(Yicai) Jan. 17 -- China will introduce a new category of innovative medicines to its public medical insurance system to encourage drug development.

The new Category C will focus on innovative drugs that have high clinical demand but are expensive to develop, the National Healthcare Security Administration announced today.

The first edition of Category C will be released this year, Huang Xinyu, department director at the NHSA, said at a press conference today. It will focus on drugs that exceed basic medical insurance coverage but are highly innovative and have significant clinical value, Huang added.

Since the latest addition to Categories A and B will require time to integrate with commercial insurance, this year's full catalog will be prepared earlier than usual. Applications are expected to begin in early April, with adjustments completed by September, he added.

To reduce patients' medical costs, China established the NHSA in 2018. Each year, it updates the list of reimbursable drugs through bidding. The latest list, released last November, added 91 new drugs and is expected to reduce patients' medication expenses by over CNY50 billion (USD6.8 billion) in 2025, according to the government agency.

After seven consecutive years of updates, China's reimbursable drug catalog now includes almost 3,160 medicines, with improved coverage of treatments for cancer, chronic diseases, rare diseases, and children's medications.

The introduction of the new category is expected to lower market entry barriers for innovative drugs, provide pharmaceutical companies with broader market opportunities, reduce drug development payback periods, and enhance research and innovation initiatives, Deng Yong, professor at Beijing University of Chinese Medicine, told Yicai.

Creating a dedicated category for innovative drugs allows for higher pricing. Increased product prices could improve drugmakers' return on investment, stimulate recovery in the pharmaceutical investment and financing market, and alleviate companies' financial pressures, Deng added.

Editors: Dou Shicong, Emmi Laine