Influencing factors analysis on price reduction in national volume-based drug procurement.

Corresponding author: Yang Li, lyang@bjmu.edu.cn

DOI: 10.12201/bmr.202203.00008

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  Abstract: Objectives: To analyze the influencing factors on price reduction in national volume-based procurement (NVBP) in China, so as to investigate the effect of NVBP and probable improvements. Methods: The results from the 2nd-5th rounds of NVBP were selected in analysis. Bidding results including the prices reduction and bid winner were selected as dependent variables. Company characteristics and competition status were chosen as independent variables. A Heckman two stage model was conducted for potential selection bias. Results: Manufactures of brand drugs are less likely to become bid-winner but their price reduction is 41% higher than manufactures of generics. Companies with higher market share (>50%) are less likely to win the bids compare with companies with less (0-50%) or zero share of market. Besides, the price reduction of companies with less market share are 7% fewer than other companies. Manufactures with ability to extract active pharmaceutical ingredients from raw materials are more likely to win but no difference in price reduction was observed. When potential competitors in group increased by 1%, the price reduction increased by 0.26 percentage and companies are less likely to win. Conclusion: VBP program can effectively promote the appearance of “patent cliff” in China and rationalize the pricing mechanism of drugs. However, more importance could be attached to ability of extracting active pharmaceutical ingredients and establishment of dynamic trigger mechanism, which could further improve the supply security and lowering the prices under market mechanism.

  Key words: volume-based procurement; price; influencing factors

  Submit time: 21 March 2022

  Copyright: The copyright holder for this preprint is the author/funder, who has granted biomedRxiv a license to display the preprint in perpetuity.
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