The First Session of the 13^th National People’s Congress of China came to a successful close on March 20. In meeting the press after the session, Premier Li Keqiang said, "We will largely reduce the import tariff of some high-demand consumer goods on the market, including pharmaceutical products, especially the anti-cancer drugs that are badly needed by the people and patients, and strive to achieve zero tariff for anti-cancer drugs." This decision has caused jubilation, and can be said to solve the urgent need of cancer patients who cannot afford the expensive treatment costs in China, however, there has also been the voice of concern: "zero tariff" would greatly impact the Chinese pharmaceutical enterprises, which would be an issue to weigh at the time of "zero tariff" implementation.

I. Expensive cancer drugs breed chaos of the drug market, and "zero tariff" can solve the urgent need

Shenzhen Intermediate People’s Court concluded an extremely large counterfeit drug case in January this year, in which the mastermind Chen Zhonghua’s crime started with overseas purchasing. For the same anti-cancer drug, the price difference between Mainland China and Hong Kong, S.A.R., China can reach thousands and even tens of thousands of RMB per box although they are only separated by a straight. For example, for the breast cancer drug Herceptin, the price is nearly RMB 25,000 in Mainland China, and around RMB 15,000 in Hong Kong, S.A.R., China, with the difference of nearly RMB 10,000; the selling price difference of Nexavar under Bayer between Mainland China and Hong Kong, S.A.R., China is nearly RMB 7,000; and the price difference of Novartis’ leukemia drug Gleevec between Mainland China and Hong Kong, S.A.R., China is as high as RMB 8,000. The high profit margin causes many people to take the way of overseas purchasing and drug counterfeiting, and suggests the fact that many oncology drugs are scarce and have extremely high prices in China.

One of the reasons for the high price difference in and out Mainland China is certainly the tariff, which problem would be largely solved by the tariff reduction and even "zero tariff" proposed by Premier Li Keqiang this time. The cancer incidence is still rising in China; according to statistics, every minute, there is 7 new cancer patients in China. We don’t know how many cancer patients there are, not accessing effective treatment or even treatment because of the expensive treatment costs. The drug price reduction that accompanies the "zero tariff" will reduce patients’ treatment costs, and can be said to solve the urgent need.

II. "Zero tariff" can promote China’s import of cancer drugs

Marketing of imported drugs is relatively slow in China. According to someone, the approval of imported drugs in China is way slower than many European and American countries; the approval of an imported drug takes 3-5 years, if not 8-10 years. It is reported that there were only 6 marketed in China among the 49 new oncology drugs marketed in the world during 2010-2014.

Reasons for the above situation include China’s "cautious" attitude towards approval of imported drugs, and more importantly, the "denial" by the "high tax rate". In other word, we can be optimistic that the "zero tariff" will promote China’s import of cancer drugs to some extent.

III. It’s necessary to weigh impacts brought by "zero tariff" on Chinese pharmaceutical enterprises

China’s modern pharmaceutical R&D relatively lags behind the developed countries in Europe and America, is still in its infancy, and is difficult to rival pharmaceutical giants like Pfizer and Novartis. While "zero tariff" will reduce drug prices and bring benefits to patients, it will also cause great impacts to the Chinese pharmaceutical enterprises, and will seemingly bring some concerns to the new drug R&D that is nascent in China.

Therefore, the implementation of "zero tariff" must weigh its impacts caused to the Chinese pharmaceutical enterprises, for example, mechanism and measure like tax reduction may be provided to excellent Chinese pharmaceutical enterprises, and the import may be appropriately slowed down for drugs of diseases that already have good drug choices in China.

Summary:

Tax rate reduction and even "zero tariff" can be called great news for the Chinese cancer patients, and will have some control effect over the strange phenomena of "drug overseas purchasing" and "counterfeit drugs" currently in China, however, when this measure is implemented, it is necessary to weigh its impacts on the Chinese pharmaceutical enterprises, so that the Chinese patients will access better treatment and the Chinese pharmaceutical industry will be guaranteed to achieve sound development.

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