IRI: The medical insurance negotiation of innovative drugs is a temporary success or failure, and the outcome is still pending


Author:Wang Huiyuan
Source: iResearch

Introduction:The results of the national health insurance negotiations will be announced soon. While waiting for the results of the negotiations, innovative pharmaceutical enterprises should examine the ecological transformation of the domestic innovative pharmaceutical industry and predict the practical challenges they may face after the "national talks". Successful pharmaceutical enterprises need to think about the future product layout and store ammunition for the next "national talks"; Those who fail should also adopt corresponding market strategies to stabilize market share and fight again in the coming year.

The results of the national medical insurance negotiation will be announced soon. While waiting for the results of the negotiations, innovative pharmaceutical enterprises should examine the ecological transformation of the domestic innovative pharmaceutical industry and predict the practical challenges they may face after the "national talks". Successful pharmaceutical enterprises need to think about the future product layout and store ammunition for the next "national talks"; Those who fail should also take corresponding measuresmarketStrategy, stabilize market share, and fight again next year.

From listing to medical insurance access, shorten the cycle to have the first mover advantage

In this year's medical insurance negotiation, 271 drugs passed the preliminary form examination, of which 93.02% were newly marketed drugs after 2016. Although the negotiation results have not yet been released, the trend of accelerating the introduction of innovative drugs into medical insurance is beyond dispute. Some new drugs have been included in the medical insurance drug catalog in the same year when they were launched, and the commercialization efficiency has been rapidly improved and the value has been rapidly reflected.

From 2016 to 2020, about half of the innovative drugs listed in China each year will be included in medical insurance, and most of them will double their sales in the first year of medical insurance access. At the same time, the shorter the interval between initial listing and negotiation access, the faster the sales increase after medical insurance. Some studies have shown that the total sales growth rate of varieties from the first listing to the negotiation access interval of 0-2 years is 832%, while the total sales growth rate of varieties from the first listing to the negotiation access interval of more than 10 years is only 24%. This is also the reason why innovative pharmaceutical enterprises attach great importance to the rapid "innovation" in medical insurance negotiations.

Taking Xinda Biology as an example, Xindilimab (Daboshu) was officially listed in March 2019, with a revenue of 332 million yuan in the first half of the year. It entered the medical insurance in November of that year, becoming the first PD-1 monoclonal antibody to enter the medical insurance directory in China. After the entry, the price was lowered from 7838 yuan/bottle to 2843 yuan/bottle, but the sales volume increased rapidly. In 2019, Cindelimab achieved an annual revenue of 1.016 billion yuan and 2.29 billion yuan in 2020. According to the third quarter financial report of Xinda Bio, the sales revenue in the third quarter of 2021 will exceed 900 million yuan, and the total revenue in the first three quarters has been equal to that in the whole year of 2020, maintaining the first mover advantage of the PD-1 track.

In this year's negotiation, PD-1 monoclonal antibody is still one of the focuses of competition. Xinda Biology, Baekje Shenzhou, Hengrui Medicine and Junshi Biology all have new indications. The new indications of Cindelizumab injection of Cinda Biology and Tirelizumab injection of Baekje Shenzhou this year both involve non-small cell lung cancer and hepatocellular carcinoma, CARRIELIzumab injection of Hengrui Medicine involves nasopharyngeal carcinoma, and TEREPLIzumab injection of Junshi Biology involves nasopharyngeal carcinoma and urothelial carcinoma. The negotiation results have a profound impact on the whole PD-1 track pattern.

The entrants continue to increase investment in R&D and innovation, jump out of homogeneous competition, and reserve "ammunition" for medical insurance negotiation

On the one hand, the accelerated entry of innovative drugs into medical insurance reflects the continuous support of medical insurance for innovative products, on the other hand, it also reflects the hot trend of research and development of innovative drugs in China. At present, the domestic innovative drugs have been approved and listed in a blowout trend. From January to September 2021, 27 innovative drugs passed the review, which has exceeded the number of innovative drugs passed the review in 2020. With the introduction of a series of policies to encourage R&D, such as accelerating drug approval, patent protection and tax reduction, the development of innovative drugs continues to heat up, and China's pharmaceutical market is changing to an innovation driven market.

This is from the listingcompanyIt can also be seen from the R&D expenditure. The R&D investment of domestic enterprises above designated size has increased by about 8% annually, and the R&D expenditure of listed companies has accounted for more than 6% of sales revenue. For example, in the third quarter of 2021, Hengrui Pharmaceutical's R&D expenses reached 4.142 billion yuan, a year-on-year increase of 23.9%, accounting for 20.5% of its operating revenue; The R&D investment in Baekje Shenzhou in the first half of 2021 is about 6.77YimeiRMB, up 14.7% year on year; In the first half of the year, Xinda Bio invested 1.042 billion yuan in R&D, up 29% year on year. The increasing investment in R&D drives the accelerating output of innovative drug products. In the future, the proportion of newly launched innovative drugs in medical insurance negotiations will continue to maintain a high level.

