China Aims to Tame Cancer Gene Test Pricing With Bulk-Buying Plan

China is preparing to implement its influential volume-based procurement policy in the field of cancer gene testing, a move anticipated to disrupt and standardize the industry much as previous initiatives have affected other healthcare sectors like noninvasive prenatal testing (NIPT) [para. 1]. On August 14, 2024, the Jiangsu Provincial Health Care Security Administration released a draft plan aimed at centralizing bulk purchasing for cancer gene-testing services—a proposal open for public comment until August 29 [para. 2]. Gene testing is essential for mid- and late-stage cancer patients to determine the suitability of targeted drug therapies, and repeated testing becomes necessary as resistance develops [para. 3].

Two principal technologies dominate the market: PCR (polymerase chain reaction) and NGS (next-generation sequencing), offering differing scopes and price points. PCR examines a small number of genetic sites and costs a few hundred to a thousand yuan, while NGS can analyze up to hundreds of genes and can cost tens of thousands of yuan. NGS has gained popularity in recent years due to its broader data output [para. 4]. Unlike pharmaceuticals, cancer gene testing prices are largely unregulated, leading to dramatic inter-provincial and inter-hospital disparities for the same or similar tests, heavily impacting out-of-pocket expenses for patients [para. 5]. For instance, a test costing 3,000 yuan at the company base could be sold for 5,000–9,000 yuan to patients, with wide variation across hospitals and labs [para. 6]. Most of the profit margin is retained by hospitals and doctors, not the testing companies, resulting in financial challenges for these firms, which are compounded by recent anti-corruption crackdowns on the medical sector [para. 7].

With local-level bulk purchasing appearing imminent, industry observers are debating whether this could signal a turning point for struggling companies [para. 8]. According to the plan, hospitals must forecast at least 80% of the previous year’s testing volume for a two-year procurement period. Both hospitals and third-party labs may bid, but hospitals face more relaxed participation rules and can charge higher prices [para. 9][para. 10]. Bids are capped: PCR tests at 280 yuan per genetic site; NGS tests at 800 yuan per gene, with further reductions for larger panels, ultimately limiting the maximum charges for NGS tests to 7,500 yuan for labs and 10,000 yuan for hospitals if testing more than 10 genes [para. 11]. The expected result is significant price reductions and greater consistency; for example, small-panel NGS tests previously priced at 5,000 yuan will see a cap of 3,900 yuan [para. 12].

Some in the industry, like Gen-Mind’s CEO Tian Geng, view this as beneficial for mature tests but caution that complex multi-gene analyses are not ready for such procurement due to technical and certification limitations [para. 13]. The procurement is restricted to officially approved products, mostly small-panel NGS and PCR tests, leaving advanced laboratory-developed tests excluded [para. 15][para. 16]. Only one large-panel NGS test has been authorized [para. 17].

The draft does not penalize hospitals for not meeting volume commitments, mirroring the earlier NIPT precedent, which reduced service costs by 50% and saw increases in in-house testing volume [para. 18][para. 19][para. 20]. The biggest gain for NIPT was its addition to Jiangsu’s official medical services list, qualifying it for insurance reimbursement [para. 22]. There is cautious optimism that bulk purchasing for cancer testing might yield similar benefits [para. 23]. The market is also being reshaped by anti-corruption measures targeting referral-based models, favoring companies with extensive equipment or volume deals [para. 24][para. 25].

While initial drafts referenced a foreign investment exclusion list that could have affected major U.S.-listed competitors, this was removed in the final version [para. 28]. Although standardization is seen as positive, experts like Tian advise a gradual and differentiated approach to procurement because cancer genomics is diverse and rapidly evolving [para. 29].