Novartis, Pfizer, AZ and more hand China 50%-plus cancer drug discounts

China is quickly approving many of the newest cancer drugs but it also is demanding big discounts if drugmakers want them on its national insurance coverage list. In fact, in the latest round of negotiations, drugmakers offered up discounts averaging 56.7% for medications that included blockbusters from Novartis, Pfizer and AstraZeneca.

All together, 17 cancer drugs (full list below) reached deals with the Chinese government for inclusion on the country’s National Reimbursement Drug List. Of them, 10 are relatively new drugs that just reached China this year or in 2017.

Novartis appears to be the biggest winner, with four drugs listed, followed by Pfizer’s three. But among the 18 drugs originally chosen for final talks, Novartis’ myelofibrosis therapy Jakavi was the only one left without a deal.

AstraZeneca offered the largest discount, 71% for its third-generation EGFR-TKI Tagrisso, according to China Health Insurance, a magazine supervised by China’s Ministry of Human Resources and Social Security. The drug previously cost about 1,760 Chinese yuan ($254) per 80mg pill and will now cost CNY 510.

In addition, Pfizer also cut the prices for renal cell carcinoma drug Inlyta and ALK-positive lung cancer med Xalkori by more than 70%.

Lung cancer is one of the most sought-after therapeutic areas. Boehringer Ingelheim’s Giotrif and Novartis’ Zykadia, which fight head-to-head against Tagrisso and Xalkori, respectively, are now also on the roster. Focus V (anlotinib), developed by local firm Chiatai Tianqing (CTTQ) for third-line non-small cell lung cancer, is the fifth one in this category.

These drugs’ new prices will be subject to re-evaluation after Nov. 30, 2020, and if any generics are approved before that or if the actual market price comes down significantly, authorities will consider adjustment, said the newly formed State Medical Insurance Administration, which negotiated the latest price cuts with companies.

While China has been speeding its drug review, it has also been cracking down on cancer drug prices amid a growing domestic outcry calling for affordability—and as its insurance fund runs tight. It recently removed import tariffs on cancer drugs and cut their import value-added tax to 3%, and then immediately pressured drugmakers to adjust their prices accordingly.

Because the country operates a national medical insurance scheme, getting onto the list means much wider patient reach for biopharma companies. But in the meantime, they’ll need to carefully examine the market to understand the level of discount they can afford in exchange for volume growth.

The government and companies must walk a delicate balance, and China’s state-run China Central Television (CCTV) gave a rare glimpse into the process. It includes document submission from the companies, expert evaluation based on millions of data and pharmacoeconomics models, and culminates in a 30-minute-per-drug face-to-face negotiation.

Erbitux, marketed in China by Merck KGaA, failed the previous 2017 round. This time, according to CCTV, a company’s Chinese representative sought instructions from headquarters several times during the closed-door bargaining, as the government’s ask went below what he had been authorized. In what the executive called "the lowest price in the world," the drug got its deal by taking a 69% discount, to CNY 1,295 per vial.

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