Equally important with increasing investment is the differentiated layout. According to the Annual Report on the Status of Clinical Trials of New Drugs Registration in China (2020) released by the National Drug Examination Center, there are obvious problems of homogeneity in clinical trials of new drugs in China, and the implementation efficiency is not high after approval. Among them, there are as many as 75 drug varieties targeted at PD-1 in registered clinical trials, and more than 20 in phase III clinical trials. For enterprises that are planning PD-1, it should be seen that the overall decrease of PD-1 products in the medical insurance negotiation is about 10%~20%. After the price reduction, the annual fee will remain at the level of 35000 to 40000 yuan, and the future domestic market revenue will be limited. Except Xinda, which has the first mover advantage, whose income can be maintained at the expected level, other participants in the same track have to face the harsh fact of severe revenue compression.

The national medical insurance negotiation has become an unavoidable test for innovative pharmaceutical enterprises, which requires innovative pharmaceutical enterprises to seek differentiated product layout and international commercialization strategies in addition to competition speed in product layout. In terms of product research and development ideas, we can aim at exclusive indications, actively explore new indications, explore technical routes such as drug combination and combination therapy, and in terms of commercialization strategies, proactively layout cooperative research and overseas multi center clinical trials, and actively explore overseas markets.

Those who have not entered the market actively layout the market outside the hospital, explore innovative means of payment, and prepare for the "comeback"

The result of the medical insurance negotiation must be that several people are happy and some people are sad, but the final failure does not mean that they are incompetent or inefficient. After all, the national medical insurance directory contains less than 3000 varieties. As the second largest medical market in the world, China has a large number of medical varieties and rich channels. Innovative pharmaceutical enterprises have many strategic choices in addition to negotiating with other countries.

For innovative drug enterprises whose products fail to enter the national medical insurance catalog, only by anticipating changes in the market pattern and formulating effective market strategies outside the medical insurance catalog can they be prepared. Among them, it is necessary to carry out drug donation activities, improve channels through charitable organizations or insurance products, and fill in the lack of medical insurance. In particular, innovative drugs that have been on the market for a long time, due to the lack of real world data, doctors have a low selection rate in practical applications, and market recognition takes time. Even if they enter the medical insurance directory, they will face the problem of difficult admission. Therefore, for innovative pharmaceutical enterprises, no matter whether the products have successfully passed the medical insurance negotiation, they should focus on promoting the actual sales and use of products through drug donation activities, so as to enrich the foundation for the next round of dynamic adjustment of the medical insurance drug catalog. In the negotiation of the national medical insurance drug catalog in 2020, the imported PD-1 was completely destroyed, and the subsequent strategy was to stabilize the market by modifying the drug donation scheme to reduce costs. Other domestic PD-1 products have adopted similar strategies. In August this year, Kangfang Bio's PD-1 product Annike (Paraprizumab Injection) was approved for marketing to treat recurrent or refractory classical Hodgkin's lymphoma (r/r cHL) above the second line. Although not able to catch up with this medical insurance negotiation, the product price was directly compared to the self paid price of the medical insurance catalog PD-1 product after reimbursement. At present, all four kinds of domestic PD-1 are covered by medical insurance, including 51000 yuan/year for Hengrui Medicine, 52000 yuan/year for Baekje Shenzhou, 56000 yuan/year for Junshi Biology, 98000 yuan/year for Xinda Biology, and the part paid by patients every year is within 20000 yuan. The price of Annike is 4875 yuan/100mg, and the total cost of treatment for up to 2 years is as low as 39000 yuan through free drug donation and patient assistance plan.

Secondly, the development of the market outside the hospital is also an effective means. After the failure of the medical insurance catalogue, hospital access will be more difficult. For some complex and refractory diseases, such as severe and rare diseases, patients need long-term medication and long-term follow-up, which depends on the way of purchasing drugs outside the public hospitals, which provides pharmaceutical enterprises with a large number of market opportunities outside the hospital. Therefore, in order to ensure the availability of drugs in the existing market, we should actively open up out of hospital markets such as DTP pharmacies or private hospitals. With the development of“internet+With the implementation of such policies as the Guiding Opinions on Medical Service and Medical Insurance Payment and the Measures for the Supervision and Administration of Online Drug Sales (Draft for Comments), online sales of prescription drugs by Internet hospitals is also a direction that needs attention and development.

In addition, we should pay attention to exploring innovative means of payment such as commercial insurance to improve market penetration. For example, two CAR-T therapies approved in China this year, Agilence of Fosun Kate and Regilence of Mingjunuo, are not eligible for this round of medical insurance negotiations. Due to the current high technical barriers, limited patient accessibility and low market penetration. Before entering the national medical insurance directory, it is still necessary to actively organize multi-party science education for experts and patients, explore innovative payment, explore cooperation paths with commercial insurance such as Huimin Insurance, and improve market penetration.

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