SHANGHAI - China's National Development and Reform Commission issued Oct. 2 a guideline price for its Essential Drug List, which stipulates price ceilings for 296 drugs on the first part of the list.

Under the new guideline, 45 percent of drugs will see prices reduced an additional 12 percent, 49 percent of drugs will see their current prices maintained, and the remaining 6 percent of drugs will see price increases, NDRC said.

All medical institutes, pharmacies and distributors can now institute EDL prices under the price caps set by the guideline; although prices can vary by brand recognition and quality for the same drug manufactured by different companies, according to NDRC.

Implementation of the new drug price policy will begin Oct. 22 and will be revised annually.

China released Aug. 18 the first part of the EDL for community health organizations, which includes 307 medicines (Also see "China Releases First Part Of Essential Drug List For Community Health Clinics And Rural Hospitals" - Scrip, 19 August, 2009.).

The guideline covers 296 of the 307 drugs on the list and NDRC will set prices separately for the remaining 11 drugs, which are narcotic and psychotropic medicines and are highly regulated.

"The price adjustment is less severe than what was expected earlier, consistent with the insight we had last week," Ding Ding a senior equity analyst at Susquehanna International Group, told PharmAsia News.

The overall net benefit of EDL for leading pharma companies should be realized earlier than expected, Ding Ding said in an Oct. 5 note.

The 6 percent of drugs that will see price increases are low-priced generics already in low supply, the analyst noted. "Due to the low price and no margin, many manufacturers stopped producing these drugs. The government expects to ensure the supply of these drugs by raising the price," she said.

In an earlier note, Ding Ding predicted that some price caps might not be as low as initially feared by drug producers (Also see "Powerful Chinese Government Commission Set To Issue Price Caps For Essential Drug List Medicines" - Scrip, 23 September, 2009., 2009).

After the release of China's EDL and its healthcare reform plan, drug prices were expected to be cut at least 25 percent at the patient level, including the removal of hospitals' 15 percent price markup and a 10 percent reduction on wholesale prices (Also see "China's Changing Drug Market In The Wake Of Essential Drugs List" - Scrip, 9 September, 2009.).

Most of the drugs listed on the EDL have been marketed for many years, the price of which has been regulated, said NDRC. The guideline is centered on three main principles, which will:

1. Ensure the market supply of essential drugs;

2. Reduce unreasonable marketing and operational costs and consider the purchasing capability of the public;

3. Adjust drug prices depending on market supply and demand.

NDRC stressed that drug quality is the first priority and manufacturers cannot sacrifice quality to lower prices.

To ensure quality of drugs on the EDL, China's State FDA issued Sept. 24 a new quality control regulation, which asks local FDAs to conduct at least two inspections every year of all manufacturing sites for drugs listed (Also see "China Releases New Regs To Step Up Quality Control For Essential Drugs; Second Part Of EDL Expected In November" - Scrip, 30 September, 2009.).

- Dai Jialing (j.dai@elsevier.com)

China's Essential Drug Prices Less Severe Than Expected; Some Prices See Increases

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