Every reporter: Chen Xing Every editor: Du Yu
On April 14, the General Office of the State Council issued the &#34;Several Opinions on Improving the Price Formation Mechanism of Pharmaceuticals&#34; (hereinafter referred to as &#34;Opinions&#34;), which for the first time established a tiered governance logic for drug pricing centered on clinical value and innovation level from a top-level design perspective.
Jin Chunlin, director of the Shanghai Health and Health Development Research Center, commented in an interview with the &#34;Daily Economic News&#34; reporter (hereinafter referred to as &#34;Every reporter&#34;) that the &#34;Opinions&#34; provide a &#34;reassurance&#34; for the innovative drug industry, as the protection period gives companies stable expectations, and the space for self-pricing allows prices to truly reflect clinical value. A policy research expert from a pharmaceutical company stated that in the past, companies had to &#34;actively lower prices&#34; in the early stages of listing to enter the medical insurance system. Now, with a clear price protection period, they can price more comfortably according to clinical value and input costs, and even reference the prices of similar international products, with the &#34;anchor point&#34; for overseas pricing also expected to rise.
While the policy breaks the deadlock, the fundamentals of the industry are undergoing a qualitative change. In the first quarter of this year, the total amount of authorized transactions for innovative drugs exceeded USD 60 billion, and several leading companies turned losses into profits for the first time, marking a new phase for the industry from &#34;burning money on R&amp;D&#34; to &#34;realizing profits.&#34; Since late March, the innovative drug sectors in the A-shares and Hong Kong stocks have rebounded strongly, and the valuation logic is being reshaped. Institutions such as CITIC Securities and CICC believe that the valuation ceiling for innovative drugs is expected to rise further. However, Jin Chunlin also reminded that the biggest challenge in implementing the full-chain pricing policy lies in the contradictions between the medical insurance payment side and the hospital usage side, as well as the complexity of multi-departmental collaboration. The actual effectiveness of the policy highly depends on the quality of the supporting detailed rules.
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<h2>The State Council's &#34;Opinions&#34; Release Market-Dominated Price Signals</h2>
The &#34;Opinions&#34; propose 14 measures from four aspects, including the implementation of a self-assessment system for newly listed drugs, distinguishing categories such as high-level innovative drugs, improved new drugs, and generic drugs (copy drugs), and providing policy support and price guidance accordingly. Among them, for high-level innovative drugs with high innovation and clinical value, support is given to set prices that match high investment and high risk in the early stages of listing, and to maintain relatively stable prices for a certain period.
Regarding medical insurance payment standards, the &#34;Opinions&#34; clarify that for exclusive drugs applying to be included in the medical insurance catalog, payment standards will be formed through negotiation based on the reasonableness of the initial price, under the premise of what the medical insurance fund can bear; for non-exclusive drugs applying to be included in the medical insurance catalog, payment standards will be formed through competitive bidding and other methods. After the listing of generic drugs, provinces should promptly adjust payment standards.
The &#34;Opinions&#34; emphasize the need to deepen the normalization and institutionalization of centralized bulk purchasing of pharmaceuticals, forming reasonable prices through voluntary participation by enterprises, self-quotation, and fair competition. For drugs with diverse supplies that have been on the market for many years, a quantity-price linkage should be maintained. At the same time, strengthen the policy coordination between medical insurance payment standards and selected prices
In terms of online price management, it is required that drugs supplied to public medical institutions be listed on the provincial medical procurement platform, and to improve the dynamic adjustment system for listed prices, promoting a reasonable price gradient between reference formulations and generic drugs, and facilitating relative price balance among drugs with the same generic name produced by different companies.
The &#34;Opinions&#34; also clarify that public medical institutions will implement zero markup sales for drugs (excluding traditional Chinese medicine pieces) and adopt a zero markup sales policy for traditional Chinese medicine formula granules. It encourages designated pharmacies under medical insurance to participate in centralized bulk procurement and promotes public price comparison for medical insurance drugs. The price discovery function of online pharmacies will be utilized to regularly conduct online and offline price comparisons.
Regarding the payment for innovative drugs, the &#34;Opinions&#34; propose to improve the multi-level medical security system, promote the implementation of commercial health insurance catalogs for innovative drugs, and encourage social forces to participate in price negotiations and precise assistance for innovative drugs. At the same time, it strengthens the supply guarantee and price stabilization for shortage drugs, implementing government-guided price management for narcotic and psychotropic drugs.
In terms of drug price governance, the &#34;Opinions&#34; require strengthening price monitoring and early warning, advancing the application of drug traceability codes throughout the drug circulation chain, and improving the price risk disposal mechanism and the credit evaluation system for drug procurement. Illegal activities such as monopolistic price increases and collusion in bidding will be severely punished according to the law, and a drug medical insurance value assessment system will be established to support real-world research.
<h2>The Drug Price Formation Mechanism Directly Addresses the Biggest Pain Points of Innovative Drug Companies</h2>
How to support and promote the development of innovative drugs has become an important topic in recent years.
As early as July 2024, the State Council's executive meeting reviewed and approved the &#34;Implementation Plan for Supporting the Development of Innovative Drugs Throughout the Chain,&#34; emphasizing the coordinated use of policies such as price management, medical insurance payment, commercial insurance, drug allocation and use, and investment and financing, optimizing the review and approval process and the assessment mechanism for medical institutions to jointly promote breakthroughs in the development of innovative drugs.
On March 5, 2025, Premier Li Qiang clearly stated in the government work report that the drug price formation mechanism should be improved, an innovative drug catalog should be established, and support for the development of innovative drugs should be provided.
However, the long-standing issue of low pricing for innovative drugs has troubled the development of China's innovative drug industry. At the same time, the pricing of innovative drugs is extremely complex, requiring both reasonable returns on R&amp;D investments for companies and ensuring fair accessibility of drugs. According to the &#34;White Paper on Multi-Payment for Chinese Innovative Drugs and Devices (2025),&#34; the sales market size for innovative drugs reached 162 billion yuan in 2024, but the payment structure is imbalanced: medical insurance fund payments account for 44%; personal cash payments account for 49%.
Therefore, how to resolve the pricing difficulties of innovative drugs and balance drug prices, medical insurance funds, and patient accessibility has become a common concern for academia, industry, and policy sectors.
Journalists from &#34;Everyday Economy&#34; noted that in March 2024, Han Sheng from Peking University's International Research Center for Pharmaceutical Management and Tao Libo from Peking University's Health Policy and Technology Assessment Center published a research article titled &#34;The Price Formation Mechanism for Newly Launched Drugs and Economic Theoretical Analysis to Encourage High-Quality Innovation&#34; in &#34;China Medical Insurance.&#34; The study pointed out that establishing a reasonable price formation mechanism for the initial launch is an important institutional arrangement to enhance market efficiency for newly launched drugs. Differentiated price competition intensity should be set based on the degree of drug innovation to maximize the pricing power of high-quality innovative drugs while constraining the pricing power of homogenized innovations, balancing efficiency and fairness. Additionally, it should identify and reduce institutional transaction costs
