VIEWPOINTT h e A m e r i c a n C h a m b e r o f C o m m e r c e i n S h a n g h a i - V i e w p o i n t J a n u a r y 2 0 1 7

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In Search of a Cure:Market access barriers

and their impact on healthcare in China

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Executive SummaryHealthcare in China has achieved significant improvements

over the past two decades. After adding approximately 900

million people to its public health insurance plans in the

10 years up to 2012, a 2016 World Bank report states that

China has since achieved “near-universal health insurance

coverage.” Healthcare facilities have seen massive growth

as well. The China Statistical Yearbook reports that the

number of hospitals in China has grown from just over

16,000 in 2000 to nearly 26,000 at the end of 2014, while

the accompanying number of hospital beds more than

doubled to reach nearly five million. Medical personnel

expanded by more than three million workers during the

same period, reaching 10.23 million.

Despite this progress, China’s healthcare system continues

to lag behind other major markets. A 2016 report from the

Center for Strategic and International Studies concludes that

“indicators for the quality of health have gradually risen, but

improvement has not kept pace with the rise in per capita

income, and access to quality care is highly uneven.” Evidence

for this can be seen in areas of China’s healthcare that

continue to lag behind. According to the CIA World Factbook,

in 2016 China ranked 116th globally in maternal mortality rate,

121st in infant mortality rate, and 101st in life expectancy. While

China has made rapid and significant progress in advancing

its healthcare system, it still has much room for improvement.

Market access barriers for foreign pharmaceutical and medical

device manufacturers are limiting the Chinese people’s access

to cutting-edge, innovative and high-quality medical devices

and pharmaceutical products. This is a major contributing

factor to the current situation where the quantity of healthcare

in China is expanding at an impressive rate, but the quality of

this care is improving at a much slower pace.

Extremely long approval processes and complicated

bidding, tendering, and reimbursement procedures often

result in a total timeline of 4-6 years or more for imported

products to become available in China. As a result,

products reaching the market are often outdated, ensuring

that even the highest quality care in China is often below

that of other major markets. Exacerbating this problem,

a growing emphasis on price reductions and new price

cutting mechanisms has reached such extreme levels that

in some cases foreign manufacturers are simply priced out

of the market, reducing Chinese patients’ access to only

less effective products.

Many of these barriers have arisen from China’s push to slow

the growth of medical costs associated with the expansion

of healthcare coverage. Additionally, recent attempts to

champion local producers in an effort to boost domestic

innovation have also resulted in increased impediments to

foreign suppliers. While expanding healthcare coverage and

increasing innovation are worthy goals that the government

should continue to pursue, doing so in a manner that prevents

its citizens from accessing the best healthcare available is in

direct opposition to the policy of “adhere[ing] to the people-first

principle and attach[ing] primary importance to safeguarding

the rights and interests of the people's health” articulated in

the government’s major 2009 healthcare reform plan. This

document, which provided the foundation for the current

healthcare reform agenda, further states that healthcare in

China “should emphatically give full play to the role of market

forces, call on social participation, [and] promote the formation

of [an] orderly competition mechanism.”

In 2011, Chinese president Hu Jintao emphasized China’s

commitment to these goals by promising to de-link indigenous

innovation policies from government procurement – a practice

that was limiting natural market operations. Two years later,

a major reform package announced at the Third Plenum of

the 18th Party Congress included a commitment to allow “a

decisive role for market forces.” Continuing this theme, China’s

recent 13th Five-Year Plan included numerous healthcare-

specific reforms aimed at further opening the sector, including

the call for “equal treatment of... private hospitals and public

hospitals.” An additional document released by the State

Council in 2016, according to Xinhua News, further reinforced

the aforementioned “people-first principle” when the Council

“determined that healthcare reform should benefit more

people.” Yet, despite these repeated calls for the market to

play a greater role in healthcare and for reforms to be aimed at

allowing citizens access to better healthcare, barriers to many

of the newest and most effective healthcare products instead

appear to be intensifying.

