Shanghai Tweaks Medical Insurance to Give Patients More Drug Choices
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In a shift that could reshape the pharmaceutical market on the Chinese mainland, Shanghai is testing a new medical insurance reimbursement model that may reopen the door for brand-name drugs in public hospitals.
Since May 1, the Shanghai Healthcare Security Administration has implemented a policy aligning insurance payments with the prices of drugs selected through the government’s 11th national volume-based procurement program. Under the new rules, the public insurance fund will reimburse drug costs only up to the price of the generic versions chosen in the procurement program. If patients opt for a more expensive medication, such as an imported original drug, the insurance will cover the baseline amount, leaving the patient to pay the difference out of pocket.
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- Shanghai launched new insurance reimbursement since May 1, covering up to 11th national procurement prices for 453 drugs from 272 companies.
- Patients pay difference for brand-name drugs; e.g., insurance pays 70% of 6.8 yuan generic metformin-empagliflozin box, not 75 yuan Synjardy.
- Policy raises out-of-pocket ratios for drugs like olaparib, exempts grassroots clinics from usage ratios, potentially reintroducing originals in hospitals.
1. Shanghai is piloting a new medical insurance reimbursement model that could reopen access to brand-name drugs in public hospitals, potentially reshaping China's pharmaceutical market.[para. 1]
2. From May 1, Shanghai's policy ties insurance payments to prices of drugs from the 11th national volume-based procurement, reimbursing only up to the generic price; patients pay the difference for pricier options like imported originals.[para. 2]
3. This departs from the prior fixed-percentage reimbursement of total drug prices on mainland China.[para. 3]
4. The 11th procurement included 453 drugs from 272 companies for infections, tumors, allergies, asthma; e.g., metformin-empagliflozin at 6.8 yuan ($1) per 60-pill box vs. Synjardy at 75 yuan, with insurance covering 70% of 6.8 yuan (4.28 yuan) for outpatient employee plans, patient paying rest.[para. 4]
5. Out-of-pocket ratios rise for five drugs like olaparib and dapagliflozin: +20% for essentials, +30% for others when using non-procured versions.[para. 5]
6. Jin Chunlin notes these high-value, long-term, expensive targeted drugs strain funds without controls on non-procured use.[para. 6]
7. Reforms urged since 2019 State Council directive for patients to pay differences; progress slow, only first three procurement batches fully adjusted elsewhere.[para. 7]
8. Jin says lifting restrictions on non-procured drugs is inevitable; Shanghai's high patient willingness-to-pay makes it ideal pilot for national rollout.[para. 8]
9. Pharma executive praises market-oriented approach: patients choose between paying extra for originals or generics, beyond lowest-bid wins.[para. 9]
10. Shift raises out-of-pocket costs, potentially reversing drop from 60% to under 30% over two decades.[para. 10]
11. Zhao Heng predicts patients switch to cheaper options, challenging high-price original models; cites Germany's reference pricing compressing premiums by >80%.[para. 11]
12. Original drugs vanished due to insurance-hospital conflicts; solution is relaxing clinical metrics.[para. 12]
13. Hospitals prioritized procurement targets with 1:1 ratios; DRG reforms penalize expensive drugs via quotas.[para. 13]
14. By 2025, 11th round allows brand reporting, drops 60-80% exclusive use; Shi Zihai affirms non-procured use.[para. 14]
15. Shanghai doctor cautious: procurement targets limit original drug space; hospital shifted to domestics, redirects patients to pharmacies.[para. 15]
16. Policy prioritizes standard-priced drugs but exempts primary care from ratios; community centers stock Norvasc, Lipitor.[para. 16]
17. Jin: Grassroots stocking bottlenecked hierarchy; clinics avoided non-procured due to lists/procurement, crowding big hospitals.[para. 17]
18. Commercial insurers like CPIC may cover original differences in group plans, adapting policies.[para. 18]
- Latitude Health
- Latitude Health is a healthcare strategy consulting firm founded by Zhao Heng. Zhao noted that rising out-of-pocket costs may drive patients to cheaper generics, challenging high-price original drug models, akin to Germany's reference price system that cut prices by over 80%.
- CPIC Health
- Wang Xiaofu, head of the health research institute at CPIC Health, said increased accessibility of original drugs in hospitals could prompt commercial insurers to upgrade corporate group insurance plans, covering price differences and setting specific reimbursement quotas for original drugs.
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