In a boon for Roche, Novartis and more, Chinese Premier plans 'zero tariff' on imported cancer drugs

Chinese premier Li Keqiang said China will nix import tariffs on foreign anticancer drugs, a plan that could benefit drugmakers like Roche, Novartis and AstraZeneca, while prompting local pharmas to amp up their games.

“We aim to further bring down overall tariffs across the importing process, with tariff rates for important day-to-day consumer goods, including drugs, slashed. And we also plan to phase in zero tariff for the much-needed anti-cancer drugs,” said Li during a televised press conference at the close of the country’s annual congress conference on Tuesday.

Without providing a detailed timeline, Li also said the country will open up further to stimulate market vitality and public creativity.

“Our aim is to ensure that both Chinese and foreign-invested enterprises, and companies under all types of ownership, will be able to compete on fair terms on this big market of China with over 1.3 billion people,” he said. “We want to ensure that our consumers will have more options and there will be further upgrade in Chinese products and services in pursuit of high-quality development.”

China imposes different tariffs on drugs from foreign countries. After a December adjustment, some countries under the “most favored nation” structure, the U.S. included, enjoy tariffs of 2% for various drug types, a drop from around 4% to 6%. Some others with specific trade deals could enjoy a zero tariff for some drugs.

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China has the largest population of cancer patients in the world, so it's an attractive market for oncology drugmakers. According to a recent estimate from the country’s National Cancer Center, more than 4.2 million people were newly diagnosed with cancer in 2015 alone. But cancer drugs have historically been expensive in the country, and most of the advanced, targeted therapies—and pricier treatments—are still foreign-made.

Domestic companies are making notable advances in new drug R&D but they still have a ways to go.

“More research resources and money should be put into combating cancer,” Li said at a government executive meeting last October. “Some developed countries have made achievements in understanding the pathogenesis and cure of cancer. China is still lagging behind in this field. From now on, we must catch up.”

When it comes to development of generics, China falls behind India. Many Chinese patients are forced to seek illegal products from India, which are cheaper. A recent report by the Financial Times found Chinese drugmakers only won 38 generic approvals from the U.S. FDA in 2017, while 927 India-made copycats were granted U.S. approval.

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One price-cut tool the Chinese government has been using is its National Reimbursement Drug List, which names all drugs covered by the country’s national insurance program. Drugmakers must negotiate significant price cuts with the government to win spots on that list and reach more patients. For the most recent revision last July, for instance, Roche cut Herceptin's retail price by almost 70% to 7,600 Chinese yuan ($1,200) per bottle.

Li’s tariff-cut announcement came as President Donald Trump is poised to impose $60 billion in annual tariffs against Chinese products, according to The Washington Post, which cites confirmation from four senior government officials. The main targets of the new levies were said to be electronics and telecommunications goods, but could cover more than 100 products.

In response to a question on the possibility of a trade war between the two countries, Li urged the U.S. to use dialogue and negotiation, instead of being led by emotions.