In January 2017, the State Council released a new five-year

plan on public healthcare. A key goal in the new plan is to

raise life expectancy one year above its 2015 level by 2020.

The plan also calls for more effective treatment of critical

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diseases, the promotion of health education, increased

support for grassroots clinics, and the encouragement of

private capital “to provide healthcare services and develop

new medicines and medical facilities.” The plan also states

that commercial insurance should be encouraged. All of

these recent goals are supported by the Chamber.

If the government genuinely wishes to realize these

objectives, it must eliminate current barriers to high-quality

healthcare products and allow its citizens to choose the

healthcare treatments they want. While the high price of some

cutting-edge medical products will continue to prevent large

segments of the population from accessing them, continued

middle class growth and rapid expansion in private health

insurance are allowing a growing number of Chinese people

the means to do so. Rather than introduce additional barriers,

the government should allow and encourage a healthcare

environment where the available products reflect the

demands of the patients and doctors who use them.

In order to continue the development of China’s healthcare

sector, AmCham Shanghai recommends four actions:

1. Make market access simpler and more efficient. Major

components of this include reducing approval timelines

and creating clearly defined rules and regulations

regarding approval, tender, and reimbursement. Currently

the market access timeline for a product entering China

is often several years longer than other major markets,

resulting in many products being at least a generation

behind those found elsewhere.

2. Increase emphasis on quality as a determining factor

during the tendering process. Price-limiting mechanisms

and the encouragement of price cutting during various stages

of a product’s journey to market should be limited. This focus

on price minimization reduces the incentive for innovation

and has come at the expense of quality, resulting in Chinese

patients increasingly only having access to cheaper, lower

quality products that fail to satisfactorily address their health

concerns. Greater attention needs to be paid to the quality

of a product and the reliability of the company producing it.

3. Improve reimbursement mechanisms. Reimbursement

lists should receive regular updates. A new National

Reimbursement Drug List (NRDL) was released in early

2017, its first update since 2009. This is far too long. We

welcome the new list, but hope that it will be updated

more consistently in the future. Additionally, public

insurance reimbursement rates remain limited. The

government should increase its push for private health

insurance and minimize barriers in this realm, especially

to foreign providers. Increased private insurance would

not only reduce budgetary pressures emerging from

China’s expanding healthcare coverage, but would also

allow patients access to better healthcare products.

4. Do not over emphasize localization. Emphasis on

domestic products has intensified over the past few years

and given rise to market distortions that are detrimental

to the development of the healthcare sector. This practice

should be reduced.

Total Healthcare Expenditures in China (RMB Billions)

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Source: China Statistical YearbookFigure 1

201420132012201120102009200820072006200520042003200220012000

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Medical Device Sales in China (RMB Billions)

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2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: EU SME Centre and China-British Business Council,Sector Report: The Medical Devices Market in China 2015

The China Healthcare MarketThe healthcare industry in China has seen extraordinary

growth over the past two decades. According to a 2015

Deloitte report, healthcare expenditures averaged an

annual growth rate of 17.2% from 2004-2013, and in the

process quadrupled to nearly RMB3.2 trillion. This growth

continued in 2014, and according to the China Statistical

Yearbook reached more than RMB3.5 trillion (see Figure 1).

A growing middle class, increased urbanization and

rising per capita incomes have driven demand for more

and better healthcare. Meanwhile, expanded insurance

coverage has greatly widened access to at least minimum

levels of care. While this growth has been impressive,

Deloitte’s 2015 report found that healthcare spending

only accounted for 5.6% of GDP, much lower than the 7.7%

average of high-income countries. As incomes continue

to grow in China, this number is expected to rise. The

government’s Healthy China 2020 report proposes that

this spending should increase to 6.5 – 7% of GDP by 2020,

with Deloitte predicting expenditures to rise to more than

RMB6.2 trillion. Even if it falls short of this goal, China is

quickly emerging as one of the most important global

healthcare markets.

