Encouraging medical institutions to "dare to enter," insured individuals to "dare to use," innovative medicines to "dare to research," and the capital market to "dare to invest"... Against the backdrop of the national advocacy for establishing a multi-tiered medical security system, constructing a diversified payment mechanism for innovative drugs and medical devices through basic medical insurance and commercial insurance will help make these drugs and devices more accessible, while simultaneously promoting the high-quality development of the biopharmaceutical industry. Experts believe that the future integrated development of drugs and insurance requires the joint efforts of all parties to fully leverage the positive role of diversified payment methods and achieve value co-creation across the entire industry chain.
Blue Ocean Market: Shared Responsibility and Diversified Payment Methods Need Improvement
In recent years, how to build a multi-tiered medical security system, promote the development of commercial health insurance, and form a system of "multi-party sharing and diversified payment" from the payment side has been a key issue of national concern.
"Commercial health insurance is indispensable for improving the diversified payment system." Sun Jie, a member of the National Committee of the Chinese People's Political Consultative Conference and vice dean of the School of Insurance at the University of International Business and Economics, believes that three major issues need to be addressed to fully leverage the positive role of diversified payment systems. First, commercial health insurance lacks data acquisition, making it impossible to accurately calculate pricing and provide precise coverage. Second, the positioning of commercial health insurance is unclear, and product homogenization is severe. Third, the supply of innovative drug coverage under commercial health insurance needs to be improved.
Take the elderly as an example. According to data from the National Bureau of Statistics, by the end of 2023, the population aged 60 and above accounted for 21.1% of the national population, meaning that China has entered a moderately aging society. As the aging population deepens and people's lifespan continues to increase, the demand for elderly care services is also gradually increasing, drawing attention from the whole society to the health security needs of the elderly.
As an important supplement to medical insurance, commercial health insurance urgently needs to shoulder the responsibility of alleviating the pressure of medical expenses and the burden of elderly care. However, one of the core problems currently facing insurance products for the elderly is that there are very few products on the market that are truly tailored to the physical condition and risk characteristics of the elderly, resulting in weak product exclusivity and insufficient effective supply.
Taking Alzheimer's disease as an example, statistics show that there are approximately 10 million Alzheimer's patients in my country, and this number is projected to exceed 40 million by 2050. However, due to a severe lack of awareness and attention to Alzheimer's disease, high medical costs, and heavy burdens on family care, it has become one of the challenges in ensuring healthcare for my country's elderly population. Currently, many insurance companies have launched dedicated insurance products that include preventative services and early screening in policy benefits to alleviate the financial burden on patients. However, many insurance products suffer from a significant lag in covering newly approved innovative drugs, failing to provide timely coverage.
Recently, Magnesium Health and Eisai China signed a strategic agreement and launched the Brain Health Memory Protection Plan, providing targeted solutions to the three major challenges in Alzheimer's disease care. Regarding improving accessibility to innovative drugs, Wang Rundong, President of Magnesium Health, stated that Magnesium Health is committed to effectively connecting multiple stakeholders, including pharmaceutical companies, commercial health insurance companies, and healthcare service providers, integrating industry resources to improve the accessibility of innovative drugs and provide patients with more comprehensive health protection. In the future, Magnesium Health hopes to collaborate with pharmaceutical companies, insurance companies, and elderly care institutions to integrate more innovative drugs and medical devices into mid-to-high-end medical insurance, and even comprehensive medical insurance, enabling patients to access better medical resources and better medications.
Several industry insiders also mentioned that strengthening health protection for the elderly, especially in the use of high-value innovative drugs, can be achieved through commercial insurance supplementing basic medical insurance in terms of cost, coverage, and efficiency. Furthermore, for commercial insurance companies, the elderly represent a blue ocean for product innovation; including more high-value innovative drugs can provide more valuable services to users, enhancing their market competitiveness and broadening their customer base.
Multiplier effect: Data integration and sharing between medical insurance and commercial insurance
The establishment of a "multi-party shared responsibility and diversified payment" mechanism from the payment side is expected to provide strong protection for the public to access "new drugs, good drugs, and special drugs," while promoting the insurance industry to effectively innovate its products and services, and promoting the medical industry to enter a virtuous cycle of innovation of "high R&D investment - high market returns - high R&D investment."
Sun Jie believes that the future development of a diversified payment system should focus on two aspects: first, basic medical insurance should play a role in mitigating costs for rare diseases and innovative drugs and medical devices; second, commercial health insurance should further enhance its protective function. The development of commercial health insurance requires policy support. For example, relevant policies should facilitate data sharing among hospitals, medical insurance, and commercial health insurance companies, which will help insurance companies create more precise and practical commercial health insurance products.
