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Centralized Drug Procurement in China: Benefits, Controversies, and Unresolved Questions: The Domino Effect

  • Max Xie
  • 7 hours ago
  • 9 min read

“Anesthetics won't put you to sleep, hypertension won't be reduced, and laxatives won't cause diarrhea.” These shocking words came from Zheng Minhua, a department director at Shanghai Ruijin Hospital, one of China’s most well-known hospitals . When interviewed, he cast doubt on the effectiveness of generic drugs — drugs that are not originally developed but copied original drugs by making slight alterations to the formula. These “copycat drugs” are collectively purchased and approved by the government at the start of 2025. Then, public discussions have soon polarized, with conspiracies and distrust spreading despite the authorities’ assurance. A closer examination of relevant facts is necessary to understand what this controversy reveals.


From where it all started: The “Power” Definition

The Centralized Drug Procurement (VBP) is a state-led "bulk-buying" mechanism where the government consolidates the demand of public hospitals nationwide to gain ultimate bargaining power. In exchange for a guaranteed sales volume (usually 60–80% of the market), pharmaceutical companies must participate in aggressive bidding wars, often resulting in price slashes of 50% to over 90% (Stanford Law School, 2025).


Thus, the government can purchase large quantities of drugs at an extremely low price from manufacturers, which effectively reduces the prices of drugs and medical equipment while ensuring profit for pharmaceutical companies.


First established in 2018, China’s National Healthcare Security Administration (the “NHSA”) has launched 11 rounds of VBP up to the end of 2025, with a total of approximately 490 kinds of drugs (NHSA, 2025). The intention of this policy sounds sensible: according to People’s Daily, the goal of the VBP is to ensure citizens’ access to drugs regardless of their financial status and to protect the “life-saving money” for patients. And it did seem successful in terms of relieving financial burdens (Xinhua News Agency). For instance, the cost of surgery for a left artificial cochlea implant dropped to less than 70,000 CNY from 200,000 CNY. The price of Imatinib plummeted by about 7/8(NHSA, 2025).


A goal hard to fulfill

The goal of VBP this policy seems profound and sets priorities for individual's benefits. However, a shadow lies beneath these dramatic price drops. In recent years, patients, along with doctors and caregivers have noticed the decreasing availability of branded drugs in hospitals. Behind this is the most fatal threat that the VBP poses to the public: increasingly restricted access to branded, innovative drugs, many of which are life-saving.


The situation became more salient in the 10th and 11th rounds of the VBP, during which branded drugs were completely eliminated(Li et al, 2023). According to state legislation, the volume of drugs from VBP accounts for only about 60% - 80% of the quantities used by public hospitals, with the remaining portion allowing hospitals to select other brands (Stanford Law School, 2025). Theoretically, if this law has been effectively implemented, innovative drugs should to some extent appear in hospitals, which is beneficial for patients, as pharmacies devote high levels of technology into their development, ensuring best efficacy for treating illness. However, in reality, the phenomenon of branded drugs rarely appearing in public hospitals potentially leads to patients’ lack of effective medication.


These special innovative drugs can only be accessed from private hospitals or from overseas pharmacies, both of which are considered costly. Mr. Duan, the former director of the sales department in AstraZeneca, a Swedish-British multinational pharmaceutical giant, has been closely working with doctors from top-tier (Grade III, Class A) hospitals, and revealed the reasons why public hospitals tend to purchase selected drugs and drop branded ones. As an experienced worker in the pharmaceutical field, his point of view serves as a crucial reference and can help us view the impact of VBP on hospitals from a professional perspective. In an interview with me, he said: “The procurement quantity is required for the evaluation of public hospitals. According to healthcare policies, even though hospitals have the autonomy to purchase additional branded drugs, the fewer generic drugs procured in total, the more likely they are to receive negative feedback from the NHSA and the National Health Commission (the “NHC”), which could directly affect the funding of the institute and the income of doctors. Therefore, most public hospitals consider purchasing branded drugs not worth the risk.” His claims can be proven by studies (Zhu et al., 2023).



