Since its establishment in 2018, the National Healthcare Security Administration (NHSA) has been actively serving economic and social development and continuously injecting new growth momentum into social progress, people’s health improvement, and economic development while effectively managing and using healthcare security funds and striving to resolve people’s worries about disease treatment.
- Supporting the development of medical treatment, medical insurance, and medicines supply. The cumulative expenditure of the pooled healthcare security funds exceeded RMB 10.46 trillion from 2018 to 2023, with average annual growth of 11.6%, which provided a solid guarantee for the public’s access to medical services and strong support for pharmaceutical industry development, medical technology progress, and industrial capacity improvement.
- Supporting pharmaceutical innovation. The NHSA established a medical insurance access and negotiation-based renewal mechanism with a focus on new drugs, which has significantly shortened the time from marketing to inclusion in medical insurance coverage for innovative drugs. From 2018 to 2023, sales revenue of new drugs included in the National Reimbursement Drug List of China (NRDL) through negotiations exceeded RMB 500 billion during the agreement period, with RMB 350 billion paid from the healthcare security funds.
- Supporting access to new drugs. Through the “dual-channel” (designated medical institutions and designated retail pharmacies) management mechanism, some NRDL-included drugs previously available mainly in large hospitals are now available at over 100,000 designated pharmacies nationwide and included in medical insurance reimbursement.
- Increasing medical service income. By the end of 2023, over 90% of regions subject to overall planning across the country implemented DRG/DIP payment reform, and based on the performance assessment results of national tertiary public hospitals in 2022, the proportion of their medical service income grew by 0.7 percentage points compared to the previous year.
- Purifying the pharmaceutical industry ecosystem. Centralized volume-based procurement is conducted on a regular and institutionalized basis, price risks of batches of pharmaceuticals and medical consumables are handled on a rolling basis, artificially high prices of pharmaceuticals and medical consumables are addressed on an ongoing basis, and generic drug enterprises are promoted to gradually transition from the “sales with kickbacks” model to the value orientation of “winning with quality.”
China’s pharmaceutical industry has grown rapidly under the influence of multiple positive factors. The total market capitalization of the top five A-share-listed biopharmaceutical companies by market capitalization doubled from RMB 550 billion to RMB 1.1 trillion from the end of 2018 to November 2024.
China’s healthcare security cause is entering a new stage of historical development. The NHSA, by using the superior socialist healthcare security system with Chinese characteristics, its vast funding scale, and massive data resources and on the basis of steadfastly and continuously advancing various reforms, is proactively planning and launching a raft of incremental policies to further people’s health and wellbeing and stimulate new momentum for economic and social development. Some incremental policies include:
- Policies to vigorously empower healthcare facilities. Policy toolkits in terms of healthcare security fund prepayment and settlement are put to good use to significantly improve cash flow for healthcare facilities nationwide and the industry. Firstly, doing a good job in healthcare security fund prepayment. The NHSA has issued a document together with the Ministry of Finance to unify and improve the healthcare security fund prepayment system at the national level, using “prepayment” as “empowering funds” for healthcare facilities that well implement policies. Secondly, exploring immediate settlement with healthcare facilities using healthcare security funds. The NHSA strives to shorten healthcare security funds’ payment periods to healthcare facilities to help improve medical service quality and efficiency.
- Policies to vigorously empower pharmaceutical enterprises. Substantive measures are further taken to support the high-quality development of pharmaceutical enterprises on the basis of continued advancement of NRDL negotiations for innovative drugs and centralized procurement for generic drugs. Firstly, gradually expanding direct settlement with pharmaceutical enterprises using healthcare security funds. Some places have conducted direct settlement with enterprises selected in centralized procurement using healthcare security funds, with payment settlement cycles reduced from at least six months to around 30 days. For example, from January to June 2024, Inner Mongolia directly settled RMB 4.3 billion in payment for goods with 164 pharmaceutical distribution enterprises selected in centralized procurement, saving them a cost of capital of nearly RMB 100 million. The NHSA will next expand direct settlement with more pharmaceutical and consumable enterprises using healthcare security funds to reduce their cost of funds. Secondly, guiding enterprises to enhance capabilities and expand markets. Policies such as consistency evaluation and centralized volume-based procurement promote China’s generic drug industry to grow “leaner and stronger.” Most enterprises selected in centralized procurement have continued to improve their technical levels, manufacturing processes, and supply capabilities after changing the grey development model of sales with kickbacks. The NHSA supports and encourages related enterprises to, on the premise of ensuring supply to the Chinese market, exert their technical and supply advantages to export products or invest by building factories in countries participating in the Belt and Road Initiative and build Chinese manufacturing brands in the global pharmaceutical market.
