China's plan to boost drug coverage by commercial insurers no ‘magic wand', analysts say

South China Morning Post

4 days ago

Beijing's plan to publish China's first list of innovative drugs eligible for coverage by commercial health insurance will draw keen interest from pharmaceutical companies, but is not a 'magic wand', as insurers lack sufficient incentives to provide the coverage, analysts said.
The National Healthcare Security Administration, in charge of the state-run basic healthcare insurance scheme, said in a policy document on July 1 that it would publish the list this year, primarily including drugs that were not
covered by state insurance but were highly innovative and provided clear improvements in medical outcomes.
The list would be a 'major attempt to better meet the public's multi-level and diverse drugs demand', said Huang Xinyu, head of the administration's medical services management department, on July 11, as reported by Xinhua.
Both domestic and multinational drug developers will likely be drawn to the initiative, but the same cannot be said of insurers, said Webster Guo, principal at L.E.K. Consulting's China healthcare practice.
'There's likely no harm for drug companies to apply [to have their products included],' he said. 'If you are lagging behind your competitors, the downside could be significant.'
But the situation presented an 'impossible triangle' for insurers, who would struggle to devise products that would achieve national coverage while providing sufficient reimbursement levels at a price that people were willing to pay, he said, because the source of funding was 'not solved'.
Commercial health-insurance payouts of 383.8 billion yuan (US$53.5 billion) in 2023 covered only 6.8 per cent of total direct healthcare costs, while state basic health insurance covered 49.7 per cent and patients paid for 43.5 per cent themselves, according to the Shanghai Insurance Association.