The Controversy over "Red and Yellow Labels" for Drug Prices: Why Are Prices Reduced but Still Rejected? Uncovering the "Hidden Barriers" Behind Medical Insurance Cost Control
Hello everyone, I'm your financial journalist. Today, we're not talking about the rise and fall of a particular stock or the macrodata of an industry, but about a micro-issue that affects everyone who goes to the doctor and buys medicine, as well as the very survival of pharmaceutical companies: Why are prices reduced, but still marked as "red"?
Recently, Yunnan Province announced the results of a drug price warning appeal process, which serves as a mirror reflecting the real challenges faced by the pharmaceutical industry under the current "price governance" framework. In simple terms, the state has implemented a system of "red and yellow labels" for drugs (similar to traffic lights, with red indicating the most severe restrictions and yellow indicating less stringent restrictions) to lower drug prices. Many pharmaceutical companies have desperately tried to reduce their prices, even below the state-set "safety limits," only to have their appeals rejected with a cold response: "The risk warning label will be maintained."
What exactly is going on? Is it that the regulators are deliberately making things difficult for companies, or are the rules too complex? Let's break down the logic behind this in five key points to help you understand this "price battle."
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1. The Embarrassing Situation of "Being Just 0.001 Yuan Short": The Rigidity and Flexibility in Rule Enforcement
Let's start with the most absurd case: Shijiazhuang Siyao. This company's Gliclazide tablets were priced at 26.72 yuan, which was within the allowed range, but they actually sold them for 26.72 yuan, just 0.001 yuan lower than the designated limit. The same was true for Calcium Gluconate Injection, which was priced at 1.62 yuan (the limit) but sold for 1.60 yuan, 0.02 yuan lower.
Logically, since their price was even below the minimum requirement, they should have passed the review, right? Yet their appeal was rejected with the simple reason: "The risk warning label will be maintained."
Why? It's like going to the supermarket and buying a discounted item with a label saying "free shipping for orders over 10 yuan." You pay 9.99 yuan, but the cashier says, "Your membership level doesn't qualify you for free shipping." In the eyes of the regulators, "being below the limit" does not automatically mean the warning should be lifted. The decision to remove the warning depends on various factors, including the historical price trend, market stability, and whether the price is considered "abnormally low." Sometimes, a too rapid or excessive price reduction can lead to suspicions of dumping or data anomalies, requiring a more thorough review.
Comparative Example: Another drug from Shijiazhuang Siyao, the Ambroxol Hydrochloride series, successfully had its price reduced below the yellow limit. This shows that the criteria for approval are not as straightforward as a simple mathematical calculation; it's based on a comprehensive evaluation system. Companies often assume that reducing the price will suffice, but regulators look at overall compliance.
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2. The Math of Different Specifications: 15 grams vs 10 grams – Who Is Doing the Calculations?
This is the most controversial and frustrating issue in the appeals: How should drugs with different specifications and concentrations be compared?
Imagine buying milk: Brand A sells a 1-liter bottle for 10 yuan, while Brand B sells a 500-milliliter bottle for 6 yuan. By comparing the total prices, Brand B seems more expensive, but when converted per milliliter, Brand B is actually cheaper.
The Pain Point for Companies: Many drugs come in different packaging sizes (e.g., 10g, 15g, 20g) or concentrations. The Yunnan platform uses the price of a "reference product" to determine the warning level. For example, Shandong Liangfu Pharmaceutical's 15g Miconazole Nitrate cream was priced at 8.22 yuan, but the platform used a 10g product priced at 3.50 yuan as a reference, resulting in a yellow label. The company argued, "Using the 10g price to compare with the 15g price is unfair; we should use a proportional calculation!" This failure highlights companies' misunderstanding of the policy details and the rigidity in rule enforcement.
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3. The Debate over the "Reference System": Who Should Be Used as the Benchmark? Consistency Evaluation Is Key
The core logic of the price warning is that a drug's price should not exceed 1.8 times or 3 times the lowest price of similar products. But who counts as a "similar product"? Sanofi (Hangzhou) argued that their Digoxin tablets did not exceed the lowest price of products that had passed the consistency evaluation. However, regulators might consider all products of the same type available on the market, regardless of whether they have passed the evaluation, as the reference.
