(Yicai) March 25 -- The pricing of innovative drugs must be decided in the international marketplace, otherwise investment in the development of new medicines would be hamstrung, according to the former head of China’s drugs regulator.

“The prices of innovative drugs are formed by global competition,” Bi Jingquan said at an industry forum yesterday. “If this is not made clear, the market will become unpredictable and there’ll be hardly anyone willing to invest in and develop innovative drugs.”

China started developing innovative medicines not long ago, so it is very important to know the essential features, the research and development principles, and the clinical value of new drugs to encourage market development, Bi said.

Bi headed the National Medical Products Administration from 2015 to 2018. He is now the executive vice chairman of the China Center for International Economic Exchanges and deputy director of the economic affairs committee of the National Committee of the Chinese People's Political Consultative Conference.

Coming up with new drugs is a lengthy process involving high-risk and huge investment, he said, adding that over 70 percent of drug R&D funds are spent on clinical tests, while medicines to treat multiple conditions burn through even more money as more tests are needed.

That is why protecting the clinical data not disclosed by companies, which complements patent protection, is the most important institutional arrangement for encouraging biomedical innovation, he pointed out.

Innovative drugs can take a number of forms, Bi said. Firstly, new drugs that constitute a global first and fill a gap in the market by meeting unmet clinical needs. But also those that are more effective or reduce side effects compared with older treatments should also be considered innovative.

New drugs that can break monopolies, promote competition, and give patients more choice should also be considered innovative, he added.

Private Health Insurance

China should accommodate private health insurance, Bi said, adding that it should form a multi-level medical safety net on top of the existing basic medical security system to open up new payment channels for novel medicines. 

As is the case with any innovative product, those who can pay are first in line, and then the general public gradually follow, Bi said. 

He pointed out that China’s basic medical security system was set up based on paying for generic drugs, but it faces new challenges linked to the outdated healthcare system, the need for reform, and an aging population. 

As a result, there is no spare money to fund innovative drugs, so private health insurance is necessary for the system to work, Bi said. At the same time, treatment costs should be public information so that insurers can provide cost-effective products that can benefit all parties involved based on accurate calculations.

China should also legislate on private medical insurance as soon as possible to specify the rights and obligations of insurers and policyholders, as well as promote reform of the management system of private insurance to seamlessly integrate the basic and commercial insurance plans, Bi said. 

Editors: Tang Shihua, Emmi Laine