Shanghai Medical Insurance: The admission channel for non-centralized procurement coronary stent products has been opened

Source: 21st Century Business Herald

On July 1st, as the press conference on "Several Measures to Support the High-Quality Development of Innovative Drugs" held by the National Healthcare Security Administration drew high attention from the industry, the official website of the Shanghai Municipal Healthcare Security Administration released the "Notice on Adjusting the Medical Insurance Payment Standards for Coronary Stents in the City" (hereinafter referred to as the "Medical Insurance Payment Notice"), which came into effect on the same day. In the industry's view, this notice may provide new ideas for diversified payments.

According to the "Medical Insurance Payment Notice", Shanghai has implemented three types of detailed payment rules for coronary stents used by insured individuals. One is to use the products selected in centralized procurement, and their costs will be covered by medical insurance. Second, for the products that were not selected within the scope of centralized procurement, the maximum payment standard has been reduced from 7,000 yuan to 848 yuan. The excess amount (except for retired cadres and revolutionary disabled military personnel of grades one to six) shall be borne by the individual. The self-paid portion can be included in the scope of employee medical insurance burden reduction and major illness payment for urban and rural residents. Thirdly, when using products outside the scope of centralized procurement, the payment will be made proportionally. The insured person will first bear 20% of the cost, and the remaining expenses will be paid in accordance with the basic medical insurance regulations of this city.

The third point is that this is also the focus of this policy adjustment. Many industry insiders believe that this will open up space for high-value innovative medical devices to return to hospitals and compete with products on the list.

Zhao Heng, the founder of Latitude Health, a medical strategy consulting firm, told 21st Century Business Herald, "Previously, after the fulfillment of the centralized procurement products, the medical insurance requirement was to continue to give priority to the use of the centralized procurement products, so that other products had no room to survive in hospitals. Now that the regulations have been relaxed and the fulfillment is completed, hospitals can also freely use other products. It is a clear benefit for non-centralized procurement products."

The costs of non-selected products beyond the medical insurance payment price are covered by other payment methods, so it can also be regarded as an attempt at diversified payment, but in essence, it is the implementation of the medical insurance payment price. Shanghai was the first to implement medical insurance payment prices in the field of consumables. Therefore, the main replicable experience is the implementation of medical insurance payment prices. The key is that supervision can keep up. In the documents of Shanghai, the subsequent regulatory measures are relatively detailed, which is conducive to the implementation and smooth execution of the policy. Zhao Heng further added.

01

     Products purchased outside the centralized procurement have received support

Cardiac stent implantation surgery is an important measure for the treatment of acute myocardial infarction. The coronary arteries are the blood vessels that supply blood to the heart. Once they become narrowed, the blood supply to the heart muscle will be insufficient. In severe cases, it can lead to the necrosis of the heart muscle, affecting heart function and even threatening life. However, this life-saving device was previously extremely expensive, and patients often described its cost as "a car in the heart", which often amounted to tens of thousands of yuan.

In November 2020, the first centralized bulk purchase of high-value medical consumables organized by the state targeted coronary stents. The price of the selected products has dropped from an average of around 13,000 yuan to around 700 yuan. In the first round of centralized procurement, 8 out of the 11 participating enterprises were selected, including domestic and foreign medical device companies such as Medtronic, Boston Scientific, Microport, Jiwei, and Lepu.

The first-year intended purchase volume was 1.07 million, accounting for 80% of the national usage. Data from the National Healthcare Security Administration once showed that since the implementation of the national centralized procurement of coronary stents in January 2021, the overall operation has been stable. As of the end of October 2022, a total of 3.2 million selected stents had been purchased, which was 1.3 times the agreed purchase volume.

On November 29, 2022, after the expiration of the centralized procurement agreement for coronary stents organized by the state, the procurement continued. Fourteen products from 10 domestic and foreign enterprises, including Medtronic, Abbott, Shanghai Microport, and Sinocare, were selected as potential winners, with a selection rate of 91% for the enterprises. The average price of the selected brackets is around 770 yuan. Including the accompanying service fees, the terminal price range is from 730 yuan to 848 yuan, and the purchase volume is approximately 1.78 million.

In terms of procurement demand, Minimally Invasive Medical maintained its position, with an intended procurement quantity of 591,200 units in the first year, accounting for 31.7%. Next came Shandong Jiwei, with a reported volume of 278,200 units, accounting for 14.9%. Boston Scientific ranked third with a report volume of 275,900, accounting for 14.9%.

"Trading price for market share" is the core strategic orientation for medical device enterprises to participate in centralized procurement. In January 2021, the Shanghai Municipal Medical Insurance Bureau issued a notice that medical institutions that have been included in the scope of the national centralized procurement agreement shall not affect the procurement and rational use of the selected products on the grounds of total cost control, "consumption ratio", or the number of basic consumable varieties in the hospital. Data from the National Healthcare Security Administration also shows that selected stents account for over 95% of the total use of heart stents, and the vast majority of patients who have received heart stent implants use selected stents.

