Program

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Price Offers in Volume-Based Procurement in China and Their Determinants

Speaker(s)

Sun Y, Yang L
Peking University, Beijing, 11, China

OBJECTIVES: Since 2018, China has launched six rounds of national volume-based procurement (VBP) program which aims to decrease drug prices through bidding and gathering the procurement volume nationwide. Our research aims to clarify the mechanism of VBP and explain the bidding behavior of pharmaceutical companies in VBP.

METHODS: Bidding results in 2-5 rounds of VBP which exclusively included chemical drugs were collected from the official website of VBP program. The characteristics of bid winners and potential competitors were collected from Menet.com, a website gathering registry information of pharmaceutical companies and center for drug evaluation in China. Heckman two stage model was applied to corrected the potential selection bias since only the price offers of bid winners were publicized.

RESULTS: New entrants of a market (β=0.351, P<0.01)and companies who have the ability to produce raw materials (β=0.254, P<0.01) are more likely to became bid winners. Companies who have more potential competitors (β=-0.469, P<0.01) and foreign pharmaceutical companies (β=-1.480, P<0.01) are less likely to win the bid. Among bid winners, new entrants (β=0.545, P<0.1) and companies who are potential for multiple bidding (β=0.343, P<0.05) are more likely to win the bid through a higher price. Companies tend to bid for lower prices when they have more potential competitors(β=-0.864, P<0.05).

CONCLUSIONS: VBP program in China has successfully decreased the price of drugs who already have generics in the market and its mechanism is in accordance with the market discipline. More measurement could be applied to control the effect of multiple bidding.

Code

HPR60

Topic

Health Policy & Regulatory

Topic Subcategory

Pricing Policy & Schemes

Disease

Alternative Medicine, Drugs, Generics, No Additional Disease & Conditions/Specialized Treatment Areas