Commercial health insurance serves as a vital component of the multi-tiered medical security system and acts as one of the payers for innovative drugs and medical devices, offering substantial room for growth. During this year's National People's Congress sessions, commercial health insurance and biopharmaceuticals emerged as key topics of discussion. The government work report emphasized the need to "accelerate the development of commercial health insurance, promote the high-quality development of innovative drugs and medical devices, and better meet the diverse medical and medication needs of the public." Industry insiders believe that speeding up the development of commercial health insurance and leveraging its complementary and synergistic role in financing innovative drugs can not only reduce out-of-pocket expenses for patients—addressing public concerns about affordability—but also create stable market-based payment channels for pharmaceutical innovation, achieving a win-win scenario for both public welfare and industrial advancement.
However, innovative drugs and devices still face challenges in the "last mile" of implementation, particularly high-value innovative drugs, which encounter difficulties in hospital adoption and payment, leading to limited accessibility. In response, insurance professionals have proposed several recommendations, including accelerating the inclusion of commercial insurance-covered innovative drugs in public hospital formularies and establishing a dynamic adjustment mechanism for commercial insurance drug directories.
Transitioning from a "Single Payer" to a "Dual-Track Payment" System The insurance industry holds high expectations for commercial health insurance's role in synergistically promoting the development of innovative drugs and devices. AXA Tianping CEO Zuo Weihao noted that this marks the first time commercial health insurance has been explicitly mentioned in the government work report, with an emphasis on driving high-quality development of innovative drugs and devices to better meet diverse public needs. Zuo highlighted that this opens up new growth opportunities for the insurance sector, encouraging market participants to accelerate the development of commercial health insurance and facilitate the adoption of medical innovations. By covering innovative drugs and devices, providing high-quality medical resources, and offering full-cycle health management, commercial health insurance can collaborate with basic medical insurance to safeguard public health.
MediTrust Health Senior Vice President and Chief Commercial Officer Lang Liliang stated that commercial health insurance, as a key part of the multi-tiered medical security system, plays a crucial role in alleviating the financial burden of medical expenses for the public, solving accessibility issues for high-value medical services, and precisely meeting the growing diverse and high-quality health needs of the population. It holds irreplaceable strategic significance in advancing the Healthy China initiative and improving public welfare.
During the NPC sessions, Zhou Yanfang, NPC deputy and director of China Pacific Insurance's Strategic Research Center (ESG Office), proposed recommendations to enhance the synergistic role of commercial health insurance in promoting innovative drugs and devices. Zhou emphasized that the high-quality development of commercial health insurance not only strengthens the multi-tiered medical security system but also fosters coordinated development in the health industry, enabling more flexible and effective payment mechanisms for innovative drugs and devices, thereby improving their affordability and accessibility.
Zhou pointed out that as medical insurance payment reforms continue to advance, there is an urgent need to enhance commercial health insurance's payment capacity for innovative drugs and devices. In recent years, China has promoted medical insurance payment reforms, now entering a phase dominated by DRG (Diagnosis-Related Groups) and DIP (Diagnosis-Intervention Packet) as part of a multi-composite payment system. Against this backdrop, the industry calls for vigorous development of commercial health insurance to increase its share in financing innovative drugs and devices, thereby opening new market pathways for the pharmaceutical industry.
From the perspective of strengthening the multi-tiered medical security system, accelerating the development of commercial health insurance and fully leveraging its complementary and synergistic role in financing innovative drugs can reduce patients' out-of-pocket burdens, address public concerns about affordability, and create stable market-based payment channels for pharmaceutical innovation, achieving a win-win for both public welfare and industrial development.
In recent years, China has actively promoted commercial insurance payments to support the development of innovative drugs and devices, with related explorations yielding certain results. For example, government-led, insurance-backed inclusive health insurance products, such as "Hui Min Bao," have incorporated specialty drugs into their coverage. In terms of payouts, China's commercial health insurance paid approximately 12.4 billion yuan for innovative drugs and devices in 2024, with Hui Min Bao accounting for 15% of this amount, leveraging around 2 billion yuan.
In December last year, the National Healthcare Security Administration released the "Commercial Health Insurance Innovative Drug Directory" (hereafter referred to as the "Commercial Directory") for the first time, based on the National Reimbursement Drug List. The directory includes 19 high-value innovative drugs with significant clinical benefits for patients that are not covered by basic medical insurance. The introduction of the Commercial Directory means that innovative drugs not reimbursed by basic medical insurance may now be covered by commercial health insurance, improving patient access to these treatments.
