The Chinese government has introduced a new five-step drug pricing procedure which aims to standardise pricing, beat corruption and make the system in the country more transparent.

The National Development and Reform Commission (NDRC) has introduced an interim regulation which requires the following steps to be followed before a drug’s price can be determined:

– at least two official drug price regulators must visit the manufacturer to check the costs of the product’s raw materials;

– the proposed price is then evaluated by members of the new official expert group on drug pricing, who are chosen for these projects at random and work under the supervision of the Commission’s disciplinary unit;

– a public hearing will be held, to enable consumers to present their views of the proposed price:

– group discussions; and

– group examinations.

At least two drug price regulators must be present during the cost investigations, and the final pricing decision has to be signed off by all members of the investigation group, the regulation states. There is an express ban on regulators accepting any gifts or overseas travel, and they will work to a five-year rotation system to prevent them from developing close relationships with particular manufacturers.

This new procedure follows the anti-corruption measures introduced in January which resulted from the investigations into allegations that Zheng Xiaoyu, former director of the State Food and Drug Administration (SFDA), had abused his position by taking bribes. Under these new procedures, any company found attempting to bribe officials can be prohibited from doing business with medical institutions in China, and all meetings with overseas firms must be conducted through the auspices of the NDRC.

The Commission has also capped the consumer prices of many medicines and reduced them for thousands of others, although local reports say that this has resulted in some manufacturers removing the drugs from the market and then introducing new versions with similar ingredients but at higher prices.

Inspections tightened

Meantime, the SFDA has also announced that it is strengthening its pharmaceutical manufacturing site investigations in order to improve safety and tackle counterfeiting. Specifically, by the end of March, SFDA investigators will be sent to examine the facilities of companies manufacturing “high-risk” medicines such as blood products and vaccines, to ensure their compliance with the Good Manufacturing Practice (GMP) certification system.

On February 27, SFDA deputy director Wu Zhen said that, since last August, the agency has rejected some 3,049 applications for the manufacture of new drugs because they failed to meet the required standards, and has also revoked the licences of 353 medicines. The agency is also re-examining companies which received GMP certification for the manufacture of new drugs in 2004 and 2005. By Lynne Taylor