China, drugmakers negotiate price cuts

As part of a new program, China’s central government and three drug manufacturers have agreed on major reductions in the price of three patented drugs. The agreement may provide a blueprint for resolving the conflicting interests of patients seeking access to essential drugs and major drug companies trying to earn a profit in China.

GlaxoSmithKline, which is trying to rebuild its reputation in China after a 2014 bribery scandal, will reduce by two thirds the price of Viread, an antiretroviral that treats hepatitis B and HIV. Hepatitis B afflicts more than 7% of China’s population, and some 28 million people in the country are said to be in need of antiviral treatment.

AstraZeneca will cut by more than half the price of its breast and lung cancer drug Iressa. And the Chinese firm Beta Pharma will also more than halve the price of its lung cancer drug Conmana, which was approved for sale in China in 2011 and is undergoing trials in the U.S.

GSK and Beta both cheered the agreement, reached with the National Health & Family Planning Commission. Patients will be reimbursed through the country’s national health insurance program, the companies noted. Moreover, the negotiated prices will apply to all of China, enabling firms to bypass provincial tendering processes.

China is the world’s second-largest pharmaceutical market after the U.S. However, major drug companies have found it challenging to sell profitably in the country. New drugs are often approved for sale in China years after they are available in other countries. And many drugs are only sold through provincial tendering processes that can result in profit-crushing price reductions of as much as 80%.