The Commercial Directory shifts away from the previous model where basic medical insurance was the sole payer for high-value new drugs, instead promoting a dual-track payment system where basic insurance covers essential needs and commercial insurance covers high-value and innovative treatments.
"Difficult Hospital Adoption" and "Prescriptions Without Drugs" To facilitate the adoption of Commercial Directory drugs in hospitals, the National Healthcare Security Administration has clarified a "three exemptions" policy. Specifically, the listing and stocking of drugs in the Commercial Directory should generally follow the procedures for medical insurance negotiated drugs, excluding them from public medical institutions' basic medical insurance self-payment rate indicators and the monitoring scope of centralized procurement alternatives. Additionally, cases involving these innovative drugs may be exempted from medical insurance disease-based payment schemes.
National Committee of the Chinese People's Political Consultative Conference member and Professor Sun Jie, Vice Dean of the School of Insurance at the University of International Business and Economics, noted that despite the creation of the Commercial Directory, innovative drugs still lack clinical "last mile" standards: insufficient basis for doctor prescriptions, limited risk control measures by insurers, and weak patient perceived benefits.
From the hospital perspective, Sun stated that although national policies provide clear guidance, public medical institutions remain hesitant and face significant obstacles in actually stocking and using Commercial Directory drugs. Currently, the adoption and utilization rates of these drugs in public hospitals are still low. Key reasons for this include rigid constraints on performance indicators such as cost per case and the lack of corresponding pharmaceutical service fees in the current medical service pricing system, which discourages hospitals from providing additional services without compensation. These issues hinder the full realization of the Commercial Directory's potential benefits.
Sun also mentioned that the Commercial Directory includes 19 high-value innovative drugs, covering five CAR-T therapies (for precision cancer treatment) and various treatments for malignant tumors and rare diseases, focusing on areas not yet covered by basic medical insurance.
Zhou Yanfang also highlighted the weak infrastructure for innovative drugs and devices, leading to insufficient accessibility. On one hand, innovative drugs face "difficult hospital adoption" due to lengthy approval processes. On the other hand, there is a coexistence of "drugs without prescriptions" and "prescriptions without drugs." Settlement obstacles further exacerbate this issue, as discounts offered by pharmaceutical companies to insurers lack compliant channels, making it difficult for patients and insurers to benefit in out-of-hospital drug purchase scenarios. For example, some hospitals restrict or lack incentives for issuing external prescriptions, leaving patients unable to obtain necessary drugs even if they are aware of them. Even with a prescription, patients may encounter shortages in "dual-channel" pharmacies or DTP (Direct-to-Patient) pharmacies, along with supply chain disruptions, resulting in an inability to acquire the drugs.
Data Shortages Complicate Insurance Pricing From the insurer's perspective, risk management for products covering innovative drugs also presents challenges. Industry insiders explain that traditional commercial medical insurance primarily covers expenses within the basic medical insurance system, providing supplementary reimbursement after basic insurance payouts. In this model, risk control heavily relies on the basic medical insurance system. Under the Commercial Directory, without the support of basic insurance and its front-end risk controls, insurers face challenges in managing the rationality of treatments and drug usage, raising concerns about uncontrollable payouts.
When analyzing the challenges of commercial health insurance in synergistically promoting innovative drugs and devices, Zhou Yanfang also mentioned the lack of a solid data foundation for developing products covering innovative drugs, complicating risk management. Zhou emphasized that innovation in commercial medical insurance products and cost control depend on data support. Currently, product development lacks authoritative and comprehensive medical, insurance, and pharmaceutical data, particularly for risk assessment in covering innovative drugs, leading to conservative product design and pricing. The absence of data also undermines the precision and effectiveness of customer screening, underwriting, claims processing, and medical expense management in commercial health insurance operations.
Public reports indicate that in recent years, the insurance industry has been advancing the construction of its own commercial health insurance drug directory system. Simultaneously, the China Actuarial Association is leading efforts to develop net cost tables for commercial medical insurance.