Rapid growth in China’s pharmaceutical market has

led to it becoming the second largest in the world,

reaching US$108 billion in 2015, according to the U.S.

Department of Commerce. U.S. pharmaceutical exports

have benefitted greatly from this increase. With an

average annual growth rate of 26.6% over the past five

years, exports to China have jumped from $617 million

in 2010 to $2 billion in 2015. Meanwhile, medical device

growth has been equally impressive. A report by the

European Union SME Centre shows that device sales

doubled from 2010 to 2014, at which point sales reached

RMB255.6 billion – a 14-fold increase since 2001 (see

Figure 2). With 20% year-on-year growth in 2014, and the

accompanying RMB43.6 billion increase representing

the largest yearly growth ever, there are many reasons

to be optimistic about the medical device market in

China. But intensifying barriers and lengthy market

access processes reduce the ability of U.S. companies

to compete in this growing market.

Growth in the healthcare sector has been strong in China,

and it will continue to be a top market for U.S. companies.

But these growth rates have slowed as the government

attempts to minimize healthcare cost increases. While this

is understandable, some of these efforts are too focused

on reducing prices rather than rewarding innovation and

quality. Such policies not only deprive Chinese patients of

the latest medical technology, but in the long term may

not lead to reduced costs.

Challenges

Pharmaceutical and medical device companies attempting

to supply the Chinese market with products that will

improve the lives of Chinese citizens face many challenges.

Recently these challenges have been exacerbated by

Figure 2

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reforms aimed at improving healthcare that have instead

produced new barriers for high-quality products. This has

limited the Chinese consumer’s access to high-quality

and innovative products, and is thus achieving results

contrary to stated policy goals. Long-running challenges

facing both medical devices and pharmaceutical products

include uncommonly long approval timelines, confusing

and unclear policies and legal frameworks, a tendering

process that often includes severe price cuts and is

difficult to navigate due to differing provincial approaches

and opaque regulations, and the failure to regularly update

reimbursement lists.

Long and Arduous Market Access PathwayBringing a medical product to market in China is a long and

complex process that requires significantly more time than

in other major markets. According to a leading Chinese

medical consulting company that focuses on China Food

and Drug Administration (CFDA) registration consulting,

the registration and approval process for an imported

drug consists of seven steps, and takes an average of 2-3

years, though member companies have reported that this

process frequently takes much longer. In addition to the

approval process, products also must endure complicated

bidding and tendering processes which differ by province

and can take as long as a year and a half. This means the

entire process for bringing a new product to market in

China often takes as long as 4-6 years. For products that

require clinical trials, this can be even longer. This results

in pharmaceutical products and medical devices usually

reaching the market in China several years after they are

approved and released in other major markets.

Medical devices are especially disadvantaged by such

delays due to the regular release of new models.

Lifecycles of medical devices are much shorter

than pharmaceutical products, often as brief as 18-

24 months, making a 5+ year market access timeline

impractical. Some companies have experienced 4-5 year

wait times just for the approval of a product – meaning

that additional time was still required for the pricing and

tendering processes – which has resulted in products

released in China sometimes being as much as two or

three generations behind those available elsewhere. As

a result, even if no market access limitations arise during

the bidding and tendering procedures, Chinese patients

will be left to use outdated devices and have no access

to these cutting-edge technologies. In extreme cases,

the process takes so long that by the time a firm is

allowed to sell a device in China the device is no longer

being manufactured.

Over Emphasis on Price Cutting

Another significant concern arises from the series of

price cutting mechanisms experienced throughout

the process of bringing a product to market. There is

no standardization across provinces for bidding and

tendering. Many provinces require bidding negotiations

to begin with the lowest price nationally as a starting

point and expect further price cuts from there. Because of

vast regional wealth disparities, and differing healthcare

coverage between rural and urban populations, a number

of problems arise from this.

Poorer, rural provinces often cannot afford leading

pharmaceutical products or cutting-edge medical devices.