Jin Chunlin stated in an interview with Every Day Reporter: &#34;The 'Opinions' provide a 'reassurance' for the innovative drug industry. The pricing of high-level innovative drugs must match high investment and high risk, and have reasonable return space. In addition, the price stability period mentioned in the 'Opinions' is of utmost concern to enterprises. In the past, new drugs often faced price reductions after two years of renewal once they entered the medical insurance system. Now, the stability period may be 3 years or 5 years, making expectations clearer. Thirdly, enterprises have the autonomy to set prices, allowing them to self-evaluate prices reasonably based on clinical value, market supply and demand, competitive landscape, and social affordability. Overall, this mechanism can alleviate the expectation of price reductions immediately after the launch of innovative drugs, ensuring that the launch price is protected, and the price stability period guarantees profits within a certain period after the launch.&#34;
A policy research expert from a pharmaceutical company told Every Day Reporter that the State Council's 'Opinions' directly address the biggest pain point for enterprises: in the past, innovative drugs faced expectations of price reductions due to medical insurance negotiations immediately after their launch. Enterprises would 'proactively lower prices' to enter the medical insurance system, which compressed the global pricing space. Now, with a clear price stability period, enterprises can price more confidently based on clinical value and investment costs, without having to significantly discount in the first year after launch.
In terms of pricing strategy, innovative drug companies will be more confident in referencing the prices of similar international products, benefiting global price linkage: a reasonable initial price will drive the upward adjustment of overseas pricing benchmarks, helping to maintain the global pricing system.
Regarding the 'certain period' of the price stability period, from a commercial return perspective, 2 to 3 years is of substantial significance. The first two years after the launch of innovative drugs are crucial for market introduction and the formation of prescription habits, as well as the best window for recovering some R&amp;D costs and validating real-world value. A protection period of only one year would not allow enterprises to scale up; if it reaches three years, it would be sufficient to support subsequent medical insurance negotiations while still retaining some bargaining power. The specifics still need to be seen in the supporting details, such as whether it is linked to breakthrough therapies, priority reviews, etc.
It is worth mentioning that the 'Opinions' clearly separate the medical insurance payment standards from market prices to a moderate extent, encouraging diversified payments such as commercial insurance and charitable donations. &#34;This change may significantly alter the market access path for enterprises. In the past, it was 'launch and rush to medical insurance'; without entering medical insurance, it was difficult to scale up. Now, with a price stability period and diversified payment channels, 'first commercial insurance/self-pay, then medical insurance' will become a more rational strategy,&#34; said the aforementioned person. Overall, this policy is a long-awaited positive signal for the industry.
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<h2>Policy and Capital Resonance Reshaping Sector Valuation</h2>
Since the beginning of this year, innovative drugs have welcomed a multiple resonance of policy, capital, and industrial innovation, leading to profound changes in the industry's 'identity' and valuation logic.
CITIC Securities research report points out that since 2026, the transaction amount of innovative drug BD in China has exceeded expectations, with leading pharmaceutical companies experiencing rapid growth in innovative drug revenue, and biopharma companies gradually reaching profitability inflection points. With several international academic conferences approaching, many innovative drug pipelines are entering a concentrated data catalysis period. It is recommended to focus on the performance release of leading innovative drug companies and pipeline assets with global potential, maintaining a 'stronger than the market' outlook for the innovative drug industry
Rating.
However, reporters from Daily Economic News noticed that analysts believe many details in the &#34;Opinions&#34; still need to be tested for actual effectiveness in the future.
Jin Chunlin mentioned that, taking the self-assessment and peer review mentioned in the &#34;Opinions&#34; as an example, to avoid this process becoming merely formal, two aspects need to be addressed: &#34;First, information disclosure must be mandatory; companies listed under the new mechanism must bear certain information disclosure obligations, including submitting pricing reports and publicly disclosing pricing bases. This transparency constraint is the core pillar of the system's formulation. Second, quantitative evaluation should be linked to policy treatment; the higher the evaluation score, the greater the pricing freedom for the company, while also enjoying conveniences such as centralized issuance, green channels, and price stability protection; conversely, companies with lower scores need to provide more comprehensive information disclosure to support pricing rationality, as profit guidance is more feasible and market-acceptable than administrative orders.&#34;
In addition, a subsequent dynamic adjustment mechanism should be established to adjust price levels based on real-world research results and evidence of clinical effectiveness. This means that self-assessment is not a one-time event but a dynamic process throughout the entire lifecycle of the drug, along with peer review, forming a complete system loop and establishing a multi-chain mechanism based on risk management and credit evaluation.
Jin Chunlin believes that the biggest challenge in implementing the full-chain pricing policy is the contradiction between the medical insurance payment side and the hospital usage side. The core contradiction in the current drug market is that drug pricing is led by the medical insurance department, but the decision-making power for medication lies with medical institutions, which, under the current payment model, face cost control and naturally lack motivation to use innovative drugs. The second challenge is how the three departments of medical insurance, health and wellness, and drug supervision can avoid acting independently. This requires strengthening cross-departmental joint regulation and enhancing the coordination of policies related to drug approval, circulation, application, allocation, usage, payment, and security.
Other challenges include auditing price differences and irrational competition; irrational bidding still exists, which may lead to unstable supply or declining quality after low-price bidding; the role of commercial insurance as a second payer has not been fully activated, with the first version of the commercial insurance innovative drug catalog only including 19 types, needing further improvement and implementation.
However, he emphasized that the core value of the &#34;Opinions&#34; lies in establishing a tiered governance logic for drug pricing centered on clinical value and innovation level from a top-level design perspective, marking a shift in China's drug price management from a &#34;one-size-fits-all&#34; reduction to classified policies that incentivize innovation, but the actual effectiveness of the policy highly depends on the quality of the supporting detailed rules.
&#34;For companies, the most rational strategy is to enjoy the policy dividend window while accelerating the accumulation of clinical value evidence and real-world research layout. Because under the framework of full-chain price governance, what can ultimately support pricing is always clinical value and real efficacy, rather than market protection by policies,&#34; said Jin Chunlin.
Daily Economic News

