China wins major price cuts on patented drugs

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China flag

China has won price cuts of more than 50% for three patented drugs out of 5 in a pilot, marking an important first step in a program that seeks to get lower costs through the promise of volume buying and potential reimbursement.

China's National Health and Family Planning Commission (NHFPC) said in a notice published on its website that AstraZeneca's ($AZN) cancer med Iressa (gefitinib), Conmana (icotinib) for lung cancer from Hangzhou-based Betta Pharmaceuticals and hepatitis B therapy Viread (tenofovir) marketed in China by GlaxoSmithKline ($GSK) and developed by Gilead Sciences ($GILD).

The pilot, first highlighted in March of this year by Li Bin, director of the NHFPC, also includes Roche's ($RHBBY) lung cancer drug Tarceva (erlotinib) and Celgene's ($CELG) blood cancer treatment Revlimid (lenalidomide). Those drugs were not included in the price cuts.

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In the case of Viread, the cost will drop 67% to RMB490 ($75), with Iressa to drop 53% to RMB7,000 ($1,073) a month and Conmana down 54% to RMB5,500 ($843).

The pilot is notable for several reasons, including speculation that China may update its national reimbursement list for the first time since 2009 and add newer therapies--now mostly bought out-of-pocket--which pass the price for volume litmus test.

And a report in China Daily earlier this month suggested foreign and domestic drug and device companies in China face the prospect of "large-scale and systematic" antitrust probes on pricing policies.

In its release, the NHFPC said the pilot was aimed at "strengthening pharmaceutical market price regulation and antitrust enforcement."

Initially, the volumes will come from provinces taking note of the price cuts in reimbursement at the local level, as well as in drug purchases and tenders for public hospitals for national insurance payments. But the companies involved may also be looking at wider changes to China's national reimbursement and approval policies, which currently lag in cutting-edge areas such as oncology and hepatitis C.

Gilead, for example, is in in talks with China on pricing for its major blockbuster hep C drug Sovaldi (sofosbuvir) as the country stands outside of an access program by the U.S. drugmaker that relies heavily on manufacturing and sales licensing to mostly India-based companies.

But the drug--which can cure around 95% of patients with the liver-destroying disease--is not formally approved in China, leading most patients to travel abroad for treatment.

- here's the release (Chinese language)
- here's the story from the WSJ

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