The Healthcare Security Administration of Hubei Province has proposed the establishment of a national traditional Chinese medicine (TCM) patent medicines joint procurement office, alongside a national Chinese patent medicines alliance procurement system. This initiative aims to streamline the procurement process and reduce costs for TCM patent medicines across the country.
Initiation of National Volume-Based Procurement
Hubei’s provincial pharmaceutical pricing and tendering and procurement management service website released the “National Chinese Patent Medicine Alliance Procurement Announcement” (2022 No. 1) on September 9, marking the initiation of national volume-based procurement (VBP) of Chinese patent medicines. The effort, led by Hubei, involves 29 provinces (autonomous regions and municipal cities), excluding Fujian and Hunan.
Participation and Procurement Cycle
The announcement states that all public medical institutions (including military medical institutions) in the alliance region shall participate, and medical insurance designated private medical institutions and pharmacies are encouraged to partake. The procurement cycle is two years, during which a procurement agreement is signed each year. If the agreed purchase volume for the year is completed ahead of schedule within the procurement cycle, the winning manufacturers will continue to supply at the winning prices until the cycle expires.
Previous Provincial Alliance and Savings
Hubei led the establishment of a Chinese patent medicines provincial alliance including 10 provinces during the second half of last year, which carried out a half-year Chinese patent medicine VBP. A total of 182 products by 157 manufacturers participated in the quotation, with a purchase scale of nearly RMB 10 billion (USD 1.4 billion). A total of 97 manufacturers and 111 products won the spots, with a success rate of 62%. The average price dropped by 42.27%, with the deepest reduction reaching 82.63%. This initiative is expected to save more than RMB 2.6 billion (USD 372.6 million) in drug expenses.
National VBP Alliance and Challenges Ahead
The national Chinese patent medicine VBP alliance has adopted a similar approach, forming 16 procurement groups for 42 drugs, with a market value exceeding RMB 10 billion (USD 1.4 billion). The upcoming round will need to address challenges such as difficult quality evaluation of Chinese patent medicines, the abundance of exclusive products, high market concentration, and significant discrepancies among different winning bids in terms of price and price-cutting rates from the first provincial VBP round.-Fineline Info & Tech
