China Solidifies Drug-Buying Program that Saved $41 Billion

China Solidifies Drug-Buying Program that Saved $41 Billion


China will make permanent a program that buys drugs and devices in high volume and at low cost, a move designed to drive down medical expenses that also crimps profit margins for the health care industry in the world’s most populous country.

The government will carry out centralized bulk-buying of drugs and high-value medical supplies “on a regular and institutionalized basis” to further cut drug prices and benefit patients, the State Council, China’s cabinet, said in a statement Monday evening.

At a cabinet meeting, Premier Li Keqiang lauded the program launched in 2018, saying it helped save 260 billion yuan ($40.8 billion) in medical insurance costs and patient expenditures through the end of last year. China started the effort in select cities and subsequently carried out multiple rounds of bulk-purchasing, slashing average drug prices and medical expenses in the country of 1.4 billion people.

“In recent years, the reform of centralized procurement of drugs and high-value medical consumables has been continuously promoted, and the market-oriented mechanism has effectively squeezed the falsely high medical prices,” Li said in the statement.

The CSI Healthcare Index slid as much as 0.8%, and has weakened 4.8% this year. Jiangsu Hengrui Medicine Co. fell as much as 2.2%, while Topchoice Medical Corp. edged down 1.7%.