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China Probes 60 Drugmakers in Effort to Curb Drug Prices

China’s top economic planning agency is investigating the costs and prices of drugmakers including GlaxoSmithKline Plc (GSK), Merck & Co., Novartis AG (NOVN) and Baxter International Inc. (BAX) to improve the pricing system for medicines.

The National Development and Reform Commission will examine 27 companies for costs and 33 for pricing, according to a July 2 statement posted on the commission’s Evaluation Center of Drug Pricing. The investigation is being done so that drug prices can be adjusted in a more timely fashion, it said.

“This isn’t surprising as drug prices are often under scrutiny from the NDRC,” said Jason Siu, a health-care analyst with RHB OSK Securities Hong Kong Ltd. “It makes sense for them to try to keep procurement costs low.”

A possible impetus for the commission to probe pricing and costs of domestic and foreign companies was the publishing of China’s national essential drugs list in March, which increased the items on the list to 500 from 305, Siu said in an interview yesterday. The study comes after the People’s Daily reported the NDRC started an investigation into pricing of infant formula.

Drugs on the list are subsidized and purchased in bulk by provincial governments. The items include what every hospital should have on its pharmacy shelves, Siu said, and doctors are urged to prescribe from the list as patients are more likely to receive reimbursement.

Officials from the center will visit the companies between July and October, according to the statement. GlaxoSmithKline, Merck, Novartis, Baxter and Astellas Pharma Inc. (4503) are in the cost part of the review, along with a number of Chinese drugmakers, it said.

Chinese police started an investigation into the Chinese unit of Glaxo, U.K.’s biggest drugmaker, a week ago. Senior executives at the unit are suspected of “economic crimes,” the police have said.

There is no link between the investigation and the NDRC review, according to a person familiar with the matter.

To contact the reporter on this story: Natasha Khan in Hong Kong at nkhan51@bloomberg.net

To contact the editor responsible for this story: Jason Gale at j.gale@bloomberg.net

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