On the morning of today (March 1), the
Information Office of the Shanghai Municipality held a press briefing. Xia
Kejia, director of the Shanghai Municipal Healthcare Security Administration,
introduced the details of Shanghai’s efforts to further improve the
multi-payment mechanism to support the development of innovative drugs and
medical devices. Zhu Qigao, deputy director of the Shanghai Municipal Science
and Technology Commission, Yu Tao, deputy director of the Shanghai Municipal
Health Commission, Shao Jun, deputy director of the Shanghai Municipal Data
Administration and director of the Shanghai Municipal Big Data Center, and Cao
Guangqun, deputy director of the Shanghai Supervision Bureau of the National
Administration of Financial Regulation, attended the press briefing and
answered questions from reporters.

Healthcare
security serves as the custodian to individuals’ medical finances and plays a
pivotal role as the primary contributor for medications and medical device
expenses. In July 2023, following the municipal government approval, the Shanghai
Municipal Healthcare Security Administration collaboratively introduced a
comprehensive plan alongside six key departments. These departments include the
Shanghai Municipal Commission of Economy and Informatization, the Shanghai Municipal
Science and Technology Commission, the Shanghai Municipal Health Commission,
the Shanghai Municipal Financial Regulatory Bureau, the Shanghai Supervision
Bureau of the National Administration of Financial Regulation, and the Shanghai
Municipal Data Administration. This initiative, titled “Several Measures for
Shanghai to Further Improve the Multiple Payment Mechanism to Support the
Development of Innovative Pharmaceuticals and Medical Devices” (referred to as “Several
Measures”), outlines 28 specific measures across nine dimensions. The objective
is to propel the city towards refining the backend payment mechanism for
innovative pharmaceuticals and medical devices while ensuring stability in
industry expectations. Since the announcement of the Several Measures, the
Shanghai Municipal Healthcare Security Administration has collaborated with
pertinent departments to fine-tune and enhance the implementation, bolster intra-departmental
synergy, and expedite the realization of various measures. Over the past six
months, positive strides have been made. Notably, products cataloged under
Shanghai’s “New and Quality Pharmaceuticals and Medical Devices” are now fully covered
by basic medical insurance and commercial insurance, leading to a smoother
entry for innovative drugs and devices into hospitals and the basic set-up of
the city’s multi-payment guarantee system for innovative drugs and medical devices,
while showcasing a demonstrative effect that is gradually gaining recognition
nationwide. In the year 2023, the city’s medical institutions procured
innovative drugs totaling 10.8 billion yuan via negotiations under the National
Reimbursement Drug List (NRDL), marking a significant year-on-year increase of
73%. The specific progress and outcomes can be delineated as follows:

1. The
integration and sharing of basic medical insurance and commercial insurance
data reached a significant milestone in January 2024 with the collaborative
effort of the Shanghai Municipal Healthcare Security Administration, the
Shanghai Municipal Data Administration, and the Shanghai Insurance Exchange.
Together, they officially inaugurated the “Shanghai Healthcare Security Big
Data Innovation Laboratory (Commercial Insurance).” This initiative marks a
groundbreaking nationwide endeavor, establishing standardized processes and a
pioneering mechanism that bridges the gap between basic medical insurance and
commercial insurance. Notably, it provides commercial insurers with
desensitized healthcare security data, which have been instrumental in the
development of various commercial health insurance products based on big data
calculations.

2. A notable enhancement in the efficiency of commercial
health insurance claims has been realized. Since September 2023, the
introduction of the “One Code Compensation” function within the insurance
claims domain of “Suishengban-Insurance Code” has led to a rapid streamlining
of the claims process. Multiple insurance companies offering commercial
insurance products have successfully implemented “quick compensation.” Notably,
26 municipal hospitals and 61 insurance institutions have embraced the practice
of “direct compensation” for high-end insurance policies.

