Impact of China's National Volume-Based Procurement Policy on Cost, Volume, and Market Structure: An Interrupted Time-Series Analysis of Montelukast Sodium

Abstract

Background

To reduce drug prices and improve access to essential medicines, the Chinese government implemented the National Volume-Based Procurement (NVBP) policy, leveraging economies of scale. Montelukast sodium, widely prescribed for respiratory diseases, was included in the first round. This study evaluates the impact of the NVBP policy, offering insights for global pharmaceutical policy reform.

Methods

Utilizing national procurement data from the National Healthcare Security Administration (January 2019 to December 2020), we conducted an interrupted time-series analysis, employing autoregressive integrated moving average models to correct for autocorrelation. We evaluated changes in procurement volume (in defined daily doses), procurement expenditures, and defined daily dose costs of montelukast sodium before and after NVBP implementation.

Results

The NVBP policy triggered a substantial decline in total procurement expenditures and defined daily dose costs, significantly improving drug affordability. Unlike the volume surge observed in other NVBP-covered drugs, the total procurement volume of montelukast sodium remained stable, suggesting rational clinical demand. Structurally, the policy successfully drove a “generic substitution” effect, where bid-winning generics rapidly replaced high-priced originators. The market share of non-equivalent generics contracted significantly, marking a quality consolidation of the market.

Conclusions

The NVBP successfully achieved cost containment for chronic respiratory disease medications. By promoting high-quality generic substitution and reducing the market share of high-priced originators and low-quality generics, the policy effectively optimized the market structure. These findings provide a replicable China Model for low- and middle-income countries seeking to balance affordability and accessibility in chronic disease management.