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Home/Dynamic/Pleasure and Concern in New Policy as Delegating the OTC Pricing Right to the Provincial Level

2017

07-26

Last month, due to various reasons, National Development and Reform Commission temporarily postponed the introduction date of a new round of price reduction order of antibiotics. However, one new policy related to medicine issued by the National Development and Reform Commission this month has become the focus of the attention once again. The difference is that this new policy has been introduced and become the established fact, and will be officially announced in the coming days. 

According to what the reporter learn from the department related to pricing of National Development and Reform Commission (hereinafter referred to as NDRC), NDRC will delegate the pricing right of all Over-The-Counter Drug (OTC) listed in the Directory of Insured Drugs to the provincial development and reform commission. The new policy will be officially implemented on August 1.

Just before the official announcement, the new policy has caused strong reaction of China Nonprescription Medicines Association and its member enterprises. For this, they have also submitted a former report to indicate the possible impact related to the delegation and relevant suggestions. Some experts believe that the new policy of the NDRC will affect the entire existing OTC market, or may lead to the significant change of the entire OTC market pattern.

Introduction Story of the “New Policy”

Wang Wei, the secretary general of China Nonprescription Medicines Association introduced to the reporter that the NDRC will delegate the pricing right of all OTC drugs listed in the directory of insured drugs to provincial development and reform commission, with more than 500 OTC products involved. He revealed that the new policy has been officially approved as internal notification, and the specific implementation date is August 1.

The director of Drug Division of Pricing Department of NDRC, Guo Jianying, who is responsible for specific work of drug price of China has made it clear to the reporter that the implementation of delegation of the OTC pricing right to provincial development and reform commission has been approved by the State Council, and the specific notice would be issued and announced in the coming days. He revealed that the involved OTC products were limited to the OTC products listed in the directory of insured drugs, no individual pricing products involved.

At press time, each provincial and municipal development and reform commission, as well as price bureaus have not received relevant official notice. The deputy director of industrial product pricing division of price bureau of Jiangsu Province, Wang Guoping, who is responsible for drug pricing of Jiangsu Province, told reporter that they have not received official documents or detailed notice. He also said that the departments concerned of NDRC have already solicited local opinion, “we are just implementation unit.”

At present, there are various opinions related to reasons for the delegation of NDRC. It is said that some local development and reform commission and price agency are volunteered for the work; however, some local departments have denied this. Wang Guohua has repeatedly expressed, “what local departments do is only to implement the decision made by the National Development and Reform Commission.” Wang Wei also said that the reliability of the speculation needs to be questioned.

As to the policy of the delegation of pricing right, this time, the National Development and Reform Commission has not informed each association in pharmaceutical industry as usual. Zhou Yan, the secretary general of the China Pharmaceutical Industry Association conformed to our reporter that “we just heard about this matter. Perhaps the National Development and Reform Commission regarded the right delegation as an adjustment of internal division of labor, and though it is unnecessary to reform each pharmaceutical association or to ask for opinion. "

 Assumption and Reality

For this, China Nonprescription Medicines Association has submitted Emergency Report about Changing OTC Pricing Administration (hereinafter referred to as Reporter). According to Wang Wei's introduction, when they heard that the new policy would be implemented by the National Development and Reform Commission soon, they solicited opinions of their member enterprises, and organized a in-depth symposium with related department of the National Development and Reform Commission to express thoughts of the enterprises. “At that time, NDRC leaders suggested us to form a former report in written, thus the abovementioned Report formed”, Wang Wei told the reporter.

According to Wang Wei's introduction, during the submission of the Report, they have analyzed “Serious impact include price gap between different places due to delegation of OTC Pricing administration”, and hoped that the NDRC to postponed the new policy of OTC pricing administration, and asked the National Development and Reform Commission to refine the specific implementation measures before the official introduction of the new policy, and something like this. 

Wang Wei listed three possible results caused by the new policy to the reporter in details: one same product may have different price in different provinces, and it may lead to chaos market; resource waste due to repeated approval for each place; increased burden for enterprises, etc. 

In the Report, China Nonprescription Medicines Association suggested to refer the China’s current experience in administration mode for OTC--B Health insurance. First, the price agency where the production located put forward the recommended price based on the investigation, and report the price to the National Development and Reform Commission, then the National Development and Reform Commission issues the guide price after considering opinions of each party. Next, the provincial price agency can adjust the price within a certain range under the national guide price. In the same time, as to cross-type products, Wang Wei said, “we wish that at least the cross-type products which are both prescription drug and OTC drug, whose price shall keep being stipulated by the state uniformly.”

We learnt that during the communication between China Nonprescription Medicines Association and National Development and Reform Commission, the implementation of the new policy has been approved by the State Council. Wang Wei told the reporter reluctantly, “Related department of the National Development and Reform Commission has promised to consider our suggestion, however, once it has been approved, it will not be changed.” However, some experts believe that some subsequent supplementary provisions may be added by the National Development and Reform Commission in the future. 

Facing different opinion of the association, Guo Jianying confirmed that they have received the Report from the association. He told the reporter that although the association and the enterprises have different opinions, but those conclusions were made upon assumption. “Knowledge starts with practice, if problems occurred during the implementation, we will actively communicate with each party and solve the problem.”

There are some opinions thought that the state is aimed to stipulate a more real price of OTC, and through automatic market regulation to suppress the existing irrationally high drug price.

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