The vacated space of volume/price of the drugs centralized procurement with quantity in secondary and above public hospitals of China

Abstract

Abstract Background In 2018, the National Centralized Drug Procurement (NCDP) policy has been implemented in 11 provinces, and promoted across the country in 2019. The main feature of the policy is “volume for price”, therefore, it is necessary to measure the price relationship, not only to reduce the price of drugs, reduce the burden of patients' medical costs, but also facilitate pharmaceutical companies to access enough innovation incentives. The aim of this study was to assess the vacated space effect of the drug centralized procurement by national organizations in exchange of price for quantity. Methods A difference-in-differences (DID) model was employed to analyze the effect of the 4 + 7 pilot drugs centralized purchasing policy on drug sales volume and selected versus clinically substitutable unselected varieties, using observational data from 2018 to 2019. We compared drug procurement data between secondary and above public hospitals in pilot and non-pilot cities throughout China. Results The study showed that the average treatment effect (ATE) of sales in the in-hospital market for the selected supply varieties in centralized purchasing is -0.42, and with a sales volume of 0.49. This indicates a volume-price vacated space of 1.16 ~ 1.17 DDD (defined daily dose)/Yuan, implying that for every 1 defined daily dose (DDD) increase in reported volume, the standardized price decreased by 1.16–1.17 Yuan. The ATE of in-hospital market sales for drugs not selected in centralized procurement shows a decrease of 0.13. This finding highlights the presence of the price linkage effect. The ATE of sales volume is 0.57, indicating a volume-price space of 4.38 ~ 4.39 DDD/Yuan for unselected drugs, approximately 3.75 higher relative to that of the selected ones. Conclusions The ratio of the volume-price space of clinically substitutable unselected and selected drugs may serve as direct evidence for evaluating the shift from centralized purchasing of drug varieties to clinically substitutable other ones. To strengthen the volume-based negotiation approach and maximize the effectiveness of centralized purchasing policies, we recommend the strategic implementation of a three-tiered centralized purchasing system, the expansion of drug coverage, and the introduction of relevant constraints and incentives.

Keywords

• National Centralized Drug Procurement policy
• Difference in difference
• Exchange a sales volume for a price