How National Volume-Based Procurement Reshapes Drug Prices and Public Spending in China

China's National Volume-Based Procurement (NVBP) program centrally tenders selected off-patent molecules. Winning products are purchased under contracted volumes at discounted prices, while non-winning products may remain available outside the contracted volume. We assessed how NVBP tender waves 2-5 affected procurement prices and first-year public procurement spending.

We used monthly hospital procurement records from 29 mainland provincial-level regions during 2019-2022, measured at the product-province-month level, for five therapeutic areas. Prices were measured as defined daily cost (DDC) in Chinese yuan. We estimated log-price effects using dynamic difference-in-differences models for staggered treatment timing across molecules. We then mapped estimated price changes onto one-year public procurement spending under fixed-share and realized-reallocation scenarios.

DDC fell by 58% for winning products and by 10% for non-winning products. Baseline spending was CNY 2.82 trillion. Estimated savings were CNY 779.9 billion (27.7%) under the fixed-share scenario and CNY 1,038.1 billion (36.9%) under the realized-reallocation scenario.

NVBP was associated with large direct price reductions and smaller spillover reductions, yielding substantial procurement savings.