China Promotes Distribution of Medicare-covered Drugs Through Double Channel

China permits qualified drug stores to sell prescription drugs included in the National Reimbursement Drug List. At these drug stores, people can enjoy the same medical care payment coverage with hospitals. The policy intends to add another sales channel for the drugs outside hospitals, especially for the newly listed drugs through centralized procurement.
by Grace Wang May 24, 2021

On May 10, 2021, China National Healthcare Security Administration (NHSA) and National Health Commission (NHC) published a guidance on improving the "double channel" management system1 for drugs covered by social healthcare insurance. The drugs are also known as the medicines in the National Reimbursement Drug List (NRDL)

What Is "Double Channel"?

The "double channel" management means that designated healthcare institutions and qualified drug retailers can sell Medicare-covered drugs. The two channels offer an equal level of social health coverage. The "double channel" is intended to ensure the drug supply and support the clinical use of these drugs, said NHSA and NHC.

Drugs Most Likely to Benefit from "Double Channel"

The two authorities required the "double channel" management system to include the drugs which have high clinical value, few alternatives and are urgently needed by patients.

Thanks to the new policy, prescription drugs will be more likely to undergo a sales growth in comparison with OTC (Over-the-Counter) medicines which are already available at drugstores. In the past, prescription drugs were only allowed to be dispensed at hospitals or with prescriptions at DTP (direct to patient) pharmacies but now they are also accessible at designated retail drug stores.

Anti-neoplastic medicines are also expected to benefit from the "double channel". Antitumor drugs occupy the most places in the first batch of 19 drugs, which were selected from the products newly included in the 2020 NRDL. Now they have been made for sale at the 1,417 designated medical institutions such as public hospitals and 1,907 designated drugstores across China.2 These anti-neoplastic drugs include Niraparib Tosilate Capsules, Tislelizumab Injections and Toripalimab Injections. 

In the future, an increasing number of drugs will be selected by NHSA, then manufacturers will have chance of distributing qualified drug products through the designated channels.

Why "Double Channel"?

The reason is to resolve the difficulty for Medicare-listed drugs to enter hospitals. Before the establishment of "double channel", a drug may come across several obstacles to access patients through hospitals:

1.Lengthy Procedure for Drugs to Enter Hospitals

It usually takes a long time for a drug to go through the five steps as follows:

(1)    Clinicians submit applications to the relevant medical department in the hospital after assessing the risks and rewards of the candidate drugs.

(2)    The medical department conducts an initial selection of the candidate products.

(3)    The conclusion of the previous selection is submitted to a medical committee consisting of experts in the hospital. The committee will then carry out formal reviews of the drugs' manufacturing licenses.

(4)    The hospital holds periodic meetings for further selecting the drugs. During the meeting, the clinician who submitted the applications should elaborate on issues such as the comparison of the candidate drug with the currently available ones in the hospital. Experts will discuss and vote on the candidate drug. Only the drug winning more than two-thirds of the votes can get the permit to enter the hospital.

(5)    The hospital releases the information of the medicines approved by the selection meeting and the drugs replaced by the newly granted ones. It will choose distributors from the manufacturers which won the bid for supplying the drug. The hospital's pharmacy will then procure the approved drugs.

*In general, only by entering the NRDL can drugs be admitted into hospitals.

The procedure remains the same with the frequency of drug selection meetings held only once or twice a year at tertiary A-level hospitals. In contrast, the NRDL's adjustments become more frequent from every eight years to the current rate of about once a year. So a specific drug may meet the expiry of a fixed two-year term contract of staying in the NRDL before getting admitted into a hospital. 

Since the way to a hospital is lengthy, "Double Channel" was launched to add the designated drug stores as another market access for NRDL-listed drugs.

2. Limit of Drugs in the Hospital

There is a limit on the number of drug products at hospitals. For example, a public hospital with more than 800 beds are usually equipped with no more than 1,500 drugs, including 1,200 western drugs and 300 traditional Chinese medicines. The upper limit adds to the intensity for drugs competing for the places at hospitals.

3. Hospitals Earn Little from Selling Drugs

One of the reasons public hospitals are reluctant to procure drugs is that they get little or no profits from the deed. Hospitals were allowed to charge 15% higher than the original purchase price. But now the drug markups are canceled as required by the comprehensive reform in public hospitals. Thus, there is little gain for hospitals to procure new drugs.

In conclusion, the "double channel" means broader access to market for drug suppliers whose products are listed in NRDL. ChemLinked BaiPharm team will continue following the policy and convey its latest updates to you. 

Grace Wang
ChemLinked Regulatory Analyst
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