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Chinese regulators are investigating the quality of domestic generic drugs after a rare public backlash against a cost-cutting campaign that prioritised their use in the national healthcare system but has led to doctors complaining about their effectiveness.
The probe comes amid increasing concerns among foreign pharmaceutical companies that China’s drug procurement system, in which producers bid for bulk tenders to supply public hospitals, in effect discriminates against international competition.
China’s pharmaceuticals market is one of the most important for drug companies, second in size only to the US, with sales of $239bn in 2023, according to a report by research group Frost & Sullivan.
But healthcare costs in the country have soared, and Chinese policymakers have sought for years to revamp the medical insurance system and rein in prices. In 2018, they began rolling out a centralised drug procurement scheme, replacing a fragmented system in which hospitals negotiated individually for medical supplies.
The programme drove down costs, with the average price of some medications falling more than 50 per cent. But some of those discounts came from replacing more expensive, off-patent drugs from companies such as AstraZeneca and GSK with cheaper domestic alternatives. Patients and doctors have expressed concerns about the effectiveness of some domestic generics.
In a rare public complaint on January 16, Zheng Minhua, a senior surgeon at Shanghai’s Ruijin Hospital, and 19 other prominent doctors, said it was an “undeniable fact” that domestic drugs showed poor efficacy with their patients, even when dosages were increased.
“Hypertension does not drop effectively, anaesthetics do not put patients to sleep and laxatives do not cause diarrhoea,” they wrote in a policy proposal submitted to Shanghai’s municipal legislature and seen by the Financial Times. “Questionable drug efficacy poses the greatest safety risk to patients,” they added.
The doctors called for “greater flexibility” in drug contract bidding to have western brand-named drugs covered by insurance.
Growing public anger prompted the National Healthcare Security Administration to dispatch a team to Shanghai last Tuesday to examine hospital data on domestic generic prescriptions, according to a statement.
The issue of medical safety is especially sensitive in China, where past scandals over tainted infant formula and blood transfusions that had proven deadly stoked public outrage over lax regulations.
Chinese patients can still purchase some foreign drugs online, but they are not covered by insurance, and doctors usually do not provide advice on non-approved medication. In the procurement process for Shanghai’s public health system last month, more than 20 foreign brands including Pfizer, Bayer and MSD sent bids for 32 off-patent drugs. None were selected.
Foreign companies have also become increasingly vocal about lack of access to China’s drugs and medical devices market.
The European Union Chamber of Commerce in China told the FT it “would closely monitor” the probe, adding that it hoped “to see steps taken to ensure that the procurement system for drugs does not prioritise low prices at the expense of product safety and clinical outcomes”.
American Chamber of Commerce in China president Michael Hart said: “If companies can’t sell and make a reasonable profit in China, they won’t offer their products and services to China. And we think that would be to the detriment of the healthcare market.”
One nurse who works in an operating room at a top hospital in Shanghai expressed concerns that domestic medical devices were often inferior to foreign competitors.
“Items like tumour removal forceps may look identical to imported ones, [but] during precise operations, domestic tools often fail to grip properly,” they said, adding that there were cases of patients “waking up during surgeries” after taking domestically produced anaesthetics.
Jumbo, a 35-year-old lecturer in Shanghai who preferred to be identified by one name, was prescribed a Chinese antiviral drug at a public hospital for chickenpox last year.
But the virus spread aggressively, and her own research led her to believe the drug’s active ingredient was far less effective than imported alternatives such as GSK’s Valtrex. She doubled her dosage without consulting her doctor.
“I understand why hospitals prescribe domestic drugs, but I’m willing to pay for more expensive foreign medications,” Jumbo said. “Patients need all available treatment options and the healthcare system should not block us from another path.”
Additional reporting by Wang Xueqiao in Shanghai
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