China Reveals Its 2025 Coverage Goals for Publicly Funded Healthcare

In September 2021, China’s National Healthcare Security Administration (NHSA), the government agent in charge of publicly funded healthcare announced its 14th five-year plan (FYP), covering the years 2021 to 2025. Our team in China has identified the following top-level performance indicators for our customers to understand China’s plan concerning key policy reforms and initiatives, such as DRGs and centralized tendering.

PUBLIC HEALTHCARE FUND

In China, the public fund known as the “basic health insurance system” covers over 95% of the population. 95% continues to be the threshold for China to stay on course with its universal coverage ambition. The 14th FYP does not specify the financial goals for 2025 in terms of the national healthcare expenditure but reported that in 2020 the basic health insurance earned 2,500 billion Chinese yuan and spent 2,100 billion.

DRG PAYMENT REFORM

The 14th FYP states that 70% of government-funded inpatient care costs are expected to be paid using the DRG model. Read our previous article on China’s DRG reform here.

CENTRALIZED TENDERING

The 14th FYP reveals the government’s determination in continuing to use provincial and national tenders as a mechanism to control spending on pharmaceuticals and medical consumables. The goals are that in 2025, 90% of the public hospitals’ expenditure on pharmaceuticals will go through the provincial tendering process involving more than 500 therapeutic drugs, compared to 75% and 112 drugs in 2020. For consumable medical devices, the 2025 goals are 80% in terms of hospitals’ expenditure and 5 or more device categories. This certainly has a more direct impact on marketers on the ground, especially for our clients in the medical device business, as the tenders can easily slash the supply price by 50% or more, with a preference for local manufacturers with the lowest bid. This plan dashes any hope the industry has that the aggressive government-led tendering may be a temporary event. Instead of working against it, Veranex would advise our customers to proactively develop tactical plans down to individual product level, province by province, and work collaboratively with industry and trade organizations on lobbying activities on all levels with various stakeholders on policy developments.  Our in-market experts closely monitor the publicly funded healthcare policy and market trends in strategic markets like China to stay on top of industry trends and develop strategies and action plans to capture opportunities and mitigate barriers. Veranex will continue to monitor and provide updates on the further development of the national tenders in China.

Source: //https://www.gov.cn/zhengce/content/2021-09/29/content_5639967.htm