Changing Characteristics of Pharmaceutical Prices in China Under Centralized Procurement Policy: A Multi-Intervention Interrupted Time Series

Long, Hongyan; Yang, Ying; Geng, Xin; Mao, Zongfu; Mao, Zhenhua

doi:10.3389/fphar.2022.944540

Cited by 23 publications

(13 citation statements)

References 41 publications

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“…We believe that both drug national negotiation and volume-based procurement are only transient policy effects, although they can significantly reduce prices in the current period, they do not exert sustained downward policy pressure on drug prices (basically do not affect the trend of price changes) ( 30 , 31 ). After the point in time of drug national negotiation and volume-based procurement, competition is still the main factor that makes prices lower.…”

Section: Methodsmentioning

confidence: 98%

An empirical study of the impact of generic drug competition on drug market prices in China

Yina,

Pengcheng,

Haomiao

et al. 2023

Front. Public Health

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IntroductionGeneric substitution is encouraged to reduce pharmaceutical spending in China, and with incentive policies, the market size of the generic drug continues to rise. To find out how the generic competition affects drug price in this area, this study examines how the quantity of generic drug manufacturers can influence average drug price in the Chinese market.MethodsThis study uses a rigorous selection of drugs from the 2021 China’s National Reimbursement Drug List (NRDL), and uses drug-level fixed effects regressions to estimate the relationship between competition and price within each drug.ResultsWe note that drug prices decline with increasing competition in the Chinese market, but not in a perfectly linear manner, with marginal price declines decreasing after the fourth entrant and “rebounding” at subsequent entrants, especially the sixth.DiscussionThe findings suggest the importance of maintaining effective competition between suppliers to control prices, and that the government needs to further control generic pricing, especially for late entry generics, to ensure effective competition in the Chinese market.

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Section: Methodsmentioning

confidence: 98%

An empirical study of the impact of generic drug competition on drug market prices in China

Yina,

Pengcheng,

Haomiao

et al. 2023

Front. Public Health

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“…In order to control for potential confounding variables, ensure the accuracy and reliability of causal inferences, and thus reduce bias in the estimation of causal effects and improve internal validity, we introduced corresponding control variables. Based on the variables used in previous studies [14,26,36,[38][39][40][41], we selected several internal and external control variables to control the regression of the model and conducted a rigorous causality analysis in the inclusion of covariates in accordance with the ndings of a previous study [43]. Among the internal control variables, operating costs, compensation payable to employees, and the number of employees are mainly used to determine the costs of the enterprise,…”

Section: Wherementioning

confidence: 99%

How the Chinese national centralized drug procurement affects the revenues of pharmaceutical companies: a quasi-natural experiment based in China

Yang,

Sun,

Sun

et al. 2024

Preprint

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Background: As China’s band purchasing policy affects firms’ revenues, this study aims to investigate how the revenues of firms entering the policy change in the context of the normalization of the policy, with the goal of providing suggestions for its improvement. Methods: We selected two time points, December 2018 and March 2019, to investigate the impact of the policy on firms’ revenues by means of a difference-in-differences model using data from 265 pharmaceutical companies in China. Results: We found that the policy has a negative effect on firms’ net income, which is significant at the 1% level when controlling for internal and external variables. We also demonstrated the reliability of the regression results through parallel trend, placebo, and randomness tests. Conclusions: Our research shows that although firms are able to gain a larger market share by entering centralized purchasing, the low prices result in lower revenues due to the market dynamics. These results also reflect the policy’s bias in favor of drug purchasers and users, as well as the nature of price competition that places affected pharmaceutical companies in a relatively passive position in the market.

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“…2016 ). Hongfei observed that purchasing by the Chinese government organization led to marked price reductions in the labeled medicines, but the price distribution was too diffuse and the price ratios were not reasonable, requiring further and effective price regulation means ( Long et al, 2022 ).…”

Section: Theoretical Analysis and Research Hypothesismentioning

confidence: 99%

Does China’s centralized volume-based drug procurement policy facilitate the transition from imitation to innovation for listed pharmaceutical companies? Empirical tests based on double difference model

Zhuang

2023

Front. Pharmacol.

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Introduction: The normalized implementation of the centralized volume-based procurement policy for pharmaceuticals is a concerted push for supply-side structural reform of the pharmaceutical industry in China. The impact of the centralized drug procurement policy on pharmaceutical companies' transition from imitation to innovation is investigated to test whether a positive effect occurs in the innovation landscape of the pharmaceutical market. Methods: The double difference method and a series of robustness tests were used based on data from a sample of listed pharmaceutical companies in Shanghai and Shenzhen A-shares between 2015 and 2021. Results: The study found that the centralized drug procurement policy significantly contributed to the increased intensity of innovation input in the Chinese pharmaceutical industry. In terms of regional and firm nature heterogeneity, it was found that firms in the seven provinces belonging to the three economic regions had a better increase in innovation input intensity than other regions. Firms of state-owned nature had a better increase in innovation input intensity than private companies. The mechanism test found a partial mediating effect of nearly 10% for the cost of sales rate on the innovation input intensity of listed companies and a negative mediating effect on corporate operating profit. Discussion: Further research found that the effect of centralized drug procurement policy on the improvement of innovation quality of listed pharmaceutical companies was evident. The innovation development of Chinese pharmaceutical companies no longer focused on the accumulation of innovation quantity.

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Changing Characteristics of Pharmaceutical Prices in China Under Centralized Procurement Policy: A Multi-Intervention Interrupted Time Series

Cited by 23 publications

References 41 publications

An empirical study of the impact of generic drug competition on drug market prices in China

An empirical study of the impact of generic drug competition on drug market prices in China

How the Chinese national centralized drug procurement affects the revenues of pharmaceutical companies: a quasi-natural experiment based in China

Does China’s centralized volume-based drug procurement policy facilitate the transition from imitation to innovation for listed pharmaceutical companies? Empirical tests based on double difference model

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