“Made in Wuhan” Generic Drugs Added to the 2020 National Reimbursement Drug List

On March 1, Wuhan officially implemented the 2020 National Reimbursement Drug List, adding 119 new drugs. Through negotiation, Wuhan Qirui Pharmaceutical, leveraging its independently developed and manufactured exclusive generic drugs — Aspartate-ornithine granules (hereinafter referred to as “Asp-Orn Granules”) have become the only Wuhan-based pharmaceutical company whose product has been included in the National Medical Insurance Drug List.

According to reports, this marks the third time that drugs developed and manufactured by the company have been included in the National Medical Insurance Drug List. Previously, ornithine aspartate for injection and fasudil mesylate for injection were respectively included in The 2009 and 2017 National Reimbursement Drug Lists.

     Out-of-Formulary Drug Adjustments: From “Open Selection” to “Preferred Selection”

In the 2020 adjustment of the National Reimbursement Drug List, unlike previous rounds that reviewed all listed drugs, this round for the first time adopted a system of voluntary submission by pharmaceutical companies, under which only drugs not currently on the list that meet the criteria set out in the adjustment plan are eligible for inclusion. This shift in the scope of drug selection—from a “wide-screen” approach to a “selective” one—ensures that only the very best among the best are chosen.

The ornithine aspartate granules developed and manufactured by Wuhan Qirui Pharmaceutical comply with the adjustments made this time. Eligibility for negotiation is granted to drugs that are included in five or more provincial-level medical insurance drug formularies.

Ornithine Aspartate Granules Launched in January 2004, it is the first domestically exclusive generic drug, indicated for the treatment of hyperammonemia caused by acute and chronic liver diseases such as cirrhosis, fatty liver, and hepatitis. It is particularly suitable for managing early-stage encephalopathy or neurological complications and has been included in the provincial basic medical insurance drug formularies of 11 provinces.

     Price Cut of 41.7%: Wuhan Pharmaceutical Company “Passes the Test”

Currently, the inclusion of drugs in the National Medical Insurance Drug List is primarily achieved through negotiation, in accordance with the relevant requirements. “Every new entry must be negotiated.” In the pharmaceutical industry, health-insurance negotiations are often referred to as a “do-or-die” situation: companies that successfully secure inclusion in the National Reimbursement Drug List will gain access to a vast market and be able to leverage volume to drive down prices; conversely, failure in these negotiations means missing out on the opportunity to tap into that market.

Looking back on last year Zhang Wei, head of the negotiation team and chief negotiator for Wuhan Qirui Pharmaceutical Co., Ltd., described the negotiation experience in Beijing from December 14 to 16 as “extremely nerve-wracking.”

To ensure the smooth market entry of its ornithine aspartate granules, Wuhan Qirui Pharmaceutical Co., Ltd. has established a dedicated negotiation team. “Repeatedly conduct drills to simulate various scenarios in order to improve the accuracy of drug price predictions.”

Doorbird Granules At its launch in 2004, the product was priced at RMB 14.78 per bag, with the lowest listed price across provinces set at RMB 7—representing a nearly 55% drop from the initial launch price. “In the national medical insurance access negotiations, our target negotiated price was around RMB 5.6,” Zhang Wei told reporters. “However, the final outcome turned out to be even more ‘slim’ than we had anticipated.”

The rules for this round of medical insurance negotiations and In 2019, the process was largely consistent: the National Healthcare Security Administration would set the expected reimbursement price for each drug and place it in an envelope, which would then be handed on-site to the national healthcare negotiation experts. Companies would subsequently submit two rounds of bids; if both bids exceeded the National Healthcare Security Administration’s expected price by more than 15%, the company would be automatically disqualified.

The company’s initial quote represents a further reduction on top of the previous national lowest price. “33%, ‘RMB 4.69’.” The result was then flagged as “outside the range.” Zhang Wei explained that, at the outset, the experts in the medical-insurance price-negotiation process are also unaware of the drug’s “floor price.” Before negotiations begin, the experts publicly open the sealed envelopes in front of the company representatives and record the floor price. After the initial quote is submitted, the experts inform the company that the price is too high—and that the gap is quite substantial.

The tension on site was so thick you could hear everyone’s heartbeats. "After all, if the bid doesn’t fall within the specified range a second time, the bidder is immediately eliminated." Zhang Wei and his colleagues recalculated on the spot and lowered their second bid by another 7% to RMB 4.26, successfully advancing to the next round of negotiations. Following several rounds of negotiation, the final transaction price was set at RMB 4.08.

The final result was below the company’s target price. “At 1.52 yuan, the price reduction amounts to 41.7%—a substantial drop,” said Zhang Wei. “If this drug had not been included in the National Medical Insurance Drug List this time, its chances of survival would be virtually zero, and its sales market would be extremely small.”

Today, as the only product developed by a Wuhan-based company to be included in the national medical insurance negotiation catalog, Wuhan Qirui Pharmaceutical has new sales expectations for Menniao Granules: last year, sales of this drug were With a current production capacity of 2 million cartons, the company expects to reach 3.3 million cartons this year, striving to serve more patients with high-quality pharmaceutical products. According to reports, several pharmaceutical distribution companies have already proactively contacted Wuhan Qirui Pharmaceutical to explore potential collaborations.

     High-quality, affordable medicines will have more opportunities.

“The annual update of the National Reimbursement Drug List brings to the forefront the challenge of drug pricing for patients, while behind the scenes it reshapes the entire pharmaceutical landscape,” Zhang Wei told reporters in an interview. He explained that inclusion of a drug on the national reimbursement list provides substantial benefits to pharmaceutical companies: first, it opens up new sales channels and boosts brand awareness, allowing the R&D costs invested in that product to be gradually offset by rising profits, which in turn supports the drug’s long-term development; second, once companies start generating profits, they gain the financial resources needed to fund R&D on other products, thereby fostering innovation and driving overall corporate growth.

Last year The Interim Measures for the Administration of Drugs Covered by Basic Medical Insurance, which came into effect on September 1, stipulate that the national medical insurance drug list is, in principle, adjusted once a year.

In response, Zhang Wei stated that in the past, the national medical insurance formulary was also adjusted from time to time, but the frequency of such adjustments was too low and the scope of each adjustment was often limited, leaving pharmaceutical companies with little sense of urgency. Following the implementation of dynamic adjustments, pharmaceutical companies’ mindset will undergo a significant shift. Moreover, inclusion of a drug in the medical insurance formulary does not necessarily mean it has entered “The ‘insurance cabinet’ requires constant vigilance against being “kicked out” of the formulary, which will create more opportunities for high-quality, cost-effective drugs. As a result, market competition will intensify, with price reductions and increased investment in R&D becoming common strategies for pharmaceutical companies to enhance product quality and competitiveness.

Under the policies of national medical insurance negotiations and centralized drug procurement, the impact on pharmaceutical manufacturing, sales, and distribution enterprises is... On March 1, Li Pei, Senior Manager of China Resources Healthcare in Wuhan, stated that the pharmaceutical market will become more concentrated, with mergers and reorganizations among pharmaceutical companies already underway. In the future, both the structure and market share of the pharmaceutical sector will evolve, but these changes will undoubtedly move in a positive direction, driving greater efficiency and higher quality. In short, “the pharmaceutical market will become more standardized, and competition will be more orderly.”