CHINA Law and Practice Contributed by: Alan Zhou, Coco Fan, Kelly Cao and Stephanie Wang, Global Law Office
and regulations specify several reasons for pro- hibiting importing, including but not limited to:
• prices for drugs reimbursed by the BMI funds are determined by authorities, including the NHSA, and prices for certain drugs covered by the BMI funds are fixed through nego- tiations between the NHSA and suppliers thereof; • the government centralised procurement, which offers strong bargaining power to the procuring side, gives a favourable procure- ment price to hospitals and drug stores participating in centralised procurement, and may set pricing rules for manufacturers and wholesalers; • the “two-invoice system” eliminates multi- tiered distribution channels and lowers drug prices; and • the enforcement of “zero mark-up policy” means that public hospitals may not add any mark-up when selling drugs to patients. Medical Devices There is no nationwide regulation or policy spe- cifically and directly controlling the pricing of all medical devices. However, the pricing of medical devices may be significantly influenced by the following regulatory factors: • the pricing of certain medical devices is indi- rectly restricted because national and local rules limit the amount that a public hospital may charge patients for medical services, and the cost of medical devices used in these services may be included in those charges; • the procurement of certain costly medical devices by hospitals is strictly controlled by planning at the central and provincial levels; and • centralised procurement, the “two-invoice system” and the “zero mark-up policy” may also be applied to the procurement of certain high-value medical consumables by public hospitals, etc.
• uncertain curative effect; • serious adverse reaction; • harm to the human body; • expired; • invalid; • obsolete; or • used. 7.5 Trade Blocs and Free Trade Agreements
China has signed and acceded to various trade blocs and free trade agreements, including the Regional Comprehensive Economic Partnership, the Framework Agreement on Comprehensive Economic Cooperation with ten members of the Association of South-East Asian Nations, the Preferential Trade Agreement (the Asia-Pacific Trade Agreement) and 18 bilateral free trade agreements (FTAs). Based on the official website of the China FTA Network, several other FTAs are also being negotiated and considered. 8. Pharmaceutical and Medical Device Pricing and Reimbursement 8.1 Price Control for Pharmaceuticals and Medical Devices Pharmaceuticals The prices of most drugs are mainly determined by market competition, while the prices for nar- cotic drugs and Class I psychotropic drugs that are listed in the Central Pricing Catalogue are capped by the government. Nonetheless, government policies may have a significant effect on the pricing of drugs. For example:
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