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The General Office of the State Council issued "Several Opinions on Improving the Price Formation Mechanism for Pharmaceuticals," establishing a pricing governance logic for drugs centered on clinical value and innovation level. Experts indicate that this policy provides stable expectations and autonomous pricing space for the innovative drug industry, promoting industry profitability. In the first quarter, the total amount of external licensing transactions for innovative drugs exceeded USD 60 billion, and the innovative drug sectors in both the A-share and Hong Kong markets rebounded strongly. Despite the favorable policy, the contradictions between medical insurance payments and hospital usage still need to be resolved

腾讯新闻 - 财经

Eastmoney Fund CSI SH-HK-SZ Brand Name Drug Industry ETF

CCB Principal CSI Innovative Drugs Industry ETF

J.P.Morgan Asset Management CSI Brand Name Drug Industry ETF

E Fund CSI Innovative Drugs ETF

GF CSI Innovative Drugs Industry ETF

Fullgoal CSI Hugangshen Innovative Drugs Industry ETF

Guotai CSI Hugangshen Innovative Drugs Industry ETF

Guotai SSE STAR Brand Name Drug ETF

Ping An CSI HK Equities Medical and Health Integration ETF

GF CSI HK Innovative Drugs Industry ETF(QDII)

Yinhua CSI Innovative Drugs Industry ETF

E Fund CSI 300 Health Care ETF

CITIC Securities Co., Ltd.

CITIC SEC

CICC

From "Medical Insurance Negotiation Price Reduction" to "Self-Determined Pricing Protection": The drug price formation mechanism directly addresses the biggest pain point, and innovative drugs welcome a return to value