State-organized centralized drug procurement is not merely group purchasing to drive down prices; instead, it leverages public purchasing power to secure fairer, higher-quality healthcare services.

Anti-cutthroat competition rules will phase out inefficient production capacity and optimize resource allocation, compelling pharmaceutical enterprises to shift focus to innovative drug R&D, production process upgrading and quality improvement.

Bidding for the 11th round of state-organized centralized drug procurement will kick off soon. The National Healthcare Security Administration recently clarified that this round of procurement will adhere to the principles of "stabilizing clinical medication, guaranteeing drug quality, preventing bid-rigging and curbing cutthroat competition". New rules including optimized benchmarks for price gap control and avoiding automatic adoption of the lowest bid directly target the cutthroat competition prevalent in the generic drug sector.

As a core component of healthcare security reform, 10 batches of state-organized centralized drug procurement have been rolled out over the past seven years, covering a total of 435 successfully procured medicines. By cutting redundant intermediate links to eliminate inflated profit margins, centralized procurement has effectively curbed artificially high drug prices, overhauled the industry’s commission-driven sales model, and substantially eased patients’ financial burden of medication.

Nevertheless, in previous bidding rounds, a small number of enterprises submitted irrationally low bids to seize market share and undercut rivals. Such reckless competition distorts market order and creates hidden risks to drug quality and supply. A handful of winning manufacturers even suspended production and cut off supplies, tarnishing the reputation of the centralized procurement system and endangering patients’ consistent, safe access to medicines. More importantly, if enterprises perceive centralized procurement as a system that prioritizes rock-bottom prices above all else, their incentive for innovation will be stifled. Though centralized procurement does not cover new innovative medicines, enterprises squeezed to minimal profit margins will lack funds to develop new drugs or upgrade manufacturing techniques.

The anti-cutthroat competition provisions introduced in the 11th round of procurement deliver targeted solutions to these pain points. Under the new rules, any enterprise submitting an extremely low bid must provide cost calculation data and commit to offering a bid no lower than production cost, putting a stop to ruinous and irrational bidding. These adjustments are not intended to push drug prices higher; rather, they strike a balance between reducing patients’ financial burdens and safeguarding drug quality.

Only competition centered on quality can protect public health. It must be emphasized once again that state-organized centralized drug procurement is far more than a simple group discount initiative — it harnesses collective public purchasing power to deliver fairer, superior healthcare services. From patients’ perspective, while affordable medication is desirable, reliable therapeutic effects matter more. Iterative improvements to centralized procurement rules aim to resolve the high cost of medical treatment and ensure safe medication use, fulfilling the original mission of healthcare security reform: protecting people’s health.

Centralized procurement links two critical sides: the public’s demand for affordable medicines and the sustainable growth of the pharmaceutical industry. From an industrial standpoint, curbing cutthroat competition is pivotal to advancing high-quality development of the pharmaceutical sector. China hosts a large number of small-scale pharmaceutical manufacturers with relatively weak overall innovation capabilities, many of which have long relied on generic drugs for quick returns. Although R&D investment as a share of operating revenue has risen markedly among pharmaceutical firms in recent years, such investment remains concentrated among leading innovative drug developers, leaving the industry’s overall innovation capacity in need of further improvement. By phasing out inefficient production lines and rationalizing resource distribution, anti-cutthroat competition rules will force manufacturers to invest in innovative drug research, upgrade production workflows and boost product quality.

Enforcing anti-cutthroat competition standards will elevate refined management of centralized drug procurement. However, given that generic drug tendering often draws dozens of competing manufacturers, downstream procurement adjustments alone may fail to fully curb ruinous rivalry. To guarantee consistently high-quality, stable drug supply under centralized procurement, more targeted measures and joint coordination between upstream and downstream regulatory authorities are required.

On one hand, full-lifecycle quality supervision must be strengthened. Centralized procurement does not end once bids are awarded; dynamic random inspections must continue post-award, implementing end-to-end monitoring covering raw pharmaceutical materials, manufacturing processes and clinical efficacy. On the other hand, compatible incentive mechanisms should be refined. Preferential policies can be offered to manufacturers with outstanding product quality, motivating enterprises to take proactive steps to enhance quality instead of merely cutting costs passively.

Most crucially, the priority of public health must permeate every policy design stage. To extend the benefits of centralized procurement to wider populations, policymakers should fully solicit input from physicians and patients when drafting rules and implementing detailed provisions. For instance, when determining procurement volumes, regulators should weigh not only price reduction margins but also clinical demand and patient medication adherence. Clinical trial and research data can be integrated into quality evaluation frameworks to let therapeutic performance speak for itself.

Practicing, exploring and refining policies iteratively is an effective approach to advancing numerous initiatives. It is expected that as procurement rules mature, centralized drug procurement will better safeguard public health while continuously injecting robust momentum into the development of the pharmaceutical industry, enabling all people to access more efficient, safer and affordable medicines and healthcare services.

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