OBJECTIVES:

Generic drugs have been deemed as a potentially powerful way to release financial burden on patients and health care systems. Tiered pricing framework and pooling purchasing power are two strategies, from the perspectives of manufacturer and buyers respectively, to achieve rational prices of generic drugs. We select pan-Canadian Tiered Pricing Framework (TPF) and Chinese National Volume-Based Procurement (NVBP) as comparators to explore the similarities and differences across the two policy implementation mechanisms and summarize the lessons for other jurisdictions.

METHODS:

Donabedian’s structure-process-outcome framework was applied for understanding two initiatives systematically.

RESULTS:

TPF is an upstream initiative aimed to lower the prices of generic drugs and to increase coverage and price consistency. NVBP is a downstream national initiative prioritized for drug price reduce. TPF process begins with application from manufacturer. By associate generic drug manufacturer number with price cut percentage, TPF leaves the choice to manufacturers to decide if join a specific generic drug market. Whereas, the Chinese government determine the NVBP list and holds authority to choose manufacturer(s) with lowest price(s). TPF provides clear drug price information to potential suppliers with unclear order quantity. The NVBP drug price is determined by tendering, while procurement volume is clear and massive. The effectiveness of TPF and NVBP is similar, 50% and 53% of price cut percentages, respectively. While the efficiency of TPF is 1.5 time as NVBP, with about 133 kinds of successfully-priced drugs per year. By comparing 60 drugs covered by both programs, the NVBP price is 57% of TPF counterpart averagely (1.1% ~ 301.6%), by purchase power parity. Under NVBP structure, single or more than 5 manufacturer(s) can achieve better results.

CONCLUSIONS:

Experience in the two countries shows coordinated pricing mechanism involves lots of piecemeal interactive problems, which a sophisticated system with a robust long-range plan may address better.