The State Council approved State-run centralized medicine procurement and 11 pilot cities for the program in a circular issued on Jan 17. It is an effort to deepen reform of the medical and health sector and optimize the pricing system of drugs.

According to the circular, in the 11 pilot cities — Beijing, Tianjin, Shanghai, Chongqing, Shenyang, Dalian, Xiamen, Guangzhou, Shenzhen, Chengdu, and Xi’an — drugs will be selected from generic brands for centralized medicine procurement. The selected drugs must pass the consistency evaluation on quality and effectiveness.

The policy is aimed at lowering drug costs for patients, reducing transaction costs for enterprises, regulating drug use of institutions, and improving the centralized medicine procurement and pricing system.

The centralized procurement is open to all approved enterprises that can produce drugs on the procurement list in the Chinese mainland.

Clinical effects, adverse reactions, and batch stability of the drugs will be considered, and their consistency will be the main criteria for evaluation, while production capacity and stability of the supplier will also be considered.

In practice, centralized procurement will be about 60 percent to 70 percent of the annual drugs purchased by public hospitals in the pilot regions.

The working group for the centralized medicine procurement and pilot cities consists of the General Office of the State Council, the State Medical Insurance Administration, National Health Commission, and the State Food and Drug Administration.