Drugmakers agree to halve prices to get on China state insurance list

Pharmaceutical tablets and capsules are arranged on a table in a photo illustration shot September 18, 2013. REUTERS/Srdjan Zivulovic/Illustration/File Photo

BEIJING, Dec 28 (Reuters) - Drugmakers have agreed to cut prices by around 50% on average for more than 100 medicines in order to have them included in China's state medical insurance scheme from March, potentially heralding a massive leap in sales.

The National Healthcare Security Administration (NHSA) said in a statement on Monday that an 119 medicines would be added to the National Reimbursement Drugs List (NRDL) with an average price reduction of 50.64%.

Ninety-six of them are branded drugs with no generic versions available in the domestic market, according to the statement.

They included some key products made by foreign pharmaceutical companies, such as Novartis' (NOVN.S) blockbuster inflammation drug Cosentyx, and Israeli firm Teva Pharmaceutical's Austedo treatment for Huntington's disease.

The list also add more home-grown PD-1 inhibitor products, a fast-growing class of drugs that help the immune system attack cancer by blocking a mechanism tumours use to evade detection.

PD-1 drugs from Shanghai Junshi Biosciences (1877.HK), Beigene Ltd (6160.HK) and Jiangsu Hengrui Medicine (600276.SS) have been added, compared with only one Chinese product in earlier round of drug list update.

"It's a healthy thing not to have a winner take all approach and show there is room for multiple companies," said Brad Loncar, whose Loncar Investments runs a ETF for Chinese drug firms.

"There would be great pressure for PD-1 drugs that have not made it to the market, as prices for state medical insurance has set ceiling for future prices," said ICBC International Research analyst Zhang Jialin.

No PD-1 products from multinational drugmakers were included.

The new drug list will be effective from March 2021, NHSA said. Inclusion on the list could potentially boost demand for medicines, as patients could be reimbursed for a significant portion of the costs.

The NHSA updates its list annually. Average sales of medicines added last time jumped by nearly 2,000% during a nine-month period of 2020, according to a research by ICBC International Research analysts.

Reporting by Roxanne Liu and Ryan Woo; Editing by Simon Cameron-Moore

Our Standards: The Thomson Reuters Trust Principles.