Creation: Proletarian Liberation Struggle Association Political Economy Group
On October 18, 2024, the tenth batch of centralized drug procurement by China Reform begins. In this procurement, all participating companies must quote their drug prices in the first round; the lowest bid is used as the baseline multiplied by 1.8 times. Companies with quotes above this limit will be eliminated entirely. This competitive mechanism forces participating pharmaceutical companies to lower their drug prices from the start. Those developing their own drugs and relying on procurement to recover R&D costs (mainly foreign companies) have withdrawn from the procurement or only offered symbolic bids. On December 30, the results of the tenth batch of national drug procurement were announced, with no original research drugs winning bids. Half a month later, on January 15, 2025, during this year’s Shanghai Two Sessions, 20 leaders of Shanghai’s tertiary hospitals and members of the Shanghai Municipal CPPCC jointly submitted a proposal, stating that some procurement drugs have unstable efficacy, but doctors have no choice in clinical use, and calling for a channel to retain original research drugs.
The “National Medical Products Administration” page shows that “original research drugs are innovative new drugs that require screening of thousands of compounds and rigorous clinical trials before approval for market. The average R&D period is about 15 years, costing hundreds of millions of dollars, making the R&D very expensive, and thus the prices are high. Generic drugs only replicate the main molecular structure of original drugs, saving time, resources, and effort, with lower R&D costs, and are not priced high, which can improve drug accessibility for patients. Currently, the pricing of original research drugs in China is far above the standards set by the ‘Drug Government Pricing Measures.’ For example, the original research drug ‘Rochefin’ produced by Roche for injectable ceftriaxone sodium costs over 80 yuan, while domestic generics cost only 4-5 yuan, nearly 20 times less. However, generics and original drugs cannot be identical in preparation processes, so there are differences in adverse reactions and other aspects.” In short, original research drugs are drugs independently designed, developed, produced, and clinically validated by enterprises. The manufacturing process and chemical formula of each drug are protected by intellectual property rights, and other companies cannot produce them without authorization. The intellectual property of the chemical formula has an expiration date; after it expires, the chemical formula can be made public, but the manufacturing process remains proprietary. Other companies can attempt to produce based on the chemical formula, and as long as the final synthesized drug has the same chemical formula, it is considered the same drug. Such imitation drugs are called generics. Since they only pursue the same chemical formula and have more relaxed requirements for active ingredient content, generics often have less efficacy and more side effects than original drugs. However, they usually require less initial capital investment and have faster capital turnover.
As China Reform increasingly openly uses medical insurance as a tool for profit, continuously reducing subsidies for drug purchases for the general public, they often set procurement prices for drugs very low, far below the production costs of original drugs. For original drug companies, including drugs in the insurance catalog means incurring losses with each sale. As a result, almost all original drugs have withdrawn from the procurement bidding list this year, leaving only a large number of low-quality generics in the insurance catalog. This has led to numerous reports of ineffective or even toxic side effects of drugs. The China Medical Insurance Bureau disclosed last April that before procurement, about 50% of patients used original drugs and 50% used generics approved through consistency evaluation[1]. After procurement, the proportion of generics rose sharply to about 95%. Zheng Minhua, director of the Department of General Surgery at Ruijin Hospital, said in an interview that under the low prices of procurement drugs, drug quality is unstable, with issues like “blood pressure not lowering, anesthesia not working, laxatives not working,” and that “doctors are very helpless because they have no choice and no channels to report upward.”
Besides Shanghai, Lu Changlin, a member of the Beijing Municipal Party Committee and also a submitter of a proposal, criticized generics, stating that clinical findings show that using the same dose of new oral anticoagulants, imported drugs effectively prevent strokes and pulmonary embolism, while procurement drugs have a higher risk of stroke and pulmonary embolism. Moreover, adverse reactions are more common with procurement drugs; after switching to procurement drugs, some patients even experienced allergic reactions, indicating insufficient drug purity and manufacturing process issues.
Even though China Reform loudly claims that the so-called centralized procurement is a way for China’s medical insurance bureau to “trade volume for price,” compressing drug prices to ensure affordability for low-income groups, the reality is that after the state’s medical insurance covertly seizes a portion of their taxes, low-income people are left only with low-quality drugs, while high-quality drugs mostly withdraw from public hospitals and can only be obtained through private purchase. This move by China Reform not only makes life harder for the proletariat but also causes some lower middle-class groups to lose access to treatment, thereby undermining their own ruling foundation.
Through China Reform’s quality consistency evaluation, generic drugs have achieved the same quality and efficacy as original research drugs. ↩︎