China is experiencing a major demographic and epidemiologic transition challenging their healthcare system according to the “November 2014 Report to Congress of the U.S China Economic and Security (USCES) Review Commission” www.uscc.gov.
The report resulted from the USCES Review Commission’s April 2014 hearing to discuss China’s healthcare sector, drug safety, and U.S-China trade in medical products. Witnesses at the hearing were from FDA, People’s Republic of China, PhRMA, and the Asia Health Policy Program at the Shorenstein Asia-Pacific Research Center of Stanford University.
The report draws a number of conclusions. China’s median age will exceed the median age in the U.S within this decade, and the population 65 and older is expected to rise to 25 percent by 2040 totaling 300 million.
Some experts estimate that China’s healthcare spending will increase from $357 billion the figure in 2011 to $1 trillion in 2020 making China the second largest market after the U.S. It is evident that an older and wealthier population will seek more frequent and better quality treatment.
China’s healthcare boom is also occurring at a time when some of the mature markets are losing luster. Therefore U.S companies that market drugs, medical devices, and healthcare services, view China as an important opportunity since other few other exporting markets can match China in terms of market size and level of development.
China’s rise as a pharmaceuticals exporter has coincided with the growing reliance on drug and drug ingredient imports to the U.S. This trend is worrisome because China by some estimates is also the world’s leading supplier of fake and substandard drugs.
Since 2007, FDA has taken important steps to improve drug safety regulation. In China, FDA is expanding their team of drug inspectors, increasing the frequency of inspections, and working closely with Chinese counterparts and the Chinese FDA.
China’s process for approving new drugs leads to excessive data transfers. Loopholes in China’s intellectual property laws allow local drug makers to reproduce U.S. patent drugs prematurely. Clinical trials combined with state interference in tendering, pricing, and reimbursement can cause delays of up to eight years for state-of-the-art U.S drugs which are prohibitively expensive for ordinary Chinese patients.
There are however concerns in trading with China. For example, companies are worried about being targeted by China’s recent anticorruption drive and indiscriminate use of its antimonopoly which aims to lower healthcare costs but is a disadvantage to foreign companies.
U.S device makers are also concerned about the proposed amendments to China’s Medical Device Law published in March 2014. The amendment could impose hundreds of new requirements on foreign device makers, including indigenous standards for serial number tracking.