Summary of Key Points
On July 31st, the 12th National Drug Procurement Auction was held in Shanghai, involving 65 therapeutic areas (such as hypertension, diabetes, cancer, etc.), with 45,000 medical institutions participating in the bidding process. The main change in this procurement is the shift away from a focus on "low prices" and towards a emphasis on "reliability." Additionally, a special policy has been introduced for original research drugs (reference preparations) that allows them to be selected even if there is no guaranteed volume purchase. The previous 11 auctions have covered 490 drug varieties, with a significant increase in the proportion of generic drugs, making medications more affordable for patients.
Detailed Analysis
1. This procurement focuses on reliability rather than low prices
In past auctions, companies often competed by cutting prices significantly below their cost to be selected. However, this time there is a clear emphasis on avoiding excessive competition:
- The rules do not favor the lowest bidder; factors such as the benchmark price, ranking criteria, and volume allocation methods no longer use the lowest price as the sole criterion.
- The competition now assesses comprehensive capabilities, including the quality of the drugs, the clarity of cost calculations, and the stability of supply. For example, companies are evaluated on their ability to ensure long-term supply and meet quality standards.
- Companies are advised to retain a profit margin; industry experts suggest that they should avoid price wars to invest in research and development and allow competitors to survive, as only reasonable pricing can support sustainable growth.
In other words, the focus has shifted from "who offers the lowest price" to "who can provide high-quality drugs over the long term."
2. Original research drugs have a new pathway to market
Many patients prefer using original research drugs (e.g., imported ones), but in previous auctions, generic drugs were often selected due to their lower prices, leaving original research drugs unavailable in hospitals. This time, there are new rules for original research drugs:
- As long as the bid does not exceed the "highest valid bid price" set by the authorities, a company can still be selected even if it does not make it through the first round, provided its bid is at least 5.4 times the benchmark price (which allows some profit margin).
- The benefit for hospitals is that they can purchase original research drugs if needed, solving the problem of patients being unable to access them.
- However, if the bid for an original research drug exceeds the upper limit, it will not be selected.
For example, a company whose original research drug was previously too expensive may now have a chance to be selected as long as its price is reasonable.
3. The procurement covers an increasingly wide range of essential drugs
The 65 drugs included in this auction cover critical areas such as hypertension, diabetes, and cancer, with participation from nearly all major hospitals nationwide. The results of the previous 11 auctions are even more significant:
- 490 drug varieties have been included in the procurement, with a high proportion being common and chronic disease medications.
- The use of generic drugs has increased; in the first 10 auctions, 80% of the varieties had a majority of generic options, approaching the 90% level seen in countries like the United States and Japan (for instance, 90% of atorvastatin prescriptions are for generic versions).
- Patients benefit from lower prices; what used to cost dozens of yuan may now cost just a few yuan after the auction.
In other words, more common medications are becoming more affordable, reducing the financial burden on patients.
4. What companies need to consider when bidding
The bidding process has clear timelines and requirements:
- The event started at 7:25 AM with security checks and sign-in, and bid submissions were accepted until 10:30 AM.
- There are two rounds of bidding: the first round selects candidates based on "Rule 1," and the second round selects those based on "Rules 2" and "3."
- Authorities advise companies to bid reasonably to maintain order, as there are many participants and the meetings can last until late.
For companies, this means preparing materials on time and setting bids that are both competitive and profitable.
Conclusion
The core objective of the 12th procurement is to create a healthier competition environment that values quality and supply stability. It provides opportunities for original research drugs while addressing patients' needs and making essential medications more accessible to the general public. For companies, it emphasizes the importance of competitiveness based on quality rather than price. For patients, this means cheaper and more convenient access to medical treatments.