It is positive news for the public that China is observing faster price cuts on oncology drugs. This major incident has taken place due to turmoil over a movie which revealed smugglers who were sneaking cheaper generic drugs into the country. This resulted in big pharma therapeutic drugs being targeted for cuts.

The newly formed health insurance administration in China intend to deepen discounts on cancer drugs which were already on its National Reimbursement Drug List (NRDL) based on public bidding and procurement based on cancer therapies. In the meantime, officials will start enlisting negotiations for treatments which were not included on the coverage list.

A novel dimension on cancer costs was declared in a government press conference, right before the removal of import tariffs and decreased import value-added tax to 3% on all commonly available cancer therapies. The Chinese government hopes that the drug companies will keep this decision in mind when fixing prices on therapies.

Due to China’s streamlined drug review process, novel effective cancer therapies such as Bristol-Myers Squibb’s Opdivo and AstraZeneca’s Tagrisso are entering the market with full swing. This entry resulted in the government being forced to negotiate prices to swiftly make these cancer therapies accessible to all patients.

But Chinese healthcare reform expert Jiemian, Zhu Hengpeng, who heads the Center for Public Policy Research at the Chinese Academy of Social Sciences, advised that low priced drugs could have long-term negative effects on innovation, especially for domestic drugmakers.  

Under this Chinese insurance scheme, hospitals would be given a specific amount to treat each patient for a particular disease. Hence doctors would have less incentive in order to use high-cost drugs.