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A Case Study of Pharmaceutical Pricing in China: Setting the Price for Off-Patent Originators

Author

Listed:
  • Shanlian Hu

  • Yabing Zhang
  • Jiangjiang He
  • Lixia Du
  • Mingfei Xu
  • Chunyan Xie
  • Ying Peng
  • Linan Wang

Abstract

This article aims to define a value-based approach to pricing and reimbursement for off-patent originators using a multiple criteria decision analysis (MCDA) approach centered on a systematic analysis of current pricing and reimbursement policies in China. A drug price policy review was combined with a quantitative analysis of China’s drug purchasing database. Policy preferences were identified through a MCDA performed by interviewing well-known academic experts and industry stakeholders. The study findings indicate that the current Chinese price policy includes cost-based pricing and the establishment of maximum retail prices and premiums for off-patent originators, whereas reference pricing may be adopted in the future. The literature review revealed significant differences in the dissolution profiles between originators and generics; therefore, dissolution profiles need to be improved. Market data analysis showed that the overall price ratio of generics and off-patent originators was around 0.54–0.59 in 2002–2011, with a 40 % price difference, on average. Ten differentiating value attributes were identified and MCDA was applied to test the impact of three pricing policy scenarios. With the condition of implementing quality consistency regulations and controls, a reduction in the price gap between high-quality off-patent products (including originator and generics) seemed to be the preferred policy. Patents of many drugs will expire within the next 10 years; thus, pricing will be an issue of importance for off-patent originators and generic alternatives. Copyright The Author(s) 2015

Suggested Citation

  • Shanlian Hu & Yabing Zhang & Jiangjiang He & Lixia Du & Mingfei Xu & Chunyan Xie & Ying Peng & Linan Wang, 2015. "A Case Study of Pharmaceutical Pricing in China: Setting the Price for Off-Patent Originators," Applied Health Economics and Health Policy, Springer, vol. 13(1), pages 13-20, August.
    • Handle: RePEc:spr:aphecp:v:13:y:2015:i:1:p:13-20
    DOI: 10.1007/s40258-014-0150-5
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    References listed on IDEAS

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    1. Dodgson, JS & Spackman, M & Pearman, A & Phillips, LD, 2009. "Multi-criteria analysis: a manual," Economic History Working Papers 12761, London School of Economics and Political Science, Department of Economic History.
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    1. Livio Garattini & Katelijne Vooren, 2015. "Safety and Quality of Generic Drugs: A Never Ending Debate Fostered by Economic Interests?," Applied Health Economics and Health Policy, Springer, vol. 13(1), pages 3-4, August.
    2. Varsha Bangalee & Fatima Suleman, 2018. "A Comparative Study on Medicine Pricing in Brazil, Russia, India, China and South Africa (BRICS)," Global Journal of Health Science, Canadian Center of Science and Education, vol. 10(10), pages 152-152, October.
    3. Toon van der Gronde & Carin A Uyl-de Groot & Toine Pieters, 2017. "Addressing the challenge of high-priced prescription drugs in the era of precision medicine: A systematic review of drug life cycles, therapeutic drug markets and regulatory frameworks," PLOS ONE, Public Library of Science, vol. 12(8), pages 1-34, August.

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