3. A
conducive environment fostering the adoption of commercial health insurance is
progressively taking shape. Firstly, there has been a refinement of
preferential tax policies, notably through collaborative efforts of the Shanghai
Municipal Tax Service, the Shanghai Supervision Bureau of the National
Administration of Financial Regulation,
and the Shanghai Municipal Healthcare Security Administration. The scope of
supplementary medical insurance has been meticulously delineated, allowing
eligible supplementary medical insurance premiums paid by enterprises for
employees to be deducted from the taxable income in cases where the total amount
doesn’t surpass 5% of the employees’ total salaries. Secondly, there has been
an expedited development of products with preferential individual tax.
Individuals, upon purchasing these tax-advantaged health insurance products,
are entitled to pre-tax deductions when calculating the tax payable. The
deduction limit stands at 2,400 yuan per year (200 yuan per month). Since
August 2023, five insurance companies have introduced 11 new tax-advantaged
health insurance products. Thirdly, the establishment of a “supermarket” for
employees’ healthcare security personal account products is underway. A
dedicated area for the purchase of commercial health insurance products using healthcare
security personal account funds has been incorporated into a sub-sector under
“Suishengban-Insurance Code.” This initiative has seen the addition of five new
products, bringing the total to 12, with plans to launch an additional nine
products in the near future. Fourthly, the ambit of drug liability insurance
subsidies has been expansively broadened. There is a concerted effort to facilitate
the extension of liability insurance coverage for human clinical trials of
biopharmaceuticals. This endeavor has already benefited 195 pharmaceutical
companies in Shanghai and 1,124 projects, delivering a substantial risk
protection valued at 7.24 billion yuan.

4. The
influence of the Huhuibao brand continues its expansive reach with several key
enhancements. Firstly, a concerted effort has been made to elevate the impact
further. Embracing the quasi-public welfare attribute, Huhuibao helped ensure
the well-being of 6.3 million individuals in 2023, transcending age and health
status. This commitment solidifies Huhuibao as the leader in the nation,
maintaining the largest number of insured persons for similar products.
Secondly, there is a continuous drive to broaden the coverage over innovative
drugs. All products deemed suitable for inclusion in Shanghai’s “New and
Quality Pharmaceuticals and Medical Devices” catalog will now fall within the
protective ambit. Notably, the indications for coverage have been expanded to
include the latest domestically approved range, incorporating 38 types of
innovative specialty drugs. Thirdly, strides have been made in enhancing the
claims settlement experience. The “quick compensation” service has undergone
optimization, resulting in an average claim settlement time of 2.3 days and a
remarkable quick compensation rate of 75%. Building on this success, since
August 2023, the implementation of “active compensation” has been introduced,
further refining the foundation established by the “quick compensation” system.

5. The
swift integration of innovative drugs and medical devices into clinical
applications is a focal achievement. There has been proactive guidance to
encourage qualified innovative drugs within the city to engage in NRDL
negotiations and secure inclusion in the NRDL. In the latest iteration of the NRDL,
38 locally developed, manufactured or introduced innovative drugs have been included,
solidifying the city’s position among the nation’s leaders in this regard. To
expedite the admission of innovative drugs and medical devices into hospitals,
a series of impactful measures have been implemented, yielding positive
outcomes. Firstly, efforts were directed towards enhancing the access mechanism
for innovative drugs and medical devices into hospitals. The Shanghai Municipal
Health Commission and the Shanghai Hospital Development Center reiterated
directives to medical institutions, urging them to convene pharmaceutical
affairs meetings within a month of the release of the new NRDL. Importantly,
restrictions such as total healthcare security budgets, drug catalog limitations,
and the ratio of drug costs against total medial expenses were discouraged as
reasons affecting the admission of innovative drugs and medical devices. The listing
assessment mechanism has been further optimized, with all second-level and
above hospitals in the city successfully holding pharmaceutical affairs meetings
by the end of January this year, including 37 municipal hospitals completing
their meetings before January 20. Secondly, a targeted approach was adopted
with the healthcare security quota, prioritizing the utilization of innovative
drugs and medical devices by medical institutions. Innovative drugs included
into the NRDL via negotiations are budgeted separately for the initial three
years, exempt from inclusion in the total healthcare security budget of the
hospital for the ongoing year. In the fourth year, the highest annual amount in
the initial three years becomes part of the total budget calculation base. The Shanghai
Municipal Healthcare Security Administration has already implemented this
measure during the expense settlement process with hospitals in 2023. Thirdly,
a simplified process for listing medical devices into the system has been
introduced. Since July of the preceding year, the local healthcare security code
application for medical devices has been eliminated, with national healthcare
security codes exclusively used for procurement and settlement. The
responsibilities related to charging codes for single-use medical devices that
can be billed separately have transitioned from hospitals to production
enterprises. The acceptance process has been streamlined from multiple outlets
to a centralized unit. Since the optimization, 10,700 new classification codes
for single-use medical devices that can be billed separately have been added, covering
333 catalog items.