For a long time, the lack of supporting medical and health insurance data has hampered insurance companies' ability to develop health products tailored to the needs of the general public, especially those with specific diseases or population groups, leading to a vicious cycle in the service and innovation of commercial health insurance products. Sun Jie suggests actively utilizing cutting-edge technologies such as artificial intelligence and big data to share patient and disease data from public hospitals, as well as reimbursement data for various diseases from medical insurance departments, with commercial health insurance companies. This would encourage insurance companies to actively expand their market, leverage data for actuarial calculations, develop health insurance products that better meet the needs of the public, and achieve precise pricing.
In Shanghai, data sharing between medical insurance and commercial insurance has been pioneered. In January of this year, the Shanghai Municipal Medical Insurance Bureau, together with the Shanghai Municipal Data Bureau and the Shanghai Insurance Exchange, officially launched the "Shanghai Medical Insurance Big Data Innovation Laboratory." This marks the first time nationwide that standardized processes and mechanisms have been established to open anonymized medical insurance data to commercial insurance companies. Currently, big data analytics are being conducted for the development of multiple commercial health insurance products. The next step is to further deepen the construction of the medical insurance big data laboratory, building upon the existing foundation to better leverage the multiplier effect of medical insurance data.
Shanghai Model: Collaborative Development of "Three-Pronged Approach" to Medical Services
An international innovative biopharmaceutical company registered in Shanghai had its first independently developed innovative drug included in Shanghai's "Hu Hui Bao 2023 Edition" list of domestically designated high-cost drugs in June last year. This product has now achieved a breakthrough in Shanghai, being used clinically in eight tertiary public hospitals in the city. From August 2023 to January 2024, the product has benefited over 2,900 patients in Shanghai. Another innovative drug from the company has seen its clinical application in tertiary public hospitals in Shanghai increase from 13 to 18, benefiting over 2,600 patients in Shanghai from August 2023 to January 2024, representing a year-on-year increase of 46%.
It is understood that the "Shanghai Benefit Insurance" covers as many as 38 types of innovative special drugs, of which 28 are registered, held, researched and developed or produced in Shanghai.
Another innovative pharmaceutical company registered in Shanghai, focusing on the research and development of targeted innovative drugs, successfully renewed the national medical insurance catalog for two of its independently developed Class 1 new drugs this year, and included them in Shanghai's "New and Superior Drugs and Medical Devices" product catalog. These two products have been put into clinical use in several Shanghai municipal medical institutions, and in the second half of 2023, the sales revenue of the two innovative drugs in the Shanghai market increased by 36% and 105% year-on-year, respectively.
These cases illustrate how Shanghai has strengthened the linkage and collaboration among medical insurance, medical services, and pharmaceuticals to make it easier and more accessible for innovative drugs and medical devices to enter hospitals.
Last year, seven departments in Shanghai jointly issued "Several Measures of Shanghai Municipality on Further Improving the Diversified Payment Mechanism to Support the Development of Innovative Drugs and Medical Devices," proposing nine categories and 28 key support measures to establish and improve the diversified payment mechanism, promote the inclusion of more high-quality innovative drugs and medical devices in the basic medical insurance and commercial health insurance payment scope, and improve the accessibility and affordability of innovative drugs and medical devices.
To collaboratively build a development pattern of "three-pronged medical reform," Xia Kejia, Director of the Shanghai Medical Security Bureau, stated that the "28 Measures" aim to achieve one policy effect: to encourage medical institutions to "dare to enter," to encourage insured individuals to "dare to use," and to encourage innovative pharmaceutical research and development. Pharmaceutical R&D requires greater investment. By giving companies confidence from the back end, we encourage them to be more willing to conduct R&D at the front end, and to encourage the capital market to "dare to invest." These effects are beginning to emerge.
The diversified payment mechanism for innovative drugs and medical devices through basic medical insurance and commercial insurance has effectively promoted the high-quality development of Shanghai's biopharmaceutical industry. Data shows that in 2023, Shanghai medical institutions purchased 10.8 billion yuan worth of nationally negotiated innovative drugs, a year-on-year increase of 73.1%; in 2023, the scale of Shanghai's biopharmaceutical industry reached 933.732 billion yuan, a comparable increase of 4.9%; in January of this year, 90% of Shanghai's tertiary hospitals and 72% of its secondary hospitals purchased innovative drugs, and 83% of its tertiary hospitals and 45% of its secondary hospitals purchased innovative medical devices, demonstrating initial positive results.
