China in the fast lane

Brett Gardiner and Boon Yap from Research Partnership discuss access opportunities for novel therapies in the world’s hottest emerging market

The sheer size of China’s population (1.4 billion) has long made it an attractive market for pharma in terms of potential volume, especially in the context of rising affluence associated with a growing middle class. In 2017, China was ranked the second largest pharmaceutical market in the world, behind the US. However, it has traditionally been a challenging market to launch into, particularly for manufacturers developing innovative and novel therapies.

Recent changes to China’s regulations under its 2025 Made in China strategic plan – including an expedited market access process, more frequent updates to Reimbursed Drugs Listings and additional routes to reimbursement – look set to transform this paradigm and necessitate a reconsideration of manufacturers’ strategies to obtaining optimal pricing and reimbursement (P&R).

The traditional route

Acquiring marketing authorisation in China via the CFDA (China Food and Drug Administration) used to be a lengthy and bureaucratic process, which mandated that East Asian patients’ data was included in clinical trials. As a result, drugs in China become listed as much as seven or eight years later than mature markets such as the US, Europe and Japan. Historically, only 25% of new launches even ever made it to China – from 2001 to 2016, only 100 of 433 innovative drugs launched in mature markets were launched there. Following CFDA approval, manufacturers traditionally considered three funding routes:

1. Out-of-pocket (OOP)/Patient assistance programmes (PAP)

The self-pay mechanism has typically been the first route considered by manufacturers, prior to their product being included in national/provincial drug lists. Despite a rising middle class, patient affordability remains a big concern. Out-of-pocket costs can be high and many patients are not able to afford the full cost of therapies. PAPs are commonly used to help these patients, allowing them to gain access with low OOP costs. PAP agreements are often based on patient affordability and commonly take the form of, ‘buy A, get B free’. For example, under the Opdivo (nivolumab) PAP, a patient will buy five cycles of treatment and Bristol-Myers Squibb will then provide six cycles for free. Merck is looking to establish a slightly more sophisticated PAP for Keytruda, whereby patients experiencing no side effects on their initial three months of Keytruda treatment will be given the next three months free.

2. Reimbursed drugs lists

National reimbursed drugs list (NRDL): The NRDL includes a list of therapies that are partially, if not fully, reimbursed for eligible patients. The list is approved nationally; provinces subsequently need to include the drugs onto their provincial reimbursed drugs list (PRDL). While the NRDL was officially supposed to be updated every five years, no updates were made between 2009 and 2016, and the process to gain inclusion on the listing was unclear. This meant it was a challenging, long-term strategy for manufacturers wishing to gain broad access via this route.

Provincial reimbursed drugs list (PRDL): After receiving marketing authorisation, manufacturers can enter negotiations with provinces directly and be listed on their PRDL. However, the frequency and nature of updates made to PRDLs varies significantly across China; affluent provinces tend to make more frequent updates and include new innovative therapies, while others are more restricted. For example, ZheJiang province has updated their PRDL three times in the last three years, adding innovative therapies onto their list more frequently than the NRDL, and creating variations in product access based on your province – a trend which can also be seen in major markets such as Canada and UK. In 2018, ZheJiang entered negotiations directly with manufacturers and added 21 drugs to their provincial formulary, including newly approved CFDA therapies and seven therapies that did not reach provincial negotiations in 2014.

3. Private health insurance (PHI)

While traditionally only a small proportion of the Chinese population were covered by PHI, those who were covered were often able to access high cost innovative therapies not yet available through the NRDL/PRDL. Increasing urbanisation and a growing middle class has resulted in a deepening penetration of PHI, with an estimated 5% of China’s population now covered, representing more than the entire population of the UK.

What’s changed?

Over the past few years, China has recognised the barriers that new products trying to launch face and has implemented numerous changes designed to overcome these:

Regulatory changes

1. Reduced clinical trial requirements

China is moving away from certifying clinical trial sites, allowing more hospitals to participate in research. A US-style clinical trial application system has been adopted which will reduce the wait to initiate a clinical trial to 60 days – a significant time saving from the historic 8-12 month wait.

2. East-Asian trial population not mandatory

China has relaxed the requirement to include East-Asian populations in their trials, accepting trials which have been conducted outside of East-Asian countries.

3. Priority review pathway

Manufacturers can request to have a priority review when registering a new therapy with the NMPA (National Medical Products Association, formerly the CFDA), as long as one of the criteria is met, notably:

  • Significant clinical value (innovative drugs and advanced formulations)
  • Clinical trial applications and/or registration reviews undergoing parallel review in US and EU
  • Applications of drugs to treat AIDS, tuberculosis, viral, hepatitis, rare disease and cancer (as well as paediatric and geriatric drugs).

AstraZeneca’s roxadustat, developed in partnership with Chinese company Fibrogen, has attained marketing authorisation through this priority review pathway for use in anaemia caused by chronic kidney disease for patients who are on dialysis. China is the first country to approve the therapy and AstraZeneca will be looking to launch the therapy in the latter half of 2019.

Market access changes


The recent updates to the NRDL and in particular, the price negotiation mechanism, offer more clarity to manufacturers.