Example: Saisheng Pharmaceutical's injection was priced at 115.70 yuan, while the competitor's was 76.50 yuan, resulting in a ratio of 1.512 (below 1.8), which should have passed. However, the appeal was rejected, possibly due to price fluctuations or the use of the "active market price" rather than the listed price. Suzhou Xikuo questioned this, arguing that their product had not undergone the consistency evaluation and should not be compared with those that had. The regulator's view is that products with the same clinical use are considered similar, regardless of the evaluation status.
In Plain Language: It's like grading in school. You scored 80 and thought you outperformed a classmate who didn't take the exam (75), but the teacher said, "No, I'll use the highest score among all students who took the exam (90), and your 80 is still too low."
The Key Point: Consistency evaluation is like a document proving a drug's authenticity. Previously, unevaluated drugs could sell at higher prices, but now, all drugs with the same name and dosage form must be compared. This means that even if a drug has not undergone the evaluation, it can still be flagged if there are cheaper alternatives on the market.
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4. The Misconception of "Low Price Exemptions": Low Prices Are Not Always an Advantage
Many small pharmaceutical companies believed that if their drugs were already sold at the lowest prices nationwide, even as low as 0.2 yuan per pill, they should be exempted. Companies like Hubei Minkang and Ma'anshan Fengyuan made such appeals but were all rejected.
Why Can't the "National Lowest Price" Automatically Exempt Them?
1. Exemptions Have Specific Conditions: Policy exemptions are for products with extremely low prices, low margins, and no competitive alternatives, not just the lowest price.
2. Preventing Fake Low Prices: Regulators fear companies creating fake low prices through tactics like selling at higher prices first and then lowering them, or using bundled sales.
3. Cost Reasonability: If the price is too low to cover costs, regulators may doubt the quality or sustainability of the product. For example, Shanghai Baolong's cost calculations were rejected, indicating that regulators focus on market comparison rather than the company's claimed costs.
In Plain Language: It's like saying your cabbage is the cheapest in the market, so you don't need to show a hygiene certificate. But the market regulator says, "No, all cabbages must be checked. Being cheap doesn't mean you can ignore the rules."
The Lesson: Companies can't rely on low prices as a shield; compliance and transparency are crucial. Even if the price is the lowest, if the comparison rules show it exceeds the limit, the drug will still be flagged.
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5. The Lack of Explanation for Rejections: The "Black Box" of the Review Process
The most critical issue is the lack of clarity in the reasons for rejection. Appeals are often rejected with a vague statement like, "The risk warning label will be maintained due to... requirements." This is like going to the bank and being told, "We can't process your request," without any explanation. For example, Xi'an Janssen succeeded in their appeal because they provided a clear calculation method, while Shandong Liangfu failed because their logic was not understood by the regulators.
Industry Call for Change: The purpose of price governance is to guide companies towards reasonable pricing, not to punish them. If companies only know they've received a red label but don't understand why, where they exceeded the limit, or what the comparison criteria are, they can't adjust their strategies.
Suggestions:
1. Regulators Should Make the Rules Transparent: Clearly explain the basis for decisions, such as whether the reference price is based on the average price of the last three months or the historical lowest price, and provide the formula for specification conversions.
2. Specific Feedback on Rejections: Instead of just saying "rejected," provide detailed reasons, such as, "Your price is X yuan, the reference product is Y yuan, and the ratio is Z times, exceeding the 1.8 limit, hence the yellow label is maintained."
3. Establish a Communication Mechanism: Allow companies to seek pre-approval consultations to avoid unnecessary delays.
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Summary: Price Transparency Is the Trend, but the Numbers Must Make Sense
The appeals in Yunnan are not isolated; they reflect the deepening process of national drug price governance.
- For Companies: You can no longer rely on information or specification differences to maintain high prices. Precise pricing and compliance are essential. Companies need to thoroughly understand the comparison rules, especially regarding the definition of similar products and the logic behind specification conversions.
- For Regulators: Policy enforcement should be more empathetic and transparent. While it's necessary to set limits, companies need to know why those limits are in place and how to meet them. Otherwise, the policy becomes a source of fear and hinders healthy market competition.
Reducing drug prices is about making healthcare more affordable for everyone, but the review process must also be understandable to encourage companies to innovate and comply, leading to a win-win situation for patients, doctors, and pharmaceutical companies.
In One Sentence: Reducing prices is not the goal; compliance and transparency are.