China Introduces New Pricing Policies to Reshape Medical Device Market
China’s State Council unveiled a plan to drive down high prices for medical devices and substitute expensive imports with locally made products.
The move echoes China’s approach to controlling drug prices. The government said it will take similar measures to “clean up” the market for high-value medical devices.
“The pricing measures will bring significant pressure on multinational devicemakers, because most of their products currently have not been subject to price controls,” Katherine Wang, partner at the Shanghai office of law firm Ropes & Gray, told FDAnews.
The cost containment measures include price cuts through group purchasing organizations and the creation of a more transparent supply chain.
“The government is going to introduce multiple means to bring down prices of high value medical consumables, and multinational companies will experience more direct impact than their local peers because of significant price differences,” Wang said.
To control pricing, the National Healthcare Security Administration (NHSA) will negotiate the purchase prices and reimbursement rates for high-value devices to be listed in the national Basic Medical Insurance reimbursement scheme. Long term, the NHSA intends to gradually introduce a diagnosis-related group payment system so that hospitals and physicians will have incentives to use lower-priced devices.
In the meantime, the government is rolling out a volume and category-based group purchase pilot program for public hospitals to target high-value products. The group purchasing and price negotiation models are both derived from China’s drug reimbursement system, Wang said, which was designed to do away with preferential pricing for foreign drugmakers.
Three provinces have already started group purchases for selected consumables. One province — Anhui, in eastern China — claimed it reduced the price of orthopedic implants by 53.4 percent and reduced the price of intraocular lenses by 20.5 percent on average.