China doubling size of centralized procurement program

Six months after the last round of price cuts for generics and off-patent originator drugs in China’s centralized procurement program, the Chinese government has outlined plans to nearly double the number of included drug formulations.

China’s Joint Procurement Office released new guidelines last week for the addition of 56 molecular entities in the program’s third round, bringing to 114 the total number of drugs included.

Under a round of bidding completed in January, manufacturers agreed to average price cuts of 53%, with discounts as high as 93%, in exchange for guaranteed market share (see “MNCs Lead Price Cuts”).

The new rules would allow up to eight manufacturers offering the lowest prices and whose products have passed bioequivalence testing to secure market share for a given molecular entity. The program’s prior round allowed only six winning bidders.

The guidelines continue to guarantee 80% market share for four or more winners but set a 70% market share ceiling for eight antibiotics slated for inclusion in the program: ciprofloxacin, cefaclor, cefdinir, levofloxacin, moxifloxacin, linezolid, amoxicillin and clarithromycin.

In an analyst note, Morgan Stanley’s Yolanda Hu said the change is consistent with the government’s push for rational antibiotic use and addresses potential volume hikes in antibiotic use under the program.

The new rules maintain that the duration of market commitments to winning bidders is dependent on the number of winners, ranging from one year for a single winner to up to three years for four or more winners. However, three new injectable drugs added to the program are singled out for one year commitments: Avelox moxifloxacin, a fluoroquinolone antibiotic from Bayer AG (Xetra:BAYN); seizure drug Keppra levetiracetam from UCB S.A. (Euronext:UCB); and Vidaza azacitidine from BeiGene Ltd. (NASDAQ:BGNE; HKEX:6160), which has China rights to the cancer therapy from the Celgene Corp. unit of Bristol-Myers Squibb Co. (NYSE:BMY).

The latest batch of drugs up for bidding also includes cardiovascular disease therapy Diovan valsartan from Novartis AG (NYSE:NVS; SIX:NOVN), dyslipidemia and hypercholesterolemia drug Livalo pitavastatin from Kowa Co. Ltd. and Alzheimer’s disease (AD) therapy Namenda memantine from Merz GmbH & Co. KGaA.

The deadline to submit bids is Aug. 20. Implementation of the program for the current batch of drugs could begin by 4Q20, said Hu.

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