The National Joint Procurement Office in China announced the upcoming renewal of drug procurement contracts for insulin products previously involved in the volume-based procurement (VBP) program. The renewal process is set to commence on April 23, 2024, with the procurement cycle valued at RMB 11.5 billion (USD 1.59 billion). The successful bids will take effect starting December 31, 2027.
Short-Listed Products
This renewal involves a total of 11 quotation units across six procurement groups, encompassing 14 manufacturers. All insulin products with valid domestic marketing approvals as of April 15, 2024, will be eligible for participation.
Procurement Cycle
In contrast to the initial two-year procurement cycle for insulin VBP, the renewals will establish three-year supply contracts.
Filing Quotation
The price disparity among drug products has been further minimized. For instance, for a 3ml: 300 (pen refills) product, the pricing for the 10ml: 400 and 3ml: 300 (pen refills) from the same manufacturer remains identical. The price for the 1.5ml: 450 (pen refills) is now 1.3 times that of the 3ml: 300 (pen refills), a slight improvement from the previous figure of 1.4 times in the first insulin VBP.
Winning Rules
The ceiling for this procurement continuation is typically set at 40% lower than the ceiling price of the initial insulin VBP round. Each procurement group can shortlist up to seven products: ① Bids applying for a quotation ≤ 1.3 times the lowest quote in that group may qualify. ② Bids exceeding 1.3 times but not surpassing the B-class price in the provided table may also qualify. A reactivation rule is in place for products that did not meet the winning criteria.
Class A, B, and C designation applies to the winning products. Class A encompasses products priced below a specified threshold within each procurement group, with the lowest priced product noted as A1. Additional products not exceeding Class A’s price threshold are classified as Class A winners. Those not qualifying for Class A but within the established price range are designated as Class B; others fall under Class C.
Agreed Procurement Quantity
Basic Quantity: A1 winners will constitute 100% of the first-year procurement volume, while other Class A products will receive 80% of this base. Class B and C products will receive 55% and 45%, respectively. Any elevation in product classification (e.g., from Class B to A) will result in a 10% increase in base quantity; downgrades will incur a 10% reduction. Winning products such as insulin degludec or insulin glargine (1.5ml: 450) will see a 10% increase.
Allocated Remaining Quantity: Within each procurement group, remaining quantities—comprising unallocated volumes from Class B and C as well as non-winning products—will be allocated at the discretion of the pharmaceutical institution to Class A winners. Institutions with a total procurement demand of fewer than 100 units in the first year can allocate remaining quantities freely, with such quantities capped at 80% of the first-year demand for respective products.
Key Differences from the Initial Insulin VBP Round
Notably, Hisun Pharma, which participated in the first round, will not participate in this renewal, while Asia-East Bio/Kexing Pharma, Lunan Pharma, Bo’ao Bio, and Huisheng Pharma will join the list. Wanbang Bio continues its participation despite losing a prior bid.
The demand for all shortlisted products has surged by 17.53% compared to the first insulin VBP round, reaching 242 million units. Notably, Novo Nordisk has seen a 9% decrease in demand but still commands over one-third of total demand, while Lilly’s demand fell by 6%, with other companies experiencing substantial increases. Demand specifics reveal a 35% rise in meal-time human insulin, whereas basal insulin demand dipped by 49%.
Moreover, certain insulin products from Novo Nordisk and Fosun Pharma that were included in the first round will not feature in this renewal’s demand filing. A total of nine companies have had their insulin products newly shortlisted, contributing an additional 1,540 units to the demand.
Price Reduction
No stringent price reduction mandates apply in this renewal. During the first insulin VBP round, manufacturers were required to cut prices by at least 40% from the highest effective quote, resulting in an average reduction of 48.75%. In this renewal, to qualify for Class A pricing, reductions must range from 13.75% to 39.98%, while Class B reductions fall between 4.6% and 17.71%, and others range from 1.47% to 11.06%. Consequently, the overall average price decrease is expected to be notably less severe than in the initial VBP tender.- Flcube.com