- Policies to vigorously empower commercial insurance companies. As an important component of the “1+3+N” multi-tiered healthcare security system, commercial health insurance plays a crucial role in meeting the public’s diverse healthcare security needs. Commercial health insurance premiums reached about RMB 900 billion in China in 2023, with an overall loss ratio to be improved. Commercial health insurance in China faces issues such as information asymmetry, high marketing and underwriting costs of institutions, low loss ratios, and high difficulty in combating insurance fraud. The NHSA is planning, exploring, and advancing related supportive policies such as empowering commercial insurance companies with medical insurance data and synchronizing healthcare security funds and commercial insurance settlement, to largely reduce the underwriting costs of commercial insurance companies, promote them to improve loss ratios, and guide them to develop differently from basic medical insurance development, support and include more innovative pharmaceuticals, consumables, and devices, provide differentiated services, attract more customers, and drive positive benign interaction between the commercial insurance market and basic medical insurance, thereby activating the investment of more potential funds into commercial insurance and promote the application of more new high-end pharmaceutical technologies and products.
- Policies to vigorously support the development of related new quality productive forces. The price mechanism is core to market mechanisms. The NHSA is formulating and introducing initiation guidelines for price items of medical services to uniformly guide localities to standardize price items of medical services. Upon localities’ implementation of the initiation guidelines, healthcare facilities can charge legally based on local medical service price items and levels. These initiation guidelines will not only promote the healthy development of healthcare facilities but also strongly support the development of related new quality productive forces. For example, firstly, the initiation guidelines will drive the development of artificial intelligence (AI) technology. Integrating AI with medical imaging has become an important development trend in the medical field in recent years. Based on learning of massive historical cases, AI technology can aid doctors in rapidly and accurately identifying related medical image data to help improve doctors’ diagnosis accuracy and efficiency. The NHSA uniformly sets the “AI-assisted diagnosis” extension item in the initiation guidelines for price items of radiological examinations and encourages the broader and deeper application of AI-assisted diagnostic techniques, which will effectively promote the rapid progress of AI technology and the sustainable development of the industry. Secondly, the initiation guidelines will drive technological innovation in cloud storage, cloud computing, etc. In the initiation guidelines, the NHSA includes “digital image processing, uploading, and cloud storage” in the price composition of radiological examinations to drive the rapid cloud storage of medical images. This will not only accelerate the digitalization and strengthen the standardization of medical imaging technology but also promote the optimization of cloud storage technology and rapid popularization of cloud computing technology. Thirdly, the initiation guidelines will drive the development of the low-altitude economy. The NHSA adds the price item of “air medical transport” in the initiation guidelines for price items of comprehensive medical examinations, for which the charging standard is independently set by healthcare facilities. Given the functional positioning of “basic insurance” of the basic medical insurance system, the price item is not included in the scope of basic medical insurance reimbursement, and commercial insurance companies are encouraged to study and include it in their coverage. Regulated by price policies, more and more healthcare facilities are expected to work with aviation enterprises to provide air medical transport services according to local conditions, which will not only construct an air-ground integrated three-dimensional rescue network and rapidly and efficiently marshal medical resources but also accelerate the healthy development of the aviation economy, especially the application of low-flying aircraft in the medical field.
People’s health demand grows as the economy and society develop. The NHSA will continue to effectively manage and use healthcare security funds, to provide a solid guarantee for safeguarding the life and health of all people while injecting powerful momentum into the development of related industries, including the pharmaceutical industry, and promoting these industries to offer more efficient, safer, and more accessible and affordable pharmaceutical products and medical services to all people, thereby contributing to the building of Healthy China at a higher level.
Source: National Healthcare Security Administration