To win blockbuster spots on China's coverage list, Big Pharma offers big discounts

The Chinese government will add three dozen new drugs to its national insurance program, including some blockbuster foreign medicines like Roche’s Herceptin, Johnson & Johnson’s Velcade, Celgene’s Revlimid and AstraZeneca’s Brilinta.

The surprise? Another round of insurance coverage changes in less than half a year. The not-so-surprising? Big price cuts.

The average discount for all 36 drugs added is 44%, with the highest price cut reaching 70%, according to a release [Chinese] from China’s Ministry of Human Resources and Social Security, the government body that negotiated with drugmakers.

Western-style cancer meds—16 of them—make up the majority of the drugs enlisted this time. Roche is the biggest winner, with four meds added to the new list. Besides Herceptin, the other three treatments—Avastin, Rituxan and Tarceva—are also cancer therapies. Even before the win in China, these Roche meds were expected to stand among the best-selling cancer drugs worldwide in 2022.

RELATED: The top 15 best-selling cancer drugs in 2022

AstraZeneca won new listings for three meds, blood thinner Brilinta, breast cancer med Faslodex and atypical antipsychotic Seroquel. GlaxoSmithKline, Merck, Novartis, Bayer, J&J's Janssen unit, Novo Nordisk and Sanofi are also among multinational pharma companies with newly added products.

China applies a national medical insurance scheme, and the National Reimbursement Drug List specifies all drugs covered by this insurance program. The country updated that list in February after eight years of dormancy, but immediately announced in April that it was negotiating placement for 44 other drugs.

For drugmakers, winning Chinese coverage will definitely translate into a volume boost; after all, the government-managed insurance will significantly lower the financial burden on patients. On the other hand, the government's new lower prices will cut their per-unit revenue, so drugmakers will have to grow volume signifiantly to offset the discounts.

RELATED: China updates national drug list, adding some blockbuster Western meds

Take Roche’s meds for example. The negotiated price for Herceptin is 7,200 Chinese yuan ($1,066) per 440 mg vial. The price for a 100 mg vial of Avastin is slightly less than 2,000 Chinese yuan ($296); for Rituxan, the price rests at 2,418 Chinese yuan ($358) for a 100mg vial or about 8,290 Chinese yuan ($1,227) for a 500 mg unit.

According to prices quoted in some online patient communities in China, Herceptin currently runs at about 22,000 yuan to 25,000 yuan without insurance coverage. These aren't official numbers, however.

Enlisting innovative targeted cancer drugs will further improve the availability and affordability of innovative treatments for patients in China, Roche said in a statement sent to FiercePharma. “Roche has been proactively collaborating with the state government and we will continue to work with stakeholders, including the local government, medical institutions and other organizations to support the implementation of the National Reimbursement Drug List.”

The 44% average price cuts are considered within a reasonable range compared with previous numbers. When GSK negotiated its way in for Viread, the drug’s price was cut by two-thirds.

For some drugmakers, the number of new patients they'd be able to attract at new, lower prices might not justify big discounts.

For the eight drugs that didn’t make it onto the approved list this time—including Actelion’s (now Johnson & Johnson’s) pulmonary arterial hypertension med Tracleer and Janssen’s immunology drug Remicade—the price cuts pushed by the Chinese government might well have exceeded the pharmas’ predictions for patient increases.

Facing threats from imminent copycats, Actelion had already dramatically lowered the price of Tracleer in China last year, to just below 4,000 Chinese yuan ($590) from 19,980 Chinese yuan ($2,960) per 56-pill box. Another price cut as big as 44% on top of that cut could be difficult for the company to take.