China’s new drug insurance: lifeline for patients or squeeze on big pharmaceutical firms?

Mainland China’s 17 million Alzheimer’s patients can, for the first time, pay less out of pocket for a costly drug touted as “historic” and “the beginning of the end” for the memory-robbing disease after Beijing launched a commercial insurance innovative drug list in an effort to make medicines more accessible and affordable.\nLeqembi, developed by Japan’s Eisai and costing a mainland Chinese patient about US$28,400 a year, could see its price cut by half after it was added to the inaugural edition of commercial insurance for innovative drugs unveiled last week. The list includes US drug maker Eli Lilly’s Kisunla, which has been described by international media as a “turning point” in the fight against Alzheimer’s.\nThe commercial insurance formulary covered some medicines that were not yet eligible for reimbursement under the country’s National Reimbursement Drug List (NRDL), state-run news agency Xinhua said on December 8.\nThe new scheme offers a lifeline to patients desperate for options and marks a small win for global novel drug makers, which gain access to China’s market of more than 1.4 billion people.\nProgress, however, comes at a price. Macquarie Capital, citing an industry expert, estimated that list prices for included drugs were being trimmed by about 15 to 50 per cent. The final out-of-pocket share for each drug would likely hinge on case-by-case pricing talks between drug developers and Chinese insurance companies.\n\nFor years, some innovative drugs have struggled to enter China’s vast market as makers have been unwilling or unable to slash their prices deep enough to meet NRDL requirements. Average NRDL discounts agreed between the government and drug makers in November are expected to exceed 60 per cent, following cuts of about 63 per cent in last year’s round.\n“Pharmas are trading price for access” to the market, according to Helen Chen, Greater China managing partner at L.E.K. Consulting. “Being on the NRDL list allows a newly approved product to have a better chance of getting into hospitals, in addition to reimbursement that enhances patient affordability and prescriptions.”\nHowever, the sharp price reductions typically required for NRDL inclusion had resulted in “very slim” profit margins for drug makers, “pushing many to the brink”, Tony Ren, head of Asia healthcare research at Macquarie Capital, wrote in a recent report. “A manifestation is that many international pharmaceutical companies have walked away from NRDL negotiations altogether.”\nThe new commercial health insurance formulary offers an alternative route, widening access to high-cost drugs without forcing companies to sacrifice as much profit.\nEven though it did not automatically guarantee reimbursement for patients like the NRDL, Chen said, it mainly boosted the “chances of these medicines being picked up by private commercial policies and city-based ‘huiminbao’ schemes” that provided limited coverage for some expensive drugs outside the state basket.\nOut of the 19 drugs proposed for commercial health insurance reimbursement, three-quarters were cancer therapies, including CAR-T treatments, a cutting-edge personalised cell therapy that reprogrammes a patient’s own immune cells to attack tumours, according to the National Healthcare Security Administration website. Two were for Alzheimer’s while the rest targeted metabolic conditions like diabetes and obesity.\nOfferings from global pharmaceutical companies including Eisai, Eli Lilly, Bristol-Myers Squibb and Pfizer made up much of the list, alongside products from Chinese innovative drug makers. New prices would take effect in January 2026.\nThe NRDL has an informal price ceiling. Drugs that cost much more than about 300,000 yuan (US$42,505) a year, with possible extension to 500,000 yuan, struggled to win inclusion, said Chen. That range was often below the current cost of goods for cell therapies to date, so it was “virtually impossible” for cell therapy to be reimbursed under the NRDL, Chen added.\n“Being on the commercial insurance list at negotiated prices of about 1 million yuan to 1.3 million yuan per treatment provides an alternative access path for these therapies,” Chen said.\nAbout 5 million patients were newly diagnosed with cancer in China in 2022. An estimated 17 million people lived with Alzheimer’s and other forms of dementia in 2021, according to official data.\nUnder the new scheme, commercial insurers were expected to shoulder more of the financial burden but they face challenges in making their portfolios viable given the lack of established clinical pathways and claims data in China, according to Ren. “Losses from the commercial insurance formulary policy could tip some insurers into the red,” Ren said.\n“Our insurance expert said that the National Financial Regulatory Administration has asked major state-owned enterprise insurers not to participate in the pilot programme,” Ren said.\n