Presentation (CTI)

OBJECTIVES: Since China implemented a medical insurance price negotiation mechanism in 2017, a total of 222 innovative drugs have been included in China’s National Reimbursement Drug List (NRDL), with an average price cut of 31.36%. While this has significantly alleviated patients’ financial burden, it may also impact pharmaceutical companies’ incentives for innovation. This study aimed to examine the relationship between the national price negotiation policy and the innovative behavior and performance of listed pharmaceutical companies.
METHODS: We used panel data from the CSMAR database of listed pharmaceutical companies from 2014-2023 and conducted difference-in-differences analysis. Listed pharmaceutical companies with one or more innovative drugs in the NRDL constituted the treatment group, while those without any NRDL inclusions formed the control group. Outcomes included innovation inputs (R&D costs), innovation outputs (number of approvals for innovative medicines in Class I), and innovation performance (Earnings per share).
RESULTS: A total of 2,049 listed pharmaceutical company data were analyzed. The policy variable demonstrated significant positive correlations with innovation input (0.369, p<0.01) and output (0.420, p<0.01) indicators, while exhibiting a modest negative correlation with innovation performance (-0.080, p<0.01). Medical insurance price negotiation policy has a significant positive effect on total R&D input (0.858, p<0.01; 0.614, p<0.05) and number of approvals for innovative medicines in Class I (2.987, p<0.001; 2.890, p<0.001). In the DID model without control variables, national price negotiation policy have a negative but insignificant (-0.122, p>0.05) effect on the innovation performance indicator (EPS), and a significant negative (-0.565, p<0.05) effect in the model including control variables.
CONCLUSIONS: The medical insurance price negotiation policy for innovative drugs has boosted the innovation input and output of listed pharmaceutical companies. However, it has not shown a positive impact on innovation performance in the short term.