China Haggles for a Deal on Branded Drugs

China’s former health minister has told Bloomberg that western drugmakers seeking access to the country’s “huge market” may have to give large subsidies and accept smaller profit margins on expensive cancer drugs.



Former minister Chen Zhu, who stepped down last month after seven years as China’s top health official, stated during an interview in Washington, D.C that “if the cost is too high, maybe only a few percent of patients can benefit,” going on to say that “if we can arrange an appropriate, acceptable, affordable price, then you can have a huge market.” Chen said with the cost of some oncology meds reaching over $100,000 a year, Chinese officials will increasingly push for deals such as the one Novartis entered into last year, in which it agreed to donate three doses of the leukemia drug Gleevec for every one bought by the government. This would bring down the annual cost of annual treatment to around $12,000, compared to Gleevec’s wholesale price of around $77,000 per year.

The call for more generous prices on branded drugs could be seen by some as a warning shot by the Chinese establishment, who passed their own compulsory licensing laws last year. Similar regulations are recently enforced in India where the war on price has seen a number of branded drugs stripped of their exclusivity. However, Chen said that China would only use compulsory licensing in “national emergencies” such as a bird-flu outbreak, saying “we keep the right of using this measure, but it has to be studied carefully.”

China is now the world’s third-largest pharmaceutical market, and healthcare spending in the country is expected to almost triple by 2020 to reach around $1 trillion a year, fuelled by an ageing population and the expansion of healthcare coverage.  While government insurance programs have increased their coverage of cancer treatments, Chen said that some areas still lacked provision, especially rural areas. He added that closing this gap would require drugmakers accepting lower profit margins on drugs, but that access to the 1.3 billion citizens of China would more than make up for the loss.