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China’s 2022 NRDL Readout


Despite the twists and turns, 2022 turned out to be a banner year for National Reimbursement Drug List’s new inclusions—and with welcomed upgrades to bidding and renewal rules.

The 2022 National Reimbursement Drug List (NRDL) processes got off to a good start in June 2022 as planned but had a few sputters along the way. First, the formal review process took longer than expected partly due to many applications, and the ensuing expert panel review and the pharmacoeconomics evaluation processes were impacted by sporadic lockdowns of the zero-COVID-19 policy. The policy then took a surprising turn in early December 2022, with the pandemic taking China by storm in a matter of weeks. After all the twists and turns, the NRDL negotiation finally took place in early January 2023. Results were announced two weeks later, right before Chinese New Year.

A large number of new inclusions

The good news is many pharma companies could go into the holidays with a light heart and good spirit, as 121 of the 147 shortlisted drugs got in the latest NRDL. In fact, the success rate of 82% is the highest since 2019. New inclusions span over 23 therapeutic areas, with oncology, infectious diseases, and neurology coming out on top, closely followed by cardiovascular, rare diseases, and immunology.

China’s 2022 NRDL Readout_Bruce Liu, Justinian Liu, Duo Xu, Shiying He, Selene Peng_Figure 1

Figure courtesy of Simon-Kucher.

Preference for innovations

Across the diverse therapeutic areas, a common theme for the 2022 NRDL is the strong preference for innovations. In fact, more than 70% of new inclusions received Chinese regulatory approvals within the past two years, and 24 of them were freshly approved in 2022.

Among them, lorlatinib from Pfizer and brigatinib from Takeda are the dueling tyrosine kinase inhibitors for anaplastic lymphoma kinase non-small cell lung cancer; and abrocitinib from Pfizer and upadacitinib from AbbVie are the next generationjanus kinase inhibitors that will continue to slug it out in China and change the landscape for atopic dermatitis and beyond.

Notably, the local large pharmaceutical company Hansoh made its NRDL debut with the neuromyelitis optica spectrum disorder drug, inebilizumab. Hengrui’s androgen receptor antagonist, rezvilutamide, received its regulatory approval one day before the NRDL application deadline and made it to the final listing as a poster child of indigenous innovations.

Indeed, the rise of indigenous innovations is particularly notable in the 2022 NRDL. While it appears to be more of an even split among the top MNC and local players in terms of successful listings, the total number of local listings outnumbered MNC by 70%, as many up-and-coming local players scored their first wins in the much-coveted game.

China’s 2022 NRDL Readout_Bruce Liu, Justinian Liu, Duo Xu, Shiying He, Selene Peng_Figure 2

Figure courtesy of Simon-Kucher.

A prime example of this changing paradigm is rare disease drugs, which were singled out as a separate category for the first time in the 2022 NRDL.

While seven new inclusions are a slightly underwhelming number this year, it shows a more balanced mix of MNC versus local players, with four winners from the usual suspects Takeda, Novartis, Biogen, and Roche. The other three drugs came from local companies, up from only one in the 2021 NRDL.

China’s 2022 NRDL Readout_Bruce Liu, Justinian Liu, Duo Xu, Shiying He, Selene Peng_Figure 3

Figure courtesy of Simon-Kucher.

Persisting price pressure

Pricing pressure persists for all new inclusions, with average cuts from list prices at 60%, more so for rare disease drugs. This shouldn’t come as a surprise, given the budget pressure for Chinese basic medical insurance. The formulary has been expanding over the years; and for many, the price-volume trade-offs still make sense. NRDL listing is a strategic priority for many, not only in terms of affording reimbursement but also in overcoming market access hurdles and pre-empting competitions.

Spinraza, Biogen’s drug forspinal muscular atrophy(SMA), made headlines last year with a steep price cut to make the 2021 NRDL listing. The impact of this move was far-reaching, helping it expand patient volume by seven fold to more than 3,000 patients, while simultaneously fending off competition from Roche’s Evrysdi, which didn’t make it to the 2021 NRDL.

Roche made a decisive comeback this time around and got in 2022 NRDL, throwing down the gauntlet for another fight. This bodes well for SMA patients first of all, at the same time it is not a zero-sum game for the companies. China is home to the world’s largest SMA patient population, and 9 out of 10 patients are not yet treated properly. NRDL listing of both therapies will help further improve SMA disease awareness, diagnosis, and treatment standards for the Chinese market, affording ample headroom for innovative therapies to achieve more growth and make bigger differences.

New rules for new inclusion and renewal

The 2022 NRDL also features a couple of interesting upgrades to its rules, which are welcomed by the industry.

For one, 17 of the new inclusions achieved NRDL listing via a bidding mechanism (which is designed for loss-of-exclusivity [LOE] drugs), including Pfizer’s breast cancer drug Ibrance, which went into bidding in anticipation of impending LOE and generics competitions and finally made it to the 2022 listing after previous attempts through negotiation didn’t work out.

In addition, the rules for NRDL renewal have become more transparent, and many have succeeded in pursuing the route of “simple renewal” instead of being dragged down the much dreaded “re-negotiation” route. As a result, some have emerged from “simple renewals” with no price cut and others with cuts more predictable and manageable than in previous years.

China’s 2022 NRDL Readout_Bruce Liu, Justinian Liu, Duo Xu, Shiying He, Selene Peng_Figure 4

Figure courtesy of Simon-Kucher.

In summary, the 2022 NRDL continues to bring new excitement and anticipation despite all the sound and fury of the eventful year. With the formulary expanded by around 400 innovative drugs over the past five years, the next big questions would be: how much room does it have for more innovative therapies going forward, and what alternative mechanisms are needed to address the outstanding unmet needs of China’s healthcare market?

About the authors:

Bruce Liu leads Simon-Kucher’s life sciences division in Greater China. Justinian Liu, Duo Xu, Shiying He, and Selene Peng are senior consultants for Simon-Kucher with extensive experience in the access and reimbursement trends of the Chinese market.