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Prof. Liu Guoen: Good Medicines Are Prerequisite for Price Negotiations

May 17-2024   



China’s innovative medicines have attracted much attention in recent years. Statistics show that currently 13,537 medicines are in clinical research stage around the world, of which 4,774 are originally or jointly developed by Chinese firms, or 35% of the total and second most globally. In a recent media interview, Liu Guoen, NSD Professor of Economics, answered questions on the current state, challenges and future trends of China’s innovative medicines, as well as on ways to balance their research and development, market entry, and accessibility for patients through healthcare negotiations and policy adjustments. He is also Dean of PKU Institute for Global Health and Development and PKU Boya Distinguished Professor.

 

Referencing US calculation methods, Prof. Liu and his team estimated that developing a new medicine in China costs over USD200 million and takes more than 10 years. Such an enormous investment necessitates a proportionate return to buttress continuous undertakings by firms. Therefore, Prof. Liu commended the benefits of Chinese innovative medicines going abroad: more returns generated in overseas markets provide additional safeguards for firms’ R&D. Last year, a China-developed anti-cancer medicine was granted approval by the US Food and Drug Administration (FDA) and sold at a price over 30 times that in China. Reaping such good returns in the international market will make innovative drugs more likely to be included on the healthcare reimbursement list, as experiences indicate that their prices tend to start high initially and gradually drop to a level affordable to the general public, said Prof. Liu.

 

He also pointed out that China’s medicine R&D concentrates on application innovation (so called ‘1-10’ phase), rather than original innovation (‘0-1’), owing to firms’ limited competence and financial means. He suggested that the government should, within its means, increase investment in original innovation and leave application innovation to market entities.

 

The national healthcare system aims for extensive coverage and basic guarantee, so priority is accorded to medicines and services that are clinically effective, accessible, and affordable, said Prof. Liu. Based on this principle, the national healthcare reimbursement list also works to include some affordable and indispensable new medicines so as to provide ‘value for money’ safeguards for some patients with serious diseases or rare diseases. New-to-the-market medicines, he said, can be made available to more patient groups through multi-layered healthcare measures comprising commercial insurances. Once such medicines become affordable, they will be ready to join the healthcare system for all.

 

Commercial medical insurance and national healthcare compete with and complement each other, said Prof. Liu. Since the former’s development hinges on data sharing by the latter, Prof. Liu suggested learning from international experience to make desensitized data available for the whole society to use. As such, data security, privacy protection, and effective use of data can be compatibly achieved.

 

To further spur innovations, Prof. Liu stressed the creation of a good environment with social inclusiveness, patent protection, and rule of law. He was responsible for conducting pharmacoeconomic assessment that went into the adjustment work of the national healthcare reimbursement. Negotiating for favorable purchasing prices is a must, but he reminded that such prices make sense only when truly efficacious medicines come onto the market. Otherwise, even money cannot buy.

 

Prof. Liu Guoen: Good Medicines Are Prerequisite for Price Negotiations

May 17-2024   



China’s innovative medicines have attracted much attention in recent years. Statistics show that currently 13,537 medicines are in clinical research stage around the world, of which 4,774 are originally or jointly developed by Chinese firms, or 35% of the total and second most globally. In a recent media interview, Liu Guoen, NSD Professor of Economics, answered questions on the current state, challenges and future trends of China’s innovative medicines, as well as on ways to balance their research and development, market entry, and accessibility for patients through healthcare negotiations and policy adjustments. He is also Dean of PKU Institute for Global Health and Development and PKU Boya Distinguished Professor.

 

Referencing US calculation methods, Prof. Liu and his team estimated that developing a new medicine in China costs over USD200 million and takes more than 10 years. Such an enormous investment necessitates a proportionate return to buttress continuous undertakings by firms. Therefore, Prof. Liu commended the benefits of Chinese innovative medicines going abroad: more returns generated in overseas markets provide additional safeguards for firms’ R&D. Last year, a China-developed anti-cancer medicine was granted approval by the US Food and Drug Administration (FDA) and sold at a price over 30 times that in China. Reaping such good returns in the international market will make innovative drugs more likely to be included on the healthcare reimbursement list, as experiences indicate that their prices tend to start high initially and gradually drop to a level affordable to the general public, said Prof. Liu.

 

He also pointed out that China’s medicine R&D concentrates on application innovation (so called ‘1-10’ phase), rather than original innovation (‘0-1’), owing to firms’ limited competence and financial means. He suggested that the government should, within its means, increase investment in original innovation and leave application innovation to market entities.

 

The national healthcare system aims for extensive coverage and basic guarantee, so priority is accorded to medicines and services that are clinically effective, accessible, and affordable, said Prof. Liu. Based on this principle, the national healthcare reimbursement list also works to include some affordable and indispensable new medicines so as to provide ‘value for money’ safeguards for some patients with serious diseases or rare diseases. New-to-the-market medicines, he said, can be made available to more patient groups through multi-layered healthcare measures comprising commercial insurances. Once such medicines become affordable, they will be ready to join the healthcare system for all.

 

Commercial medical insurance and national healthcare compete with and complement each other, said Prof. Liu. Since the former’s development hinges on data sharing by the latter, Prof. Liu suggested learning from international experience to make desensitized data available for the whole society to use. As such, data security, privacy protection, and effective use of data can be compatibly achieved.

 

To further spur innovations, Prof. Liu stressed the creation of a good environment with social inclusiveness, patent protection, and rule of law. He was responsible for conducting pharmacoeconomic assessment that went into the adjustment work of the national healthcare reimbursement. Negotiating for favorable purchasing prices is a must, but he reminded that such prices make sense only when truly efficacious medicines come onto the market. Otherwise, even money cannot buy.