Is that price trustworthy

The other issue here pertains to the selected drugs for common diseases. The low price has aroused doubt in the quality of generic drugs, and the debate of whether generic drugs have the same effect as branded drugs has long been a heated topic, not only limited in China but worldwide. In fact, developed nations and international organizations had applied a filter to generic drugs almost as strict as that of branded drugs. In 1984, the USA released the Hatch-Waxman Act, which set a lower standard for the approval of generic drugs, including reduced drug trials and fewer rows of BE (Bioequivalence) experiments, nevertheless, it still ensures the overall efficacy and legitimacy of the drugs. Similarly, in 2015, the criteria for generic drugs set by the China National Medical Products Administration (the “NMPA” ) were no less superior compared to global standards. However, this is not the only legislation regarding generic drugs in China.


A former president of the NMPA pointed out in an interview with Xinhua News Agency that generic drugs which have passed the consistency evaluation can alter excipients (complementary components apart from active ingredients) and additives before entering the market. Moreover, repetition of the BE experiment is no longer required if the alterations are categorized as “minor changes” (Xinhuanet, 2025). Since “minor changes” include changing additives to lower the manufacturing cost, pharmacies can legally use cheaper, often less effective excipients after the original additive has passed the evaluation as a substitute for the original ones, maximizing the declined profit caused by the VBP.


Though it does not seem like a severe issue, altering excipients still poses significant risks on the medication of patients. Drugs are composed of active ingredients, the specific ingredients which cure the disease or reduce symptoms, and excipients. Excipients ensure the uptake of active ingredients, thus playing an essential role in maintaining the stability and effectiveness of the medicine. Moreover, a significant proportion of the production cost of drugs lies in additives rather than the effective ingredient, and a drug’s quality is usually determined by the interaction between the components. Aspirin Enteric - Coated Tablets is a great example. It is a common drug used to prevent cardiac disorders. The active ingredient, Aspirin, patented by Friedrich Bayer & Co. in 1899, has a surprisingly low price of 30 CNY per kilogram. In contrast, a 120-count bottle of Bayer Low Dose 81mg, comprising a total of 9.72g Aspirin costs about 100 CNY (www.Amazon.com, 2026). It is way more pricy; however, the coating on aspirin prevents harmful acid formation and helps reduce the surface area that food directly reaches. Thus, evidently, potential harm could be done to the body if cheaper substitute excipients were used. More importantly, sampling surveys targeted at marketed generic drugs neglect the effectiveness of additives, only testing whether the proportion of active ingredients meets the standard (www.cnpharm.com, 2021). These concerns heightened public anxiety, as they worried that the officially approved drugs may contain lower-quality additives that result in long-term negative effects on human health.


More controversy regarding legitimacy of domestic generic drugs was triggered by allegations of data fabrication incidents regarding two generic drugs of Rosuvastatin, originally manufactured by AstraZeneca. An influencer on WeChat named “ Basic Common Sense”(translated name) claimed that he spotted that the evaluation reports for two separate generic drugs are identical with the same statistics, despite that they are from different manufacturers. Shortly after this incident, the authorities canceled his work and also deleted the original evidence of the two medicines. This would be statistically unlikely as it is impossible for BE experiments to generate identical results due to the structural diversity of biological organisms, but it was not an isolated case. Soon after the incident, the NMPA publicly apologized, stating these were “editing errors” made by an alleged intern (NMPA, 2025). According to the NMPA, the same data was typed unintentionally into two different charts. This is generally considered a weak reasoning, because it seems unlikely for several editing errors to appear simultaneously in the same row of VBP. Moreover, the action of deleting the original evidence does not seem reassuring if it really was just a minor error. This reasoning obviously did not convince the public, and many netizens voiced their concerns online, believing the so-called "intern" was merely a scapegoat, taking the blame for others' mistakes: “Oh, intern made a mistake on the data? What a convenient excuse.” or “If this happened in the US, the company would be fined into non-existence. Here, we get a 'correction statement' and business as usual.” appeared on social media platforms, such as “Xiaohongshu” and “Weibo”. Both two challenges mentioned above, from controversial legislation to decline in public trust towards generic drugs have highlighted challenges present in the implementation of VBP, which should not be overlooked and need careful consideration. However, government reactions were rather disappointing.


