The pan-Canadian Tiered Pricing Framework and Chinese ...

The pan-Canadian Tiered Pricing Framework and Chinese National Volume-Based Procurement

There is a directional relationship among the three dimensions in the linear model, each component being influenced by the preceding one positively or negatively. In the subsequent sections, these three components are explored in-depth to offer a detailed analysis of the TPF and NVBP policies.

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Outcome of the Analysis

The outcome describes the concrete results stemming from structure and process antecedents. The comparative outcome of negotiation, price reductions, and the effects on key stakeholders such as patients, healthcare providers, and pharmaceutical companies will be assessed.

Process Description

The structure defines the settings where policies occur, such as the macro context of the healthcare system, including its design and reform objectives. Meanwhile, the process refers to every clear step taken by the structure as part of the overall policy implementation progress. This involves concrete procedures from policy initiation to drug insurance listing.

Analysis Materials

Materials used in this analysis include published studies, opinions from experts, and interaction with policymakers. We utilized inferential, deductive, and counterfactual reasoning to examine our hypotheses, drawing on a wide range of expertise in the field.

Comparative Analysis

Structure

Tiered Pricing Framework Structure

The Canadian healthcare system is highly decentralized with 13 provinces/territories responsible for healthcare services. Despite the lack of mandatory universal drug coverage, all Canadians can access medically essential services with no out-of-pocket fees. The pan-Canadian Pricing Alliance was created in 2010 to negotiate price discounts for public drug plans across provinces/territories.

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National Volume-Based Procurement Structure

The Chinese healthcare system, though undergone decentralization, is still heavily influenced by the central government. In 2018, China introduced the National Volume-Based Procurement (NVBP) program, starting with the "4 + 7 scheme" and involving provincial entities by 2019. This was aimed at large-scale, group purchases of high-quality drugs to reduce costs and ensure drug supply security.

Structure Comparison

The structure dimension is complex, with Canada's healthcare system relatively stable compared to China’s actively transitioning system. While both TPF and NVBP aim to lower drug prices, they serve different missions due to their unique healthcare structures and histories. Canada's decentralized system emphasizes cross-province drug price consistency, while China focuses on patient financial burden and overprescribing issues.

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Process

Tiered Pricing Framework Process

The TPF for generic drugs involves tier-based pricing, market entry, and exit activities where manufacturers adjust prices according to pCPA-calculated unit prices. Only changes in TPF tiers trigger price changes, with no central process for price increase applications.

National Volume-Based Procurement Process

The NVBP involves biannual tendering covering specific drugs required by the NHIL. The price is a crucial criterion during bidding, leading public medical institutions to estimate the total purchase volume based on past consumption.

Process Comparison

Although TPF is a tiered pricing scheme and NVBP is a tendering process, both programs are significantly influenced by their respective structural factors. The TPF aims at ensuring price consistency, a suitable approach for Canada's mature pharmaceutical market, while NVBP focuses on patient burden and pharmaceutical regulation through government-induced purchasing power shift.

A notable difference is NVBP linking pricing directly with procurement, requiring extensive governmental support to ensure contract fulfillment and incentivize the use of winning drugs. This method contrasts with TPF where procurement is indirectly influenced.

Outcome

Tiered Pricing Framework Outcomes

From its inception to July 2022, TPF assessed and priced 748 types of generic drugs, resulting in an average price reduction of 53% and saving an annual total of 740 million CAD. It also helped maintain consistency in generic drug pricing across provinces and accelerated generic entry in smaller markets.

National Volume-Based Procurement Outcomes

By the end of 2022, NVBP had conducted seven rounds covering 294 drugs with an average price cut of 53%, saving approximately 51 billion CAD. It also alleviated patients’ financial burdens and motivated doctors to prescribe more affordable drugs.

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