Centralized procurement also reserves the market for products that were not selected. The above-mentioned notice clearly states, "Medical institutions, based on clinical needs, may continue to purchase and use non-selected products with guaranteed quality and efficacy on the premise of giving priority to the selected products." But in fact, the space is limited. Public information shows that in 2023, the Department of Cardiology of Shanghai Tenth People's Hospital only used over ten coronary stents other than those from the centralized procurement products. The reason was that the carotid artery structures of patients were different, and the non-centralized procurement varieties had special designs to ensure that the surgeries of patients went more smoothly.

This time, the "Medical Insurance Payment Notice" further broadens the payment channels for products outside the scope of centralized procurement. However, it also emphasizes that the monitoring and assessment of the implementation of centralized procurement by medical institutions will continue to be carried out, including whether they participate in centralized procurement, the completion of the agreed purchase volume of the selected products in centralized procurement, the proportion of selected products in the use of the same type of medical consumables, and the hospital's collection situation, etc. The implementation of centralized procurement work will be included in the performance assessment of designated medical institutions for medical insurance.

This also means that although products outside the scope of centralized procurement receive payment support, the prerequisite is that each designated medical institution must give priority to purchasing the selected products and strictly complete the agreed purchase volume. In addition, the "Medical Insurance Payment Notice" also requires that, in accordance with the principle of matching performance with price, enterprises be encouraged to set reasonable prices, optimize the listing prices of non-selected products, and strengthen full-process supervision.

In the view of the industry, the significance of this "Medical Insurance Payment Notice" is considerable. Under the premise of adhering to the "fulfillment of centralized procurement" to safeguard the basic rights and interests of patients, it provides a reasonable circulation space for high-priced products within the policy framework and grants doctors and patients the right to make independent choices. However, how far the non-selected products can go still depends on the dynamic balance between subsequent procurement execution and clinical use.

02

Innovation and going global are reshaping the competitive landscape

After years of technological innovation and market cultivation, the coronary intervention medical device industry has now become the most mature niche market in the field of vascular intervention devices in China. With the continuous application of new technologies, China has made many breakthroughs in coronary intervention therapy. Technologies such as bioabsorbable stents, drug-coated balloons, and functional balloon catheters have gradually taken the lead in the world.

However, the domestic coronary intervention market still maintains a mature and highly competitive state at present. The domestic upgrading is continuously advancing, and domestic and foreign manufacturers are engaged in all-round competition in terms of technology, products and market share. Take Sino Medical as an example. In 2024, the second year of the implementation of the second round of the national centralized procurement policy for coronary stents, the sales of its two coronary stent products and coronary balloon products that entered the centralized procurement scope increased significantly, resulting in a year-on-year growth of 59.19% in the operating income of its coronary intervention business.

However, the price pressure brought about by the volume-based centralized procurement of coronary stents has also profoundly affected the operation of enterprises. Since its listing on the STAR Market in October 2019, Sino Medical has turned from profit to loss in 2021 and has continued to suffer losses in 2022 and 2023. In 2024, the company's net profit attributable to shareholders was only 1.4978 million yuan, struggling to turn losses into profits.

The "Medical Insurance Payment Notice" issued by the Shanghai Medical Insurance Bureau this time, although still focusing only on the local area, provides enterprises with a "rigid bottom line" for fulfilling centralized procurement obligations while reserving "flexible space" for innovative products. However, this also sends a signal to the industry's development: the model that solely relies on price competition is no longer sustainable, and technological innovation driven by R&D investment has become the key to breaking the deadlock.

Lepu Medical also stated in its 2024 annual report that the current implementation and promotion of payment methods such as Diagnosis-related Groups (DRG) and Diagnosis-related Groups (DIP) in China have a significant impact on the clinical promotion of some high-priced new products of the company. There is a risk that the commercialization of new products may not meet expectations after their launch. Therefore, the company will enrich its product pipeline and actively explore new business models. Deeply cultivate the domestic medical market.

Beyond innovation and R&D, "going global" is also a key strategy for domestic medical device enterprises. For instance, in its 2024 annual report, Sino Medical also pointed out that its new-generation coronary drug-eluting stent system, HT Supreme, is the world's first healing-oriented coronary drug stent system and also the first one independently developed in China to conduct pre-market clinical research on stents simultaneously in China, the United States, Japan, and Europe. And heart stent products that have applied for product patents in the aforementioned countries and regions.

Minimally invasive Medical is also accelerating the expansion of the overseas market for cardiovascular intervention. Data shows that in 2024, the overseas revenue of Minimally Invasive Medical's coronary intervention segment increased by 47% year-on-year (excluding the impact of exchange rates). Its stent products have covered 92 countries and regions, and its balloon products have covered 87 countries and regions. The overseas expansion continues to accelerate.

According to PercedenceResearch, the global medical device market is huge, reaching approximately 570 billion US dollars in 2022, while the share of the Chinese market is only 23.3%. The overseas market offers a broader market space and more growth opportunities. Meanwhile, many CRO enterprises providing overseas services for medical devices have emerged in China, demonstrating strong motivation for domestic enterprises to go global.

Driven by the dual forces of dynamic policy adjustments and continuous technological iterations, in the future, whoever can form a synergy in clinical demand insight, cutting-edge technology research and development, and global layout will be able to seize the initiative in this industry transformation.

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