Secondary bargaining will become an important tool for price governance. In a broad sense, secondary bargaining refers to the second price negotiation between the buyer and the seller during the transaction process, outside the established bargaining results.

Specifically at the drug procurement level, it is the act of the purchasing units below the provincial level (such as cities, medical communities/medical alliances, hospitals, etc.) initiating bargaining with suppliers again outside the mainstream provincial drug prices.

Although secondary bargaining has always been controversial, the behavior of hospitals in secondary bargaining is very common in the industry.

The reasons are as follows:

First, there is no prohibition in major policies. At the national level, it is only clear that secondary bargaining is not allowed for drugs selected in centralized procurement. For ordinary drugs listed on the Internet, price governance itself is a process in which multiple parties participate in the formation of a price mechanism;

Second, there is room at the provincial procurement level. Since the attributes of ordinary drugs listed on the Internet in many provinces are "limited price listing (the promised listing price is the highest purchase price)" or "negotiated listing (needs medical institutions to negotiate before the price is generated)", the policy tacitly allows medical institutions to bargain;

Third, medical institutions have motivation, and "secondary bargaining" itself can bring new income to medical institutions to subsidize hospital finances. And to a certain extent, secondary bargaining means that local governments will further tighten their power to manage the drug catalog, thereby having a higher voice in the supply and demand relationship.

In addition, although the previous secondary bargaining was troublesome, it generally did not have much impact on the overall price system of the enterprise.

On the one hand, the previous secondary bargaining was often initiated by a single hospital or a small prefecture-level city, whose size determined its limited bargaining power; on the other hand, the hospital hoped that the income from the secondary bargaining would subsidize the fiscal revenue, and the enterprise hoped that the reduction in the secondary bargaining would not be reflected on the bill to protect the price system, so the previous secondary bargaining was often based on hidden discounts, and the actual invoice price was still the provincial online price.

At the beginning of this year, the National Medical Insurance Administration announced a batch of drug monitoring prices. From the results, it can be seen that the bargaining at the prefecture-level, GPO, and medical alliance levels was collected, but the price of provincial volume-based procurement was not included in the collection scope of the monitoring price.

In other words, in terms of the recognition of the price mechanism, ordinary drugs basically only have the difference between volume-based procurement prices and non-volume-based procurement prices, and the confidentiality of any non-volume secondary bargaining prices is difficult to achieve.

However, the greater impact faced by secondary bargaining is still to come - the "digital electronic invoice" system that is about to be implemented.

Influenced by the policy of "Opinions on Further Deepening the Reform of Tax Collection and Administration", digital electronic invoices have been gradually rolled out across the country.

Before this policy comes, businesses can still avoid price collection risks by invoicing at the winning bid price and then canceling the invoice at the end of the year. However, after the implementation of digital invoices, the price difference cancellation caused by the secondary negotiation needs to be linked to the corresponding line of goods in the invoice. If the return occurs after the price cancellation, it must also be handled according to the price after the price cancellation. Once provinces with a high frequency of secondary negotiation in hospitals, such as Anhui and Hunan, fully implement digital invoices, the handling of the secondary negotiation system becomes an extremely difficult problem.

In addition, the traceability code and direct settlement system of medical insurance funds that are being rapidly promoted have also had some impact on the secondary negotiation system.

Under the above system, the invoice system that was originally difficult to regulate can be directly captured as digital, which is more convenient for regulatory departments to collect and sort out drug prices at designated locations.

The most critical factor is the attitude of the management departments at or above the provincial level. In a reply letter in October 2022, the National Medical Insurance Administration stated that "for drugs other than national and local centralized procurement, the provincial medical procurement platform will be used for online procurement. Medical institutions can carry out joint procurement, special procurement or entrust third parties to carry out group procurement to form a diversified procurement method", which can be understood as an open attitude towards secondary bargaining.

At the same time, recently, Hunan Province issued a document mentioning that "it is strictly prohibited to buy at a low price and sell at a high price, and any disguised rebate, rebate, kickback and other illegal behaviors such as open discounts and hidden deductions during settlement are strictly prohibited", which also fully reflects the determination of provincial management departments to regulate secondary bargaining behavior.

Under the combination of policies, the price formed by secondary bargaining must be hidden, and the original secondary bargaining routines (such as hidden deductions, etc.) that protect the price system can no longer continue.

The original tacit balance of "secondary bargaining" is about to be broken and reshaped.

Looking at the world, the mode of hospital procurement of drugs can be roughly divided into the following three types according to the degree of government regulation:
First, the government strengthens supervision through procurement contracts. The government or competent authority regularly organizes the centralized procurement of drugs and signs procurement contracts. Hospitals are only responsible for procurement and use, and do not involve price issues. Under this model, due to the requirements of bidding and the restrictions of procurement contracts, it is difficult for hospitals to achieve secondary bargaining, and there is basically no room for secondary bargaining (such as the United Kingdom, Hong Kong, Denmark, and my country's volume-based procurement of related drugs, all adopt this model).

