In the ongoing discussion on the pricing mechanism of new chemical drugs, what changes are taking place in the innovative drug industry?

Interface News Reporter | Huang Hua

Interface News Editor | Xu Yue

On April 9, at the 7th Pharmaceutical Innovation Ecology Conference (also known as the "2024 Western Conference") held in Shanghai, more news was revealed on the draft of the "Notice on Establishing a Mechanism for Forming the Initial Price of Newly Listed Chemical Drugs and Encouraging High-quality Innovation" (hereinafter referred to as the "Consultation Draft"), and its progress and corporate opinions were further demonstrated.

Previously, on February 6, Financial Health reported this "draft for comments" for the first time. The emergence of this "consultation draft" is a mechanism for the formation of the initial price of newly marketed drugs by domestic regulators, aiming to encourage drug innovation.

At the 2024 Western Conference, a health economist from Peking University said in an interview with Jiemian News that the initial price policy of newly listed chemical drugs is still in the period of soliciting opinions at this stage. As for the reason for the emergence of this policy, the scholar explained that in the past, domestic drug prices were mainly managed by the National Development and Reform Commission, and there would be a regulatory price verification process for innovative drugs at the beginning of the market. In 2018, a medical insurance bureau was established in China to be responsible for the price management of drugs. However, the price management of the National Health Insurance Bureau is mainly focused on focusing on the drug after it enters the medical insurance. This means that there is a period of independent pricing between the launch of innovative drugs and their entry into medical insurance. This period leaves a relatively large space for enterprises to operate commercially, and it will also contain some problems and risks. Therefore, the initial price policy is aimed at the stage between the launch of new drugs and the entry into medical insurance, which used to be a blank, and now the National Health Insurance Bureau hopes to include it in the management puzzle, that is, even in the self-paid stage, the drug price must be regulated.

Judging from the document, the innovation of this draft lies in the fact that it tries to guide pharmaceutical companies to independently quantify the level of drug innovation and quantify the degree of drug innovation into a specific self-score. Its main scoring indicators include three parts: pharmacy, clinical value and evidence-based evidence. At present, the pharmacy part is relatively clear. At the same time, according to the above-mentioned draft for comments, after scoring, the self-evaluation score of the drug will be divided into three grades, so as to promote the tilt of resources towards high-grade and innovative products. For example, the higher the grade of the drug, the less regulatory agencies will intervene in its price, and give it more opportunities to enjoy the process of declaration, review and listing.

At the 2024 Western Conference, Wan Jiang, senior vice president of Betta Pharmaceutical, a representative of the company, proposed that the purpose of the above-mentioned draft to encourage innovative drugs to pay attention to clinical value is commendable, but the content of the document needs to be greatly adjusted and improved. After the issuance of the document, relevant associations, societies, including enterprises and medical institutions have put forward a large number of different opinions on this draft.

In fact, it is not difficult to understand the concerns of pharmaceutical companies. That is, if the score is based on the standards of the draft for comments, the score of domestic new drugs is not high. Specifically, according to the draft for comments, new drugs can be divided into three levels of more than 90 points, 50 points to 90 points, and below 50 points, corresponding to three categories: high innovation, medium innovation, and low innovation.

As for the reason why most new drugs will be in the middle and low range of self-scoring, the scholar said that part of the reason is that some new drugs have gone through the green channel of registration and lack of sufficient clinical research evidence, resulting in a score of 90 points, and they will not enjoy policy preferences. In addition, the innovation level of many new drugs in China is limited, and it is difficult to improve the score. Therefore, the criteria for product self-scoring may need to be carefully considered.

The scholar also believes that the current scoring of clinical value in the self-scoring is still insufficient and can be further strengthened. For example, how many adverse reactions a new drug solves in clinical practice, how much efficacy is improved, how much life is prolonged, and so on, all of which can be reflected.

From the perspective of the industry, it seems that the domestic innovative drug industry is still in a situation where policymakers are constantly increasing their support, but it is still considered by the industry to be insufficient to bail out. In this process, the contradictions between the two sides on what constitutes innovation and how to identify such root causes are gradually emerging. From this perspective, the Consultation Paper on the Initial Price is an attempt to establish a consensus on innovation from the early stage of the launch of a new drug, and to quantify it and affect the subsequent allocation of resources. Of course, the industry is still discussing how to respond to the trend of forward regulatory management.

There is no doubt that the initial price will definitely affect the subsequent price. At present, the price problem of domestic innovative drugs has become a major "heart disease" for pharmaceutical companies. At the Western Conference on April 9, more than one senior executive of a pharmaceutical company mentioned in his speech that compared with the price of overseas innovative drugs, China's innovative drugs are already in a price depression. From a policy point of view, the price management of drugs in China is being corrected in recent years. However, due to the impact of changes in the financing environment, international political relations and other factors, the industry is in the stage of encountering obstacles as soon as innovative drugs are made. Right now, commercialization is very important.

At the same time, the homogeneity and low level of domestic innovative drugs will continue to exist in the short term. He Ruyi, chief medical officer of Remegen Biotechnology and chief scientist of SDIC Innovation, said in a speech at the chairmanship that the reason why the current M&A cooperation has been dominated by foreign companies acquiring Chinese companies and Chinese enterprises merging with Chinese enterprises is because of the involution of China's industry. ”

At such a stage, the initial price consultation draft also involves the part of drug price intervention. For example, give the initial price a price stabilization period of 1-5 years. During the stability period, the medical security department and the drug procurement platform will mainly monitor the initial price, and will not be included in the scope of centralized volume procurement for the time being, and will not take price restraint measures in principle. Of course, there is no price stabilization period for products with a low degree of innovation. Therefore, it is becoming more and more important to strive for products that are recognized as highly innovative and maintain price advantages.

In addition, at the Western Conference on April 9, Xiong Xianjun, former director of the Department of Pharmaceutical Service Management of the National Health Insurance Administration, attended and gave a keynote report entitled "The Value of Innovative Drugs from the Perspective of Medical Insurance". For most domestic innovative drugs, the payment price of the medical insurance catalogue is particularly critical, which will affect the commercialization performance.

At the meeting, Xiong Xianjun pointed out that in terms of judging innovation, the perspective of the National Health Insurance Bureau and the Food and Drug Administration is different, the Food and Drug Administration is mainly from the perspective of molecular structure, treatment mechanism, whether there are drugs on the market in China, etc., but the National Health Insurance Bureau recognizes whether it can improve the efficacy and reduce side effects as the perspective of value judgment, so since 2017, the national drug negotiation rules have been emphasizing the benefits of patients.

Xiong Xianjun believes that "the National Health Insurance Bureau particularly supports innovation, but it depends on the degree of innovation", from the perspective of patient benefits, improved innovation is general innovation, and the vast majority of drugs are no innovation. Under this speech, it also pointed to the problem of limited gold content of domestic pharmaceutical innovation at this stage.

Combined with the initial price policy, the above-mentioned scholars believe that this policy is to stimulate real innovation, and to sort out and control products with limited innovation. If pharmaceutical companies lack a high level of innovation ability, they cannot be harsh on the policy. This policy is to encourage "true innovation" and give innovative products higher pricing space and promotion efficiency.