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. 2024 Jun 4:15:1386533.
doi: 10.3389/fphar.2024.1386533. eCollection 2024.

The impact of Chinese volume-based procurement on pharmaceutical market concentration

Ying Yang  1   2 , Yuxin Liu  3   4 , Zongfu Mao  2   3 , Jing Mao  1 , Yalei Jin  5
Affiliations

The impact of Chinese volume-based procurement on pharmaceutical market concentration

Ying Yang et al. Front Pharmacol. .

Abstract

Objectives: Optimizing the pharmaceutical industrial structure is the key mission of China's healthcare reform. From the industrial structure perspective, this study empirically evaluated the impact of China's national volume-based procurement (NVBP) policy on market concentration in the hospital-end drug market.

Methods: This study used drug procurement data of China's public medical institutions which obtained from the national database. A quasi-natural experiment was designed involving eleven pairs of matched treatment-control region combinations, with NVBP policy as the intervention measure. The market was defined by drug name (molecular boundary) and city/province (geographical boundary). Market changes were measured from three dimensions: the number of enterprises and products, market share, and Herfindahl-Hirschman index (HHI). Dual comparison approach and difference-in-difference (DID) method with fixed effect model were applied to quantify policy impacts.

Results: The number of enterprises and products decreased by 18 and 83 in pilot regions after NVBP policy, far more than the decreases in control regions (6 and 21). The accumulative market share of 15 bid-winning enterprises increased by 53.67% in volume and 18.79% in value, among which the increment of enterprises with low baseline market share was more prominent (66.64% and 36.40%). Among three enterprise types, the market share of generic consistency evaluation (GCE) certificated generics significantly increased, GCE uncertificated generics significantly decreased, and originators slightly decreased. DID models indicated significantly positive impact of NVBP policy on market concentration, with HHI-volume and HHI-value increasing by 49.33% (β = 0.401, p < 0.01) and 21.05% (β = 0.191, p < 0.01).

Conclusion: The implementation of NVBP promoted the intensive drug circulation and supply of Chinese public hospitals, intensifying the exit of GCE uncertificated generics from the hospital-end market. NVBP combined with GCE standards significantly improved market concentration, which brought a positive signal of pharmaceutical industrial structure optimization in China. In the future context of normalized and institutionalized NVBP, the balance should be further sought between low drug prices and reliable hospital drug supply, sustainable industry development.

Keywords: drug market; group purchasing; market concentration; pharmaceutical industry; volume-based procurement.

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Conflict of interest statement

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

Figures

FIGURE 1
FIGURE 1
Changes in the market share (in volume and value) of bid-winning enterprises after NVBP implementation by baseline market share levels. (A) Market share in volume of pilot group, (B) market share in volume of control group, (C) market share in value of pilot group, (D) market share in value of control group. Note: NVBP, national volume-based procurement.
FIGURE 2
FIGURE 2
Changes in the market share (in volume and value) of bid-winning enterprises after NVBP implementation by the number of drugs won. (A) Market share in volume of pilot group, (B) market share in volume of control group, (C) market share in value of pilot group, (D) market share in value of control group. Note: NVBP, national volume-based procurement.
FIGURE 3
FIGURE 3
Changes in the market share (in volume and value) among three product groups (originators, GCE certificated generics, and GCE uncertificated generics) after NVBP implementation. (A) Market share in volume, (B) market share in value. Note: GCE, generic consistency evaluation; NVBP, national volume-based procurement.
FIGURE 4
FIGURE 4
Changes in the market share (in volume and value) among three product groups (originators, GCE certificated generics, and GCE uncertificated generics) by bid-winner’s type in pilot regions. (A) Market share in volume, (B) market share in value. Note: GCE, generic consistency evaluation; NVBP, national volume-based procurement.
FIGURE 5
FIGURE 5
The distribution of HHI-volume and HHI-value in twenty-five included INNs before and after NVBP implementation. (A) HHI-volume, (B) HHI-value. Note: HHI, Herfindahl-Hirschman index; NVBP, national volume-based procurement.
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