprises need to provide detailed raw material cost information
.
If it is a self-produced API, the specific composition and calculation method of the production cost of the API should be provided, as well as the inquiry results of similar structural compounds in the industry; If the API is outsourced, a contract and invoice
are required.

Second, companies need to measure the impact
of R&D costs on prices.
According to the Circular, R&D expenses are proposed to be apportioned over a period of five years and measured in combination with potential sales
volumes.

Potential market demand, the Notice also gives a reference standard: drugs limited to outpatient prescriptions, not less than the standard amortization of 10 million copies per year; Those that can be sold in retail pharmacies and Internet platforms are apportioned
at the standard of not less than 20 million servings per year.

This also means that even for a therapeutic drug with a R&D investment of 1 billion yuan, the R&D cost of "single serving" is up to 20 yuan in the case of outpatient prescription only; In the case of sales expansion to retail channels, the R&D cost of "single serving" shall not exceed $10.

In addition, companies need to strictly measure the expense ratio
for the period.
According to the Circular, the sales expense ratio, management expense ratio and financial expense ratio in the initial offering need to strictly refer to the average level
of A-share listed pharmaceutical companies in the past three years.

If the measurement results are slightly higher than the reference level, pharmaceutical companies need to make a clear explanation; If the calculation result is more than 10 percentage points higher than the reference level, the quotation strategy
needs to be adjusted.

On the whole, pharmaceutical companies undoubtedly need to show the cost of therapeutic drugs to provincial and municipal medical insurance bureaus
.

In addition to cost factors, the pricing of domestic new crown treatment drugs also needs to fully consider innovation and economy
.

The so-called "innovation" and "economy" can be understood as a competition
in the comprehensive performance of therapeutic drugs.

According to the Circular, the course of treatment cost converted from the initial quotation of the treatment drug needs to refer to factors such as efficacy, safety data, and the quality of clinical trials, and compare it with the treatment cost of the control drug, which in principle needs to be lower than or equivalent to the cost
of the control drug.

This also means that products with clinical data that are inferior or whose clinical quality is not good may be discounted
compared to the cost of treatment of control drugs.

So, how to choose a control drug? The current price of the clinically active control drug is preferentially used as the reference benchmark, and if the clinical control is placebo, the current lower price of the approved drug is used as the reference benchmark
.

Obviously, the general idea of regulators is still to encourage innovation
.
It is able to prove its products through head-to-head clinical trials, giving more room
for pricing.

This means that if the comprehensive performance of a domestic oral drug is not inferior to P drug, the pricing can also be closer to P drug
.
Drugs that can only prove to be more effective than placebo need to fall into low-cost involution
.

However, in any case, "economy" is the first pricing principle
of new crown treatment drugs.
The Notice points out that when the cost estimate is significantly higher than the economic evaluation result, the pricing needs to be subject to the economic evaluation result
.

In other words, the cost of treatment of control drugs will determine the ceiling
of the entire therapeutic drug market.
If the price of the best drugs is significantly reduced, the market size of the entire therapeutic drug will also shrink
significantly.

Comprehensively considering the current situation of epidemic prevention and control, our requirements for new crown oral drugs have long been not only to solve the problem of existence and non-existence, but also to meet the characteristics of quantity and quality
, and also to meet the characteristics of economy.

Only products that meet these characteristics can stand out and become the "hope of the people"
.