6. The
trajectory of medical insurance payments for innovative drugs and medical
devices demonstrates a sustained upward trend. Firstly, substantial backing for
innovative devices has been consistently augmented. In October of the preceding
year, the city’s medical insurance payment scope incorporated 60 new types of
medical consumables, resulting in an approximate annual expenditure of 1
billion yuan from the medical insurance fund. Secondly, a preferential approach
has been adopted for innovative drugs and medical devices within the realm of
medical insurance payments. As part of the ongoing reform of medical insurance
payment methods, the payment standards for cases involving the application of
new technologies will be enhanced. There will be no control ratio imposed on
the cases with substantial use of new technology, and the organization of
large-scale new technology applications into independent groups is now
feasible. The 2023 version of the DRG payment grouping plan has allocated new
technologies and projects into 17 distinct groups, covering 45,000 cases and
featuring a dedicated payment amount of 500 million yuan. Thirdly, efforts have
been made to further broaden the sales channels for innovative drugs. Since
July of the previous year, all designated retail pharmacies have been
integrated into outpatient overall management and connected to the medical
insurance electronic prescription platform. This strategic move allows
innovative drugs to be dispensed in 2,000 designated retail pharmacies across
the city. Additionally, the pilot program for medical insurance payment for
drug purchases via Internet has been actively promoted, resulting in 774
designated pharmacies completing online medical insurance settlements as of
February 28.

The
diversified payment mechanisms for innovative drugs and medical devices,
facilitated through both basic medical insurance and commercial insurance, have
significantly contributed to the high-quality development of the city’s
biopharmaceutical industry. In 2023, the biopharmaceutical industry scale
reached 933.732 billion yuan, reflecting a commendable growth rate of 4.9%. The
initial results are promising, paving the way for further advancements. Moving
forward, the Shanghai Municipal Healthcare Security Administration is committed
to reinforcing intra-departmental linkage and coordination. Efforts will
persist in enhancing both basic medical insurance and commercial insurance
frameworks to foster the continuous refinement of the city’s diverse payment
mechanisms for innovative drugs and medical devices, thereby collectively
propelling the innovative development of the biopharmaceutical industry.

The first
initiative involves enhancing and consolidating basic medical insurance support
policies. This includes implementing an initial price formation mechanism for
new drugs and stimulate industrial innovation. There will be policy guidance
and promotion to ensure the timely inclusion of qualified innovative drugs and medical
devices in the scope of medical insurance payment. Streamlining the process for
listing innovative medicines and medical devices will be prioritized to
facilitate procurement and utilization by medical institutions. The independent
pricing mechanism of medical institutions during the trial period of new
projects will be refined, encouraging swift applications by medical
institutions. The admission mechanism for innovative drugs and medical devices
will be consolidated, and a preferential payment policy for medical insurance
related to these innovations will be implemented. Additionally, the scope of
medical insurance payment for Internet-based drug purchases will be expanded,
supporting the diversification of channels for sales of innovative
pharmaceuticals and medical devices.

The
second focus is on enhancing the array of commercial health insurance products.
We are committed to optimizing and upgrading Huhuibao while continually
diversifying personal account products. To facilitate policyholders in making
informed choices, we will intensify the promotion of the “product supermarket”
integrated with “Suishengban-Insurance Code.” Leveraging the success of
Huhuibao, we will establish connections with qualified Internet giants and traffic
platforms to boost the visibility of commercial health insurance. This strategy
aims to enhance product influence and expand insurance participation rates.
Capitalizing on the 5% deduction on corporate income tax will further
incentivize enterprises to procure commercial insurance products for their
employees. Additionally, we plan to broaden the scope of “quick compensation,” “direct
compensation,” and “active compensation” to elevate the overall claims
settlement experience for commercial insurance products.

The third
initiative involves advancing the integration and sharing of medical insurance
and commercial insurance data. A heightened focus on empowering the healthcare
security big data innovation laboratory will facilitate open sharing of medical
insurance big data with commercial insurance companies, innovative
pharmaceutical and medical device companies, and medical institutions. This
collaboration, carried out with a commitment to robust personal information
protection and data security, will effectively advance clinical research,
optimize commercial insurance compensation services, and explore additional
scenario applications. Leveraging the multiplier effect of data elements, we
aim to position the open sharing of medical insurance data as a distinctive advantage
for Shanghai. This strategic move is intended to attract more biopharmaceutical
companies to invest and develop in Shanghai, thereby creating a demonstrative
effect that resonates across the country.