Pharmaceutical policy in China - WHO/Europe

1 Pharmaceutical policy in ChinaChallenges and opportunitiesfor reformElias Mossialos, Yanfeng Ge, Jia Hu and Liejun WangPharmaceutical policy in China : challenges and opportunities for reformPharmaceutical policy in China : challenges and opportunities for reformElias Mossialos, Yanfeng Ge, Jia Hu and Liejun WangLondon School of Economics and Political Science and Development Research Center of the State Council of ChinaKeywordsDRUG AND NARCOTIC CONTROLPHARMACEUTICAL PREPARATIONSDRUG COSTSDRUG INDUSTRYHEALTH CARE REFORMHEALTH POLICYCHINA World Health Organization 2016 (acting as the host organization for, and secretariat of, the EuropeanObservatory on Health Systems and Policies)All rights reserved.

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4 The views expressed by authors, editors,or expert groups do not necessarily represent the decisions or the stated policy of the EuropeanObservatory on Health Systems and Policies or any of its 978 92 890 5039 5 Printed in the United KingdomCopy editing by Jane WardDesign by Sarah MoncrieffAddress requests about publications to: Publications, WHO Regional Office for Europe, UNCity, Marmorvej 51, DK-2100 Copenhagen , , complete an online request form for documentation, health information, or forpermission to quote or translate, on the Regional Office web site ( ).

5 ContentsAcknowledgementsviList of abbreviationsviiList of tables, figures and boxesviii1. Introduction and report overview12. Introduction to Chinese health care reform and Pharmaceutical policy153. Regulatory structure and drug approval254. Key health issues: ageing, urbanization and noncommunicable diseases375. Trends in health care and Pharmaceutical spending516. Affordability and accessibility of pharmaceuticals657. Pharmaceutical pricing and reimbursement738. Drug quality and supply chain919.

6 Irrational prescribing10110. Hospitals and Pharmaceutical policy11111. Primary care and Pharmaceutical policy12512. Pharmacies and pharmacists13513. Traditional Chinese medicine14314. Industrial policy15315. Conclusions and policy recommendations171 References179 Appendix 1: Organizations participating in joint seminars209 Appendix 2: Search terms for review of academic literature211 Pharmaceutical policy in China : ChAllenges And oPPortunities for reform vi AcknowledgementsWe would like to graciously thank Bo Wang and the Shanghai Medical InnovationFoundation for their support of this project.

7 We would like to thank the Organisation of Economic Co-operation and Development,World Health Organization, Boston Consulting Group, IMS Health, Kieger, McKinsey,the Journal of the American Medical Association andTherapeutic Innovation & RegulatorySciencefor allowing us to reuse figures found in their reports and publications in would like thank the following section contributors for their assistance in research anddrafting: Wrik Ghosh (Chapter 12), Raymond Kennedy (Chapter 14), Tyler Law(Chapters 5, 6 and 8), Austin Le (Chapters 4 and 9) and Angela Yu (Chapter 10).

8 Finally, we would like to thank Jeffrey Moe, Shenglan Tang and Di Dong from DukeKunshan University for reviewing the report and the collaboration with the Asia PacificObservatory on Health Systems and Policies in facilitating their remaining errors are those of the authors. Pharmaceutical policy in China : ChAllenges And oPPortunities for reform vii list of abbreviationsAIDS Acquired immunodeficiency syndromeAPIA ctive Pharmaceutical IngredientBRICS Brazil, Russia, India, China and South AfricaCDE Center for Drug EvaluationCERC omparative effectiveness researchCFDA China Food and Drug AdministrationCHC Community health centreEDLE ssential Drug ListEUEuropean UnionGDP Gross domestic productGMP Good Manufacturing PracticeHIVH uman immunodeficiency virusHTAH ealth technology assessmentIRPI nternal reference pricingNCD Noncommunicable diseaseNCMS New Cooperative Medical SchemeNDA New drug applicationNDRC National Development and Reform CommissionNHFPC National Health and Family Planning

9 CommissionNRDL National Reimbursement Drug ListOECD Organisation of Economic Co-operation and DevelopmentOOP Out of pocketOTC Over the counterR&D Research and developmentTCM Traditional Chinese medicineTHC Township health centreTHE Total health expenditureTPET otal Pharmaceutical expenditureUEBMI Urban Employee Basic Medical InsuranceURBMI Urban Resident Basic Medical InsuranceUS FDA United States Food and Drug AdministrationWHO World Health OrganizationZMU Zero mark-upPhArmACeutiCAl policy in China : ChAllenges And oPPortunities for reform viii list of tables, figures and boxesTablesTable Comparison of China s three main insurance schemes Table Number and type of hospitals in China Table Drug approval pathways for chemical drugs in China Table Number of applications for a given generic moleculeTable Differences in health care spending in selected provinces.

10 2012 Table Procurement and retail prices of generics/originators in public and privateclinics in relation to the international reference priceTable Mean availability of generics and originator brands in public and privateoutletsTable Summary of supply-side, proxy-demand and demand-side policiesTable Beijing tendering quality scorecardTable Summary of effects of ZMU policies by level of health care facilityTable Key indicators of irrational prescribing in ChinaTable Influential factors driving irrational prescribingTable NHFPC targets in health service infrastructure and resources, 2015 2020 Table Government financing for primary health care facilities in six provinces.