OBJECTIVES: Before 2017, high-price innovative drugs were generally absent from the National Reimbursement Drug List (NRDL) due to scarce update opportunities and inadequate access mechanism in China. Since 2017, the Payer (National Healthcare Security Administration, NHSA) has initiated national price negotiation for high-price innovative drugs. This research aims to understand how the reimbursement payment standard (RPS) was formulated in China NRDL negotiation.

METHODS: This analysis includes secondary research of previous negotiation processes and results and is supplemented with primary research with national payers and other stakeholders (KOL, pharmacologist and HEOR expert) to assess the negotiation mechanism.

RESULTS: In the process of RPS formulation, pharmaceutical companies submit materials as required by the Payer and the Payer reviews the materials together with stakeholders. There are six crucial factors determining the RPS: 1) clinical advantage over reference product; 2) net price after Patient Assistance Programs (PAP); 3) negotiation price with provincial and city insurance administration; 4) international price reference of 12 selected countries and regions; 5) Cost Effectiveness Analysis (CEA), and 6) Budget Impact analysis (BIA). Among all the factors, the most important are BIA and CEA as the decision was made under budget constraint. For CEA, though not published, ICER is required to be less than 3 times of GDP per capita (9,608 USD). As for BIA, the payer doesn’t have a definitive threshold, but budget impact over 1 billion USD is considered as significant increase. In order to save Basic Medical Insurance expenditure, on average, the RPS of 53 admitted drugs was more than 40% less compared to the listing price in 2017 and 2018.

CONCLUSIONS: The RPS is formulated by multiple stakeholders and includes review of multiple interrelated factors. Among them, HEOR plays the most significant role in RPS formulation.