China will improve its drug price formation mechanism to support the high-quality development of the pharmaceutical industry and enhance public access to affordable, high-quality medicines, according to a document released by the General Office of the State Council this week.

Speaking at a news conference on Wednesday, Shi Zihai, deputy director of the National Healthcare Security Administration, said the document proposes an initial pricing model for newly launched drugs based on their level of innovation, while also improving pricing systems for bulk procurement drugs.

"The measures aim to encourage enterprises to continue R&D and innovation, while guiding fair and reasonable pricing for other drugs," he said.

At the same time, public hospitals, insurance-designated pharmacies and online drugstores are encouraged to play a role in drug discovery, making drug price formation more open, transparent and comparable, he added.

Efforts will also be made to promote diversified payment and rational price formation for innovative drugs, enhance the supply and price stability of drugs in short supply, strengthen price management of narcotics and psychotropic substances, and regulate pricing behavior for raw materials.

Official data shows that China approved more than 200 innovative drugs and nearly 300 innovative medical equipment products during the 14th Five-Year Plan (2021-25).

The number of innovative drugs in the pipeline in China accounts for about one-third of the global total, and the total value of out-licensing transactions for Chinese innovative drugs exceeded $130 billion in 2025, marking a new high. Chinese companies now account for six of the top 50 global drugmakers.

Wang Xiaoning, head of the administration's pharmaceutical pricing and bidding procurement department, said that a total of 199 innovative drugs have been added to the national reimbursement drug list over the past eight years.

As of February, the insurance fund had spent 504.8 billion yuan ($74 billion) on covered medicines, driving sales of 740 billion yuan and benefiting 1.17 billion patient visits.

The total profit of the pharmaceutical industry has grown at an average annual rate of 11.3 percent, while R&D investment has increased by an average of 23 percent per year, he said.

Wang said that as the document has laid out more detailed measures to ramp up drug innovation, the administration is researching policies to enable enterprises to self-assess their drugs' clinical evaluation and innovation to help determine a launch price commensurate with high investment and high risk, while remaining stable over a certain period.

Drugmakers will be allowed to make price changes based on real-world studies and clinical outcomes.

Their pricing behavior will also be subject to oversight from all sectors and peer review, he said.

Wang added that adjustments to the national drug reimbursement list — which will add a number of innovative drugs each year through price negotiations with companies — should strike a balance between patient benefits and incentives for innovation.

Meanwhile, implementation of the national-level commercial insurance drug catalog, first proposed late last year, will be accelerated, and charitable funding and other parties will be mobilized to broaden payment channels for innovative products.

The document also emphasizes carrying out drug price risk warnings and cracking down on illegal practices such as monopolistic pricing and market manipulation.