Summary of Key Points
During the advancement of the 12th batch of national drug procurement initiatives, an incident occurred where imported original research pharmaceutical companies attempted to interfere with the process by using fake expert signatures (80% of the signatures were fraudulent, including impersonations, photoshopped documents, and deceptive tactics). Despite being exposed by the Medical Insurance Bureau, these products were still included in the procurement program. The number of drugs selected for procurement was reduced from 77 to 65, reflecting the principle of "precision screening." For the first time, drugs with patent disputes were included in the rules, and patent compliance requirements were strengthened. A new "three-retry mechanism" was introduced, providing more opportunities for original research pharmaceutical companies and leading players in the industry. The process of submitting procurement requests has become more flexible, taking into account clinical needs. In the future, pharmaceutical companies that wish to succeed will need to possess four key capabilities: production capacity, quality, cost control, and compliance, rather than relying solely on low prices.
I. Fake Joint Letters: Excessive Interference by Pharmaceutical Companies
In this case, an imported original research pharmaceutical company tried to influence the selection of drugs for procurement through a joint letter signed by 78 doctors from 31 hospitals (with the aim of either excluding their products or ensuring that the selection criteria favored them). However, upon investigation, it was found that over 80% of the signatures were fake—either forged by sales representatives or copied from other sources, with some even containing fabricated doctor names. A few genuine signatures were obtained through deceptive means such as "after-sales follow-ups" or "questionnaire fillouts" by sales personnel.
The Medical Insurance Bureau exposed this fraud, and the products in question were still included in the procurement process as usual. This incident highlights that the procurement efforts have entered a more complex phase: as patents become increasingly important for certain drugs, competition among companies is intensifying, leading some to resort to unscrupulous tactics to manipulate the rules. The Bureau also warned pharmaceutical companies and doctors to carefully review the content of any documents provided by companies to avoid being deceived.
II. Reduction in the Number of Selected Drugs: Precision Is Key
Initially, 77 drugs were proposed for procurement, but only 65 were ultimately selected, with 12 being removed. The reasons for removal are clear:
1. Drugs with annual national procurement amounts of less than 100 million yuan (too small to justify the procurement effort).
2. Drugs for which fair competition cannot be ensured (for example, those produced by a single company, making price negotiation impossible).
3. Essential drugs for assisted reproduction or those prone to shortages (these drugs are special and may experience supply disruptions or price fluctuations due to procurement).
This indicates that while the scope of procurement is expanding, only relevant drugs will be selected. The approach has shifted from trying to include as many drugs as possible to a more targeted selection process, indicating that the system is becoming more mature.
III. Upgraded Rules: Moving From Volume-Based Negotiations to Comprehensive Assessment
Previously, procurement focused on using large volumes to secure lower prices. However, the core logic for the 12th batch has changed to a comprehensive evaluation:
- Strict Patent Requirements: Drugs with patent disputes are now included, but compliance is mandatory (previously, it was only a soft recommendation; now, non-compliance will disqualify them).
- Three-Retry Mechanism: If a company's bid fails, it still has the chance to re-enter the competition—especially for original research drugs. Even without securing a guaranteed volume, these drugs can still be considered for hospital inclusion, providing more opportunities for original research companies.
- Advantages for Leading Generic Manufacturers: The retry mechanism allows for corrections in bidding errors. Higher entry barriers (such as production experience and quality control records) help eliminate smaller companies, allowing leading manufacturers to gain a competitive advantage in the market for key drugs (for example, sacubitril valsartan, which was included this time).
IV. More Flexible Submission of Procurement Requests
Provinces began submitting procurement volumes in July, with Beijing's rules being particularly illustrative:
- Drugs with increasing usage and higher recommendations in medical guidelines can be submitted in larger quantities, aiming for 100% of historical average usage.
- Drugs whose usage is expected to decrease (e.g., due to reduced related treatments or fewer patients) can be submitted in smaller amounts, but with a clear explanation provided.
- Seasonal drugs (such as flu medications) should have their volumes adjusted according to seasonal patterns.
This shows that the procurement process is no longer a one-size-fits-all approach but takes into account actual clinical needs to avoid waste or shortages.
V. The Future for Pharmaceutical Companies: Compete on Real Skills, Not Just Low Prices
In the past, some companies could win bids by submitting extremely low prices. However, this is no longer possible:
- Anti-competitive practices (such as deliberately driving down prices) are now restricted.
- Quality requirements and anti-collusion measures have increased compliance costs (companies cannot cut corners or collude to inflate prices).
- The retry mechanism allows for reasonable bidding errors.
Companies that wish to succeed in future procurement will need to demonstrate four key capabilities: sufficient production capacity, stable quality, cost control, and compliance. Simply having a "consistency evaluation" certificate (proving that generic drugs are as effective as original research drugs) or a single low-price bid is no longer enough.
These changes indicate that the government is becoming more adept at balancing price reductions with ensuring supply and quality. Pharmaceutical companies must shift their focus from competing on low prices to demonstrating comprehensive capabilities.