New policies supporting innovation across the full value chain

The first-ever mention of "Innovative Medicine" in the Government Work Report opened up unprecedented development opportunities within the biopharmaceutical industry. In March, the discussion around "Full Value Chain Support for Innovative Drugs" became a focal point in the pharmaceutical industry, with the circulation of relevant implementation plan drafts injecting strong confidence into the industry.

While it will take some time for these policies to be implemented on a national level, local policies have emerged to kickstart the process. In April, Beijing, Guangzhou, and Zhuhai upgraded their industrial policies to attract high-quality talents and enterprises.

The policies supporting the high-quality development of the biopharmaceutical industry in Guangzhou Development District (Huangpu District) and Zhuhai revolve around industrial environment construction. Biopharmaceutical companies that achieve innovation milestones could receive awards or generous monetary compensation of up to RMB 5 billion.

The Measures to Support Innovative Medicines’ High-quality Development 2024 ("Beijing Measures") differ in approach from those of Guangzhou and Zhuhai in that they are aimed at accelerating R&D projects, streamlining the review and approval processes for innovative medicines, and promoting the clinical application and commercialisation of innovative technologies.

The final Beijing Measures were issued only 10 days after its draft was released for public comment. Aligning with the central government's policies, the Beijing Measures provide comprehensive policy support for innovative pharmaceutical and device companies along each step of the industry chain, including R&D, production, review, and application.

One of the most encouraging developments emerging from the Beijing Measures is the expansion of payment channels for innovative technologies. For instance, it states that "commercial insurance companies will be encouraged to collaborate with medical institutions and pharmaceutical companies to develop specialised commercial health insurance products covering innovative medicines and health management services." This initiative not only supports developing projects but also extends coverage to a broader market of innovative medicines and devices.

Furthermore, the Beijing Measures offer specific solutions to the pain points faced by innovative pharmaceutical companies. Some examples include:

• Removal of limitations on the number of drugs in medical institutions, accompanied by the implementation of a standardised process to promptly update the medical institution's drug list following the release of the new National Reimbursement Drug List (NRDL).
• Fast-tracking the pricing process and insurance reimbursement evaluation of innovative medicines and equipment.
• Exemption of eligible innovative medicines and equipment from the Diagnosis Related Groups (DRG) payment system, allowing them to be paid by a separate mechanism.

It is anticipated that these policies, once thoroughly implemented, will greatly accelerate the development of China's biopharmaceutical industry. However, some practical hurdles remain. The risk of financial subsidies leading to market overheating, the proficiency of healthcare practitioners in mastering innovative medical technologies, and the effective integration of commercial insurance with basic medical insurance are challenges that need to be addressed at the implementation stage.