ISPOR Asia Consortium Industry Committee Explores Pricing Approaches in China and the US

Published Nov 2, 2023

The ISPOR Asia Consortium Industry Committee has hosted a virtual meeting on 27 July 2023. This meeting brought together stakeholders interested in health technology innovation and health policy in the Asia Pacific region, particularly industry colleagues to connect and learn about healthcare hot topics. The session was moderated by Dr. Larry Z Liu, Chair of ISPOR Asia Consortium Industry Committee and Executive Director of Center for Observational and Real-world Evidence, Merck & Co. inc, USA, and it featured two presentations by Dr. Wudong Guo, Research fellow of China National Health Development Research Center and Prof. Peter J. Neumann, Director of the Center for the Evaluation of Value and Risk in Health of Tufts Medical Center, USA.

Cases Studies on Measuring Value under China’s Volume-based Procurement (VoBP) Tenders

Presented by: Dr. Wudong Guo, PHD, Research fellow, China National Health Development Research Center, National Health Commission, Beijing, China

China's basic health insurance system covers over 95% of its population, but the country faces challenges due to an aging population and increasing non-communicable diseases, leading to a rapid growth in healthcare expenditure. To address these issues, the National Healthcare Security Administration (NHSA) was established in 2018 to oversee the healthcare security system, including the implementation of Volume-based procurement (VoBP) for medicines and medical consumables.

VoBP is a group purchasing approach where the government determines the quantity of medicines or consumables to be purchased, and manufacturers bid prices based on the purchase volume. In China, the National VoBP (NVoBP), organized by the NHSA at the central government level, has achieved significant milestones, including price reductions of more than 50% for medications and over 80% for high-value medical consumables.

The presentation reviews the NVoBP in China through the adapted Walt and Gilson's policy triangle framework, analyzing the context, actors, content, and process.

  • In terms of context, China stands as the world's second-largest drug market, where original and generic drugs hold substantial market shares.
  • Regarding actors, the Joint Procurement Office (JPO), comprised of representatives from each province, is responsible for organizing VoBP, and hospitals report their drug demand to the JPO. Manufacturers submit applications to participate in VoBP.
  • In terms of content, the NVoBP encompasses key mechanisms such as linking bidding prices to procurement volumes to provide drug manufacturers with clear expectations and ensuring the quality of generic drugs by carrying out the Generic Consistency Evaluation (GCE). The content part also addresses the challenge of measuring value in NVoBP fairly. Two approaches are employed: using GCE as an entry criterion for generic drugs and ranking applied companies based on comprehensive scores for patent medicines.
  • The process of NVoBP comprises two phases. From 2000 to 2018, some provinces explored centralized procurement, focusing more on pricing rather than quantities. Since 2008, Volume-based procurement became dominant and the implementation of NVoBP is progressing towards normalization and institutionalization.

The presentation also offers recommendations for future VoBP, including conducting satisfaction surveys for patients, doctors, and manufacturers to gather diverse perspectives, performing comprehensive evaluations of the economic impact of VoBP, establishing a re-assessment mechanism, implementing monitoring and evaluation systems for hospitals' medication demand reporting, and emphasizing the value of medicines from the perspectives of safety, effectiveness, cost effectiveness, innovation, and equity to discourage harmful price competition.

Value-based Pricing vs. International Reference Pricing: Implications for US Drug Prices

Presented by: Peter J. Neumann Sc.D., Director of the Center for the Evaluation of Value and Risk in Health (CEVR), Institute for Clinical Research and Health Policy Studies at Tufts Medical Center and Professor of Medicine at Tufts University School of Medicine, Boston, Massachusetts, USA

  • Dr Peter Neumann highlighted differences between value-based prices and international reference pricing. Paying value-based drug prices makes sense because it helps ensure that drug companies produce more of what people want – products that improve people’s health – while considering society’s other pressing priorities.
  • International reference pricing means benchmarking a country’s drug prices to prices of similar or comparable drugs in other counties. A key problem with international reference pricing is that importing prices from other countries imposes on one country’s citizens the values of patients and health systems in the referenced countries.
  • Ideally, US prices, including those covered by Medicare negotiations in the Inflation Reduction Act, will account for US population preferences and US-benchmarked value-based prices.

To learn more about ISPOR Asia Consortium and the Industry Committee, please contact

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