Understanding Heterogeneous Drug Procurement Behaviour of Healthcare Institutions Under Pooled Procurement: Evidence From China

Zhao, Boya; Cheng, Zhao; Feng, Xing Lin

Understanding Heterogeneous Drug Procurement Behaviour of Healthcare Institutions Under Pooled Procurement: Evidence From China

Articles in Press

Document Type : Original Article

Authors

Boya Zhao

Zhao Cheng

Xing Lin Feng

School of Public Health, Peking University, Beijing, China

Abstract

Background
While the overall impact of pooled drug procurement on drug procurement has been evaluated, little is known about how healthcare institutions’ pre-policy procurement composition is associated with heterogeneous post-policy procurement responses. This study addresses this gap under China’s National Volume-Based Procurement (NVBP) policy.

Methods
We used monthly procurement data from January 2018 to December 2020 from four provinces in China, covering both pre- and post-policy periods, as the NVBP policy was implemented in January 2020. Outcomes were procurement volumes, measured as the number of defined daily doses (DDDs), of NVBP-covered drugs (bid-winning and non-winning products) and their clinically substitutable alternatives. All healthcare institutions in the selected provinces were included and stratified by (1) their pre-policy share of bid-winning products among NVBP drugs and (2) their pre-policy share of NVBP drugs among both NVBP and alternative drugs, to assess institutional heterogeneity. Interrupted time series (ITS) analysis was conducted to assess the immediate (level) and long-term (slope) post-policy changes.

Results
Procurement volumes of bid-winning products increased substantially following the policy (level change: 1275%, P < .01), with smaller increases observed among healthcare institutions with higher pre-policy bid-winning shares (eg, highest-share subgroup: 441%, P < .01), consistent with uniform procurement targets. Although overall procurement of alternative drugs remained stable, healthcare institutions with higher pre-policy NVBP shares experienced significant increases, with level changes of up to 1010.9%, suggesting substitution driven by financial losses. In contrast, healthcare institutions with lower NVBP shares saw notable declines (level change: −34.8% to −65.2%), possibly reflecting demand-side substitution toward lower-priced NVBP drugs.

Conclusion
Findings highlight that in pooled procurement, procurement behaviour is shaped more by regulatory enforcement and financial incentives than by price-driven demand. Strengthening guidance and oversight of supplier behaviour remains essential to realizing the full benefits of pooled procurement reforms.

Keywords

Pooled Procurement

Drug

Procurement Volume

Healthcare Institutions

Heterogeneity

China

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