Transparency in price negotiation mechanism
A list of potential candidates for inclusion onto the NRDL is drawn up by a committee of physicians, medical insurance and pharmaceutical company experts. Manufacturers are not able to proactively submit their products. Once the list is determined, two groups are formed to review each of the drugs independently. The groups then come together and set a target negotiation price, which is confidential. Manufacturers are then invited to offer a price for their product. If the offered price is ≤15% of the governments’ target price, the manufacturer and government will enter a negotiation. If the price offer from the manufacturer is >15% of the target price, negotiations will cease and fail.

More frequent updates
China is also committing to updating the NRDL, with two recent updates in 2017/2018 and another expected to occur in August/September 2019. In 2017, 44 products entered negotiations, of which 36 were successful. In the most recent oncology-specific update in 2018, 17 oncology drugs were included on the NRDL, of which 15 were from multinational companies.

2. Innovative contracting/managed entry agreements (MEA)

MEAs are starting to be introduced into the private sector. The contracts go beyond the ‘buy A, get B free’ model and have specific criteria agreed by the PHIs and manufacturer.

Case Study:

Ibrance (palbociclib) initially launched in China using an MEA through payment by performance. Ibrance is given at a 35% discount if the enrolled patient progresses in four months. Pfizer are accepting no more than 500 patients on this scheme across 34 cities and are collaborating with China’s largest commercial insurers, People’s Insurance Company of China and MediTrust Health, a Shanghai based firm that offers healthcare financing services. This payment-by-performance model provides an opportunity for Pfizer to better understand Ibrance’s response in Chinese patients and can help in generating post-marketing and real-world data to further support its use in this population.

What are the implications of these changes?

When evaluating what pricing and access strategy manufacturers should consider prior to launching in China, the key question is whether to submit for government reimbursement via the National or Provincial RDL, and whether an OOP/PAP or private sector strategy would be better suited to the product in question. Inclusion on the NRDL does have some limitations:

1. Price-volume trade off

Widespread reimbursement via the NRDL allows for product reimbursement on a national level to a large volume of eligible patients. However, the average price discount in the 2018 listing from the list price for oncology therapies was approximately 57%, with some manufacturers discounting as much as 71% (Pfizer: Xalkori (crizotinib)).

2. International reference pricing

The result of these discounts being made public is that China has amongst the lowest price for innovative therapies in East Asia. NRDL inclusion therefore has ramifications in international reference pricing, as neighboring countries of Japan, South Korea, Taiwan and beyond may want to start referencing China and will ask manufacturers to discount their prices to similar levels. It will be important to monitor how other countries in East Asia will react and whether China will become a price-referenced country in the future.

Manufacturers can still negotiate directly with more affluent provinces like ZheJiang if their therapies are not included (by choice or rejected in negotiations) in the NRDL. Through the PRDL, manufacturers can still retain a high list price, although they will reach a smaller volume of patients than via the NRDL. PRDL access has been a successful strategy manufacturers have considered prior to more widespread NRDL listing.

Going forward, it will be important to monitor the impact of the more frequent NRDL updates and the evolution of price negotiation. While the current NRDL price negotiation mechanism is mainly driven by cost, in future we expect health technology assessments to drive evidence-based pricing. Providing real-world evidence will become increasingly important to support pricing requests.

The way forward

Previously, access in China was slow and bureaucratic. Under the new reforms, some of these barriers have been removed, meaning that manufacturers can receive quicker marketing authorisation and have faster routes to reimbursement. Manufacturers with particularly novel therapies meeting certain criteria now have the opportunity to apply for accelerated approval. NRDL inclusion offers the greatest opportunity to ensure access to the largest volume of patients, however, price/volume trade-offs and the implications for the rest of Asia for international price referencing will need to be built into the manufacturer’s strategy. Innovative contracting models and managed entry agreements could offer a way of balancing this risk, using positive outcomes as a means of demonstrating value that will be important to support public sector price negotiations.

About the Authors

Brett Gardiner

Brett Gardiner is a director and leads the pricing and market access team at Research Partnership, based at the London office. Brett has managed and contributed to the development of pricing and reimbursement strategies for over 60 pharmaceutical products and medical devices in all stages of the product lifecycle across all major European markets, North America, Asia and many emerging markets. Brett has particular experience in asset valuation and complex payer research.
Tel: +44 (0)20 8069 5000

Boon Yap

Boon Yap is an associate consultant based in Research Partnership’s London head office. With over four years’ experience in market access, Boon has in-depth knowledge of healthcare systems across both Europe and Asia. He has expertise in payer research and has contributed to numerous projects covering pricing and reimbursement, market access strategies and asset valuations, as well as a broad range of therapeutic areas.
Tel: +44 (0)20 8069 5000

About Research Partnership

Research Partnership is the largest independent healthcare market research and consulting agency in the world. We collaborate with clients from the global pharmaceutical, medtech and biotech industries, providing research intelligence and strategic recommendations that elevate healthcare brands and power their success. Our specialist market access service, Access Partnership, supports the world’s leading manufacturers in market access, pricing, and reimbursement.

To find out more please visit

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