Second, the government sets reference prices and hospitals purchase independently. The most common is the reference price for medical insurance payment, that is, the excess part is self-paid, and the lower part is at the disposal of medical institutions (Germany, France, the Netherlands, Taiwan, China and other regions refer to this model), and some regions only provide reference prices for medical institutions to purchase (such as Portugal and Japan, etc.). Under this model, hospitals have certain bargaining rights, but their bargaining power is relatively low.

Third, the GPO model. For example, in the United States, the government does not intervene in drug prices, and hospitals or hospital authorities organize procurement independently. However, due to the limited size of a single hospital, a third-party drug group purchasing organization (GPO) is often required to negotiate prices.

In my country, volume-based procurement of drugs belongs to the first model, so secondary bargaining for volume-based procurement products is neither valid nor legal.

However, for ordinary drugs listed on the Internet, the price formation mechanism is a combination of these three modes - some varieties barely maintain the listed price after rounds of price-limited bidding clauses; but some varieties are affected by some historical reasons, and there are problems with high prices and ineffective governance in the short term.

Because of this, secondary bargaining is necessary to a certain extent.

From the perspective of legal logic, at any link in the transaction, the buyer has the right to bargain and counter-offer with the seller. As the terminal link of the entire pharmaceutical circulation chain, in the absence of other contractual constraints, medical institutions can also selectively initiate bargaining with manufacturers.

From the perspective of governance effect, the smaller the scale of unit governance, the more targeted its governance is, and the more governance means can be selected. Therefore, for some varieties with local drug characteristics, there is no possibility of national governance in the short term, and bargaining from the local dimension may produce better results than large-scale bargaining.

But at the same time, the criticism of secondary bargaining has been around for a long time.

Once secondary bargaining occurs, the first bargaining (whether negotiation, bidding, or governance) will inevitably be reserved, which will lead to bad money driving out good money. In addition, if the power of bargaining is delegated to medical institutions without restriction, it will inevitably lead to corruption and collusion of interests (the information asymmetry at the grassroots level is the highest and the difficulty of supervision is the greatest). Furthermore, bidding and bargaining for drugs is by no means easy, and how to ensure the compliance of the bargaining process is also a difficult problem that needs to be considered.

Existence and non-existence are interdependent, and difficulty and ease complement each other.

The high diversity of drug use and the large scale of drugs in my country are rare in the world. It is by no means a certain procurement model that can absolutely solve the problem. On this basis, the secondary bargaining between several procurement models needs dialectical thinking.

In recent months, documents on prefecture-level bargaining have frequently leaked.
The information that has been made public includes: the centralized procurement bargaining in Zhangjiajie City, which is currently being implemented, the Yingtan Medical Alliance, which has issued a plan and a catalogue waiting for bid opening (excluding the alliance volume procurement led by cities), and some cities are preparing for secondary bargaining (not disclosed to the public).

Under the current policy system, it is difficult to achieve ideal bargaining results by using the stock market of a hospital, a medical community or a city as a bargaining chip.

First, it is an indisputable fact that the actual transaction prices of various places are collected, and it is difficult to negotiate through "secondary bargaining" without affecting the national price system; second, the companies that dare to take price risks and reduce prices in prefecture-level cities are often barefoot new players, or hard-working players who are eager to pursue cash flow. Compared with the original drug use system, it is obvious that the quality management capabilities of these players are difficult to sustain; third, since the development of volume procurement, there are not many varieties that should be purchased but have not been purchased. The bargaining power of a city/medical alliance cannot be compared with that of a giant provincial alliance.

Under the general trend of secondary bargaining, whether the procurement policy can be more reasonable, the author only proposes a thought to stimulate discussion here.

First, change the single prefecture-level/medical alliance bargaining to targeted volume linkage. After obtaining the consent of provincial leaders and relevant enterprises, for some drugs with large usage in the city/medical alliance and with centralized procurement prices in other provinces, targeted volume linkage is carried out and the quantity is reported according to the brand. In this way, the enterprise does not need to worry about the risk of the price system, the original medication plan of the hospital is minimally affected, and the government also obtains the relevant drugs with the lowest price in the country. At the same time, the overall workload and process risks of volume linkage are much lower than re-bidding, which can be said to kill four birds with one stone.

Second, for drugs without volume procurement prices nationwide, moderately adopt the method of project cooperation and negotiate and cooperate with enterprises one-on-one. For drugs with high usage and no volume procurement prices, local governments or medical alliances will come forward to discuss the feasibility of public welfare project cooperation, such as grassroots doctor training in county medical communities, early screening of cancer patients, and supporting and equipped local ** centers, but attention should be paid to the content of the contract. Generally speaking, it is relatively more reasonable for local governments to come forward and design in the form of commercial cooperation or investment promotion.

Third, the model of direct secondary bargaining by a single hospital should be reduced. The bargaining power of a single medical institution is often limited, and compared with government agencies, medical institutions are often less aware of the risks and process management of drug bargaining. At the same time, for hospitals, if they complete secondary bargaining with enterprises online according to normal procedures, the resulting reduction cannot directly make up for the hospital's finances.

Management will always become more refined, and technology will always become more mature. Under the impact of the new era policy, secondary bargaining will sooner or later need to go to the sun and become a spare part to supplement my country's current price system to improve my country's drug "price governance" project.

Source: https://mp.weixin.qq.com/