Centralized procurement of artificial joints boosts healthcare accessibility in China

BEIJING -- In 2020, a patient from East China's Zhejiang province underwent left hip replacement surgery costing over 50,000 yuan (about 7,035 US dollars), with 10,000 yuan paid out-of-pocket and the remainder covered by her basic healthcare insurance; by 2023, her right hip replacement surgery totaled slightly over 10,000 yuan, of which her private account contributed over 2,000 yuan.

The price drop came after China's first national centralized volume-based procurement (VBP) bid for artificial joints in September 2021, marking the country's second such bid for medical consumables following a bid for coronary stents in November 2020.

As a result of the bid, a procurement agreement was enacted in April 2022, resulting in significant reductions in the average prices of artificial hip joints and knee joints, which dropped from 35,000 yuan and 32,000 yuan to approximately 7,000 yuan and 5,000 yuan, respectively.

Over the past two years, more than 1.1 million sets of artificial joints were procured at negotiated prices, accounting for more than 90 percent of all artificial joints used during the period, saving over 32.89 billion yuan.

"These (figures) have met our expectations of VBP for artificial joints," said Gao Xue, an official in charge of VBP for high-value medical consumables.

After the end of the two-year procurement agreement, the National Health Security Administration (NHSA) initiated a new VBP bid for artificial joints in Tianjin on Tuesday, involving a combined demand for 580,000 sets of artificial hip and knee joints from over 6,000 hospitals nationwide.

According to the administration, 167 products from 54 bid-winning enterprises were selected from the bid and the average negotiated price was further cut by 6 percent from the previous procurement agreement.

Since China first began to pilot VBP in 11 cities in 2018, which was later promoted nationwide, the NHSA has conducted nine rounds of bids for medication, covering 374 drugs, and bids for medical consumables including coronary stents, artificial joints, intraocular lenses, and consumables used in spiral surgeries and sports medicine.

As a reform to the country's government-led procurement system, the VBP uses the "volume for price" strategy to engage in negotiations with enterprises in order to secure lower prices through guaranteed large-volume procurement.

Due to the significant decline in medical consumable prices, patients are increasingly opting for surgical interventions, which, while potentially more efficient than medical treatments, can also entail higher costs.

"In the past, many older people would rather endure kyphosis than undergo surgeries because of the high costs," said Zhan Baoming, an associate chief physician at the spine surgery department of Jinan City People's Hospital in east China's Shandong Province.

Zhan said that kyphosis patients now voluntarily approach him for surgeries after the VBP agreement for consumables in spiral surgeries was implemented in April 2023.

Besides the price drop, VBP is also believed to have improved the competition among manufacturers and optimized the structure of artificial joints used in medical institutions.

For example, artificial hip joints can be divided into different types according to the materials of their bearings, including ceramic-on-ceramic, ceramic-on-polyethylene, and metal-on-polyethylene.

"After the VBP agreement was implemented, the proportion of products with ceramic-on-polyethylene bearings that are more durable and less likely to break has risen from 47 percent to 58 percent (in medical institutions), while the proportion of metal-on-polyethylene bearing products with relatively poor performance has decreased from 12 percent to 8 percent," Gao, the VBP official, said.

According to Ding Yilei, an official of the NHSA, the VBP has helped improve the industry environment and provided favorable conditions for innovation, research and development of the pharmaceutical and medical manufacturing sector.

He noted that before the promotion of VBP, pharmaceutical enterprises often prioritized high prices and drug rebates, whereas now, an increasing number of enterprises have realized the importance of innovation and product quality, with marketing strategies playing a diminished role in VBP bidding processes.

The total investment in research and development in China's medical industry has increased annually by 23 percent on average over the past years since the VBP policy came into force, Ding said.

According to a circular issued by the NHSA on Monday, China will promote the procurement of more medical consumables including in vitro diagnostic reagents, ultrasound knives, and ligating clips.