Innovative drugmakers take note, China plans national serious illness insurance rollout this year

China's vice-director of the medical reform office Liang Wannian

Last week, China approved the rollout of medical insurance on serious illness nationwide, said Liang Wannian, vice-director of the medical reform office under the State Council and a senior official with China's National Health and Family Planning Commission, at a July 24 policy briefing.

The move will catch the attention of innovative drug companies that in some cases, such as Roche ($RHHBY), have worked with local insurance companies to make it possible for them to obtain the data needed to write policies for cancer insurance to determine an appropriate payout for treatment.

The effort by Roche fit in with access plans, but also because many patients were simply not covered under existing plans sponsored by the government for newer drugs under oncology and other treatments.

Liang said the July 22 State Council meeting reviewed those issues and saw the need for an extension to basic medical insurance of an insurance plan for serious illnesses, including new institutional arrangement to protect the interests of seriously ill patients.

A trial of such a plan started in 2012, Liang said. But it showed problems as some patients still faced heavy medical bills.

"In a bid to solve these problems and connect the serious illness medical insurance with basic medical insurance and the disease emergency rescue system, the State Council decided to apply the medical insurance on serious illness across the nation, which is also a commitment in the annual government work report this year," he said in the English-language transcription provided by the government. "By the end of this year, the medical insurance on serious illness will cover all residents, no matter in rural or urban areas, as long as they have taken part in the new rural cooperative medical care scheme or the urban medical care system."

Paying for the new system, Liang said, will mean drawing on pools of cash from the urban and rural resident basic medical insurance and the New Rural Cooperative Medical System fund.

There was also a hint that wider private insurance may be allowed.

"In principle, the government selects commercial insurance institutions through a bidding process," Liang said. "If this does not work, local governments should clarify the selection method. The profit margin of commercial insurance institutions should be controlled in a proper range."

China is involved in broad healthcare reform efforts from attempts to trim the role of "super hospitals" to efforts to speed drug approvals.

Those two efforts in particular could have profound implications for the ability to sell more innovative therapies in China as approval lags and subsequent high costs compared to existing treatments leads to blockages in availability.

- here's the State Council press briefing