If a company offers its products to such regions at a

discount – an act that benefits the citizens and healthcare

systems of these regions – then all provinces across China,

regardless of their income level or healthcare coverage,

expect the same price. In mid-2015, the central government

unveiled a new drug procurement pricing database that

requires all hospitals to participate. It is now possible for

hospitals in any given province to view final contract prices

between suppliers and hospitals in other provinces.

This combination of price sharing and the national lowest-

cost negotiating process creates problems. For example,

if a firm is willing to sell a new drug to hospitals in a low-

income province at a break-even price, then a wealthier

province will demand this price as the starting point of

negotiations and expect it to be further reduced during

the bidding process. This can produce an unmanageable

downward price spiral for manufacturers. Though it is

difficult to assess the overall impact of this price sharing

database, as it is only a year old, it appears to be producing

the opposite effect of the overarching goal of improving

access to medical care by reducing costs. Though aimed

at lowering costs, this system could instead reduce access

in less developed areas by driving prices up, as drug and

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device producers become unwilling to offer discounts to

such regions.

The major issue facing pharmaceutical companies

today is the firm and continuous downward pressure

on prices. This downward pricing pressure pervades all

areas of healthcare, but for pharmaceuticals is especially

concerning in the following areas: an emerging focus on

cost at the exception of other concerns such as quality and

innovation; the growing intensity of price cuts during the

tendering process; and the introduction of the two invoice

policy (discussed below). There are also many concerns

over the direction of upcoming reforms, most notably draft

legislation that may include a price commitment for new

pharmaceutical products as part of the approval process.

Outdated National Reimbursement Drug ListAnother significant challenge for both pharmaceutical

products and medical devices is the process of gaining

reimbursement. As previously mentioned, a key concern

is the failure to frequently and consistently update

reimbursement lists. According to medical consulting

company Pacific Bridge Medical, China’s National

Reimbursement Drug List (NRDL) is to be updated every

four to five years, and consists of a four-step process

that involves four separate government agencies

(National Development and Reform Commission, CFDA,

Ministry of Human Resources and Social Security,

and Ministry of Finance). Until the release of the 2017

list, the NRDL had not been updated since 2009 (with

the previous list being issued in 2004). Because of

The Consequences of Slow ApprovalEarlier this year Chinese citizen Steven Wang, suffering from hepatitis C and unable to

purchase the medicine to treat it, resorted to an act of desperation: making a cure from raw

materials. According to Bloomberg, Wang set out to make a homemade version of one of

the numerous hepatitis C drugs approved in the U.S. over the past several years. Purchasing

some of the ingredients from a pesticide and fertilizer manufacturer, and using Taobao (a

Chinese website similar to Amazon) to gather other necessary materials, Wang concocted

what Bloomberg called “a make-shift drug cocktail.” Remarkably, after a few months of self-

treatment, Wang was purportedly cured. But in an environment where citizens are driven to

such measures by lack of access to effective medicine, few will be so fortunate.

According to The Wall Street Journal, China has one of the highest rates of hepatitis C in the world, with around 10

million people infected. While treatments have existed in the U.S. since the early 1990s, groundbreaking new drugs

have emerged in recent years. Pharmaceutical company Gilead’s effective treatment, Sovaldi, was approved by

the U.S. Food and Drug Administration in December 2013. Sovaldi cures roughly 9 in 10 patients, and has become

a massive seller. Several competitors have since emerged, with AbbVie entering the market in late 2014, alongside

another Gilead product. Approval of new treatments in the U.S. continued throughout 2015, with at least two more

approved in 2016. These treatments have become cheaper, easier to administer, and have cure rates of 94-98%.

Yet none have been approved in China (at least four foreign treatments were granted priority-review status in 2016,

though it’s unclear how long this process will take). Instead, hepatitis C patients such as Mr. Wang must fend for

themselves – often resorting to drastic measures.

