National Health Insurance Administration: This round of centralized procurement will no longer simply select the lowest bid, but will require companies to quote not lower than the cost price.

Today, the National Medical Insurance Administration issued the eleventh batch of national organized centralized drug procurement documents. In the formulation and modification process of this centralized procurement plan, the principles of "stabilizing the clinical, ensuring quality, preventing bidding circles, and resisting internal competition" were fully followed. 1. Regarding "stabilizing the clinical". Ensuring the clinical medication needs is the basic goal of centralized procurement and also the focus of optimizing centralized procurement measures. First, optimize the reporting method of medical institutions. In the past centralized procurement of drugs, medical institutions reported drug names based on the generic name. In the 11th batch of centralized procurement, medical institutions can report drug names based on the generic name as before, or they can report specific brand names. If the brand reported by the medical institution is selected, it will directly become the supplying company for the medical institution, enhancing the alignment between clinical demand and supply. The improvement of the reporting rules has received support from a large number of medical institutions and companies. 46,000 medical institutions participated in the reporting of this centralized procurement, and 77% of the reports were specific to the brand. Second, reasonably determine the agreed procurement quantity. In the centralized procurement, 60%-80% of the drug quantities reported by medical institutions are used as the competitive target for companies. This part is the agreed procurement quantity of medical institutions, and the remaining part is still chosen by the medical institutions based on their own preferences. Third, adopt selection rules that are closer to the actual clinical medication. For companies with high demand from medical institutions but whose prices did not qualify, if they are willing to accept the selected price of the qualified companies, they are given a chance to be selected, encouraging leading companies to actively participate in selections to better meet clinical demand. Fourth, pay attention to ensuring the supply of pediatric drugs. Together with relevant departments and experts, special deliberation was conducted on the price comparison rules for pediatric appropriate small-sized drug formulations, such as oral solutions, dry mixtures, granules, injections, and others. The price comparison is based on "content difference" instead of "container difference". After the adjustment, the prices for small-sized drugs were slightly relaxed to encourage the supply of pediatric appropriate small-sized drugs. 2. Regarding "ensuring quality". This centralized procurement fully sought and adopted the opinions of the drug supervision departments and market regulation departments, and while ensuring fairness, higher requirements were set for the quality control levels of bidding companies. First, companies are required to have a certain level of production experience. Bidding companies or their commissioned production companies are required to have over 2 years of production experience in the same type of formulations, and the production lines of the bidding drugs must pass the pharmaceutical GMP compliance inspection. Second, requirements for production quality inspections. The previous requirement that the bidding drugs had not violated GMP regulations within 2 years has been expanded to include the production lines of the bidding drugs. Third, priority is given to companies with clinical recognition and stable quality. When companies have the same price, those with more reports from medical institutions or those that have not made significant changes in production processes, active ingredients, major excipients, etc., are given priority. 3. Regarding "preventing bidding circles". This centralized procurement further improved measures to prevent bidding circle behaviors. First, continued restrictions on bidding from related companies. Companies with close relationships in terms of shareholding, management, registration, or commissioning for production are considered as one entity when bidding. Second, the introduction of a mechanism for "leniency for the first whistle". Companies that are the first to provide information on bid circling and provide valid evidence, as well as those who voluntarily admit involvement in bid circling during the investigation, may receive lenient treatment according to the law and regulations to break the alliance of interests among bidding companies. Third, increased efforts to prevent and crack down on bid circling behaviors. For companies engaging in bid circling in the national organized drug procurement, in addition to being listed in the "violation list" based on the procurement bid documents, they will also be subject to the strictest penalties according to the medical price and procurement credit evaluation system. 4. Regarding "resisting internal competition". The centralized procurement follows an open, transparent, fair, and just market competition mechanism, where companies participate voluntarily and make independent bids, while also explicitly opposing excessive internal competition. First, optimize the rules for determining the highest effective bid price. Under the "weak elimination" rule where most companies can be selected, the highest effective bid price is an important measure to prevent extreme events of "significant price increases" in selection. Additionally, suggestions from industry associations and companies were fully incorporated. In provincial-level centralized procurement, the lower prices resulting from "exclusive selection" are not considered in the calculation of the highest effective bid price to avoid excessively low prices for individual drugs. Second, optimize the control "anchor" for price differentials. To ensure fairness, this centralized procurement continues to control the difference in selected prices. To prevent certain companies from quoting unusually low prices to "trip" other normally priced companies, leading to excessively low selected prices for the entire drug, the centralized procurement optimized the selection of the price differential control "anchor" by not simply using the lowest bid price. When the "lowest price" is lower than "50% of the average price", the "50% of the average price" is used as the anchor for controlling the price differential. Experts simulated the pricing of over 200 drugs in the 7th-10th batches of centralized procurement, and in cases where the highest and lowest prices were more than 1.8 times apart, under the current rules, around 1/4 of the drugs triggered an increase in the "anchor" price, resulting in an average increase of 34% compared to the lowest bid price and a maximum increase of 170%, effectively playing a role in resisting internal competition. Third, companies are required to bid not below the cost price. Each bidding company must commit to bid no lower than the cost price. For companies bidding below the "anchor price", they are required to declare the rationale behind their bid price, explaining the specific cost structure including manufacturing costs, overhead expenses, sales profits, etc., to address concerns from society about low-priced selections. Furthermore, this centralized procurement will further strengthen the implementation of the selected results. Selected companies are required to be the primary suppliers to ensure supply guarantees, to respond promptly to orders from medical institutions and complete deliveries on time. Medical institutions are encouraged to prioritize the procurement of selected products, complete the agreed purchase quantities according to the agreement, and fulfill their obligations for timely payment. This article was sourced from "CCTV News" and edited by GMTEight: Liu Jiayin.