 

Disappointing reactions, distorted truth

Dr. Zheng Minhua, the doctor representative mentioned at the start, submitted a proposal titled “How to Ensure Access to Effective Drugs Under the Drug Centralized Procurement”, in which he questioned the effectiveness of generic drugs. According to Zheng, some drugs procured appeared in clinical practice to have less reliable efficacy than original-brand or imported drugs, particularly in certain categories such as antihypertensives, anesthetics, and laxatives. This quickly gained support from patients nationwide, who left comments like “Hero for the people” and “A true people’s doctor” (NetEase News, 2025).


However, the reactions from the NMPA were disappointing. The NMPA stated that the proposal was only based on “personal opinions” and “unauthorized evidence.” It also accused Dr. Zheng of distorting the facts, saying that the drugs do not seem to have any of the devastating consequences (PhIRDA, 2025). Dr. Zheng soon faced serious backlash for questioning authorities. According to mainstream news media outlets (Tencent News, NetEase News), Zheng received countless abusive comments, most framing him of “ working for foreign governments” or “betraying his own country.” As a result, Zheng’s Weibo account was shut down amid large-scale online harassment.

 

Escaping from the Dilemma

Are there possible solutions to deal with this seemingly endless debate? Both authorities and professionals should contribute to constructing a more mature procurement system. However, we must realize the core factors that caused failure in public cooperation, thus I will analyze the further reasons behind from my own perspective and give possible solutions.


Primarily, despite the government’s intention of reducing healthcare burdens for the underprivileged, the implementation process of VBP has distanced the policy from its original purpose: instead of an attempt to improve healthcare infrastructure, it has gradually become similar to a mandate that demonstrates government authority. The decision of eliminating branded medicine lacks consideration, as it did not fully balance competing values, which might arouse doubt in the legitimacy and maturity of the policy. For the general public, their autonomy to purchase drugs has, to some extent, been deprived; for hospitals, noncompliance faces severe consequences. Therefore, as a solution, authorities should always bear in mind that, in a collectivist society like China, legislation should prioritize public interest. More specifically, instead of totally excluding branded drugs from the list, authorities should either procure them in complement to generic drugs, or leave hospitals the right to purchase innovative drugs without linking it to their overall evaluation.


Furthermore, though the data fabrication incident posed a negative impact on government authority, deleting evidence, along with  releasing a short and ambiguous announcement will not improve public compliance or regain trust. The NMPA should spare no effort to prevent similar errors to happen and give more specific and convincing reasoning to rebuild faith in the people, like informing the public about under what circumstances did the error occur and who should be held responsible. Most importantly, tensions surrounding the centralized procurement need to be properly examined and discussed, with the participation of industry experts who have insider knowledge like Dr. Zheng. For instance, hosting annual discussions to gather advice or encourage more professionals to point out current drawbacks in the healthcare system.

 

A Valuable Lesson

The approval from the public towards Dr. Zheng and their skeptical attitude toward the policy has made the debate about VBP a phenomenon not to be neglected. The controversy regarding the VBP itself stems from the public’s distrust of government-approved generic drugs, thus suppressing critical voices that speak for the people will only deepen suspicion toward the authorities. Trust is a flickering oil lamp; if extinguished, it is difficult to rekindle it.

 

 

References




Writer: Max Xie

Editor: Ivy Liu

 
 
 

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