Bridging the "Last Mile" for Innovative Drugs To address current issues and enhance the role of commercial health insurance in improving the accessibility and affordability of innovative drugs and devices, Sun Jie proposed several recommendations. On one hand, she suggested accelerating the inclusion of Commercial Directory drugs in public hospitals by optimizing performance monitoring indicators for tertiary public hospitals, explicitly excluding Commercial Directory drugs from cost indicators, and adding indicators for the application rate of innovative drugs. Additionally, public hospitals should be allowed to accept commercial insurance funds beyond government allocations, medical insurance funds, and patient out-of-pocket payments, while establishing a shared payment mechanism for pharmaceutical services involving medical insurance, commercial insurance, and patients. Furthermore, a markup payment mechanism should be established for the 19 Commercial Directory drugs, building on the exemption from DRG/DIP payment systems.
On the other hand, Sun recommended granting commercial health insurers the authority to develop usage guidelines and clinical pathways for high-value innovative drugs, creating a collaborative governance model where "medical insurance sets the direction, commercial insurance sets the standards, and hospitals ensure implementation." This would empower specialized health insurers to act not only as strategic purchasers and payers with negotiation and pricing rights but also as developers of usage guidelines and clinical pathways, genuinely enhancing the accessibility and affordability of directory drugs.
Zhou Yanfang believes that improving the payment capacity of commercial health insurance requires reforms in financing models and efficiency. She proposed expanding and enhancing group supplementary medical insurance to increase payment levels for innovative drugs and devices. Zhou analyzed that compared to individual medical insurance, group policies offer significant advantages in efficient financing and risk protection. From the customer's perspective, group insurance provides lower prices, broader coverage, and support for those with pre-existing conditions. From the insurer's perspective, underwriting at the group level allows for more accurate risk assessment, reasonable pricing, and prevention of adverse selection, thereby reducing administrative costs.
Zhou recommended that government and regulatory bodies increase efforts to promote group medical insurance, encouraging pilot programs in suitable regions for group insurance demonstration clauses covering innovative drugs, with a focus on medical devices and health management services outside the basic insurance directory, and encouraging the inclusion of more high-quality treatments. She also suggested establishing a dynamic adjustment mechanism for the Commercial Directory and improving a multi-dimensional value assessment system. The goal of creating a commercial insurance drug directory is to foster deep integration between the biopharmaceutical industry and commercial insurance, promoting a risk-sharing mechanism.
To enhance drug accessibility and solve the "last mile" issue, Zhou proposed incorporating the stocking of Commercial Directory drugs into performance evaluations for national clinical key specialties and leading hospitals, incentivizing medical institutions to adopt these drugs. She also recommended simplifying pharmacy committee approval processes to encourage quicker hospital adoption. Additionally, she advocated for full interoperability between the Commercial Directory and the "dual-channel" pharmacy settlement system, leveraging the national medical insurance information platform to establish a one-stop instant settlement mechanism for Commercial Directory drugs, ensuring patients do not need to pay out-of-pocket and claim reimbursements later, thereby achieving "more data movement and less patient effort."
Lang Liliang believes that the core of promoting deep integration between commercial health insurance and innovative drugs and devices lies in establishing an integrated mechanism featuring "directory coordination, payment linkage, data interoperability, and service closure," creating a positive cycle where "commercial insurance expands coverage, drugs and devices strengthen innovation, and patients benefit." Aligning with national policies and local practices, systematic advancement can be achieved across five dimensions: First, strengthen top-level design by improving directory coordination and policy alignment. Establish a closed-loop mechanism for the admission of commercial health insurance and innovative drugs, while enhancing inter-departmental policy coordination and local incentives to build a solid institutional foundation for "drug-device-insurance" collaboration.
Second, deepen payment innovation by enriching product offerings and service models. Centered on commercial health insurance, promote diverse products including inclusive, mid-to-high-end, and specialized policies, innovating with models such as pay-for-performance, risk-sharing, and direct payment to enhance convenience for patients.
Third, promote industrial linkage by extending commercial insurance services across the entire chain. Shift commercial health insurance from passive payment to active participation, deeply integrating into the full process of innovative drug and device development, market access, promotion, and service optimization, achieving synergistic development between insurance and the pharmaceutical industry.
Fourth, advance data interoperability to strengthen compliant and efficient application. Build a multi-party data sharing platform involving insurance, pharmaceuticals, and healthcare, enabling compliant and efficient data use in product design optimization, risk management, clinical decision support, and policy improvement to enhance collaborative development efficiency.
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Lang Liliang believes that by establishing a scientific and reasonable market-based payment system, continuously expanding the coverage of innovative drugs and devices, and steadily improving the "drug-device-insurance" collaborative development mechanism, the accessibility and affordability of innovative therapies can be effectively enhanced, injecting strong momentum into the high-quality development of the health industry and genuinely safeguarding public life and health.