Challenges for pharmaceutical companies under China’s new drug pricing regime

This spring saw China making a series of legislative and policy reforms to relax the administrative controls over drug prices that have been in place for more than decade and which relate to the majority of drugs sold in China. The reforms are aimed at creating a new system whereby drug prices are mainly determined as a result of orderly market competition rather than set by the authorities.

However, the reforms do not mean that pharmaceutical companies can determine drug prices arbitrarily. In reality, they will need to give even more emphasis to assessing whether they comply with relevant laws in determining drug prices since, as a result of the reforms, the PRC antitrust authorities will establish a monitoring system and intensify investigations into any anti-competitive pricing behaviours. As part of the reform, NDRC has announced the launch of a six-month nationwide investigation into drug pricing practices.

This alert summarises the recent developments in relation to drug prices in China and sets out the implications of such developments. 

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