Similar situations have arisen in China before, often with tragic results. In 2010, a counterfeit version of a cancer

drug approved in the West, but not in China, was sold in Shanghai and caused eye inflammation and severe vision

problems in 61 people who used it. The continued proliferation of counterfeit drugs is aided by online sales, with many

drugs entering China from neighboring countries. In 2016, Chinese authorities arrested a ring of drug counterfeiters

using WeChat (a popular Chinese messaging app) to sell fake drugs in nearly 30 provinces. Over 20,000 boxes of

counterfeit drugs and several tons of raw materials were seized.

When patients in China see people with the same illness being successfully treated elsewhere, they understandably

want access to these cures. If unable to legally purchase these products they may seek them from questionable

sources, raising the prospect of purchasing counterfeits. As long as significant approval delays continue, some

patients will, like Mr. Wang, concoct their own. But most will not be as lucky as he was.

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the speed of innovation and the regular release of

new and effective products, an eight year gap is very

problematic. This creates situations where even after

products have successfully navigated the long approval,

bidding and tendering processes, many patients are

still unable to utilize these products because they can’t

afford treatments not included in their reimbursement

schemes. This issue is further complicated by the lack

of involvement allowed from participating companies.

Drug and device producers cannot apply to be included

on reimbursement lists or provide an argument why they

should be. The government simply evaluates products

and comes to conclusions on its own. A 2016 report

from the U.S. Department of Commerce states that the

process of getting a product added to the NRDL “remains

opaque and chaotic.” AmCham member companies have

expressed a strong desire to be allowed a greater role

in this process.

Lack of Quality Health InsuranceReimbursement concerns are exacerbated by the lack

of quality health insurance. A 2016 Ernst & Young report

concludes that “current public health insurance systems

are insufficient to cover the costs incurred, particularly

for extended inpatient care.” The report also highlights

that “There is a looming funding crunch as health care

expenditures outgrow public funding.” This is a key driver

of the aforementioned dedication to price cutting through

all aspects of healthcare. Private health insurance has

grown rapidly in recent years, but is a relatively new

concept in China and remains limited. Expanding private

coverage would play a significant role in addressing both

reimbursement concerns and the pricing issues arising

from budgetary pressures.

Local ChampionsA recent challenge has emerged from the central

government’s push for the increased use of local

products. In late 2014, the National Health and Family

Planning Commission released a statement announcing

that they “strongly advocate health ministry organizations

to use domestically-made medical devices, especially

pushing top level class III hospitals to use domestically-

made products." Not only does this policy further hinder

competition, but it has raised questions regarding

its legality under China’s World Trade Organization

commitments.

Emerging Policy: The 2-invoice systemA pilot version of the 2-invoice system (两票制) was

launched in early 2016 in eight provinces. While not

yet mandatory, companies have expressed concern

regarding market access limitations that arise from it.

This system will limit drug manufacturers to one layer of

distribution by only allowing the issuance of two invoices

in a drug’s sale – one invoice between the manufacturer

and a distributor, and one invoice between that distributor

and a hospital.

It is common for multiple layers of distribution – for

example, a large distributor selling to numerous smaller

distributors in rural areas – to be used to sufficiently

meet an entire province’s needs. Many provinces have

large populations and vast geographical and urban-

rural disparities. Implementation of the 2-invoice

system within such a province – which may require

supplying first- and second-tier cities as well as

servicing a large number of rural villages or third- and

fourth-tier cities – will likely prove highly ineffective. If

a manufacturer needs to find a significant number of

distributors to service all of the low-population, rural

areas in a province (which are commonly serviced by

the second or third layer of distribution, which will be

eliminated under the 2-invoice system), it is likely that

manufacturers will not find it economically sensible to

pursue sales in such regions, and thus result in a lack of

access to quality products for rural residents. This will

work to exacerbate the urban-rural divide rather than

minimize it.

Looking ForwardAs China’s income levels continue to rise and the middle

class continues to expand, the Chinese people are

increasingly identifying health issues as a major concern.

A 2016 survey by the Pew Research Center asked

Chinese people to rate a list of issues by significance.

Forty-two percent ranked “safety of medicine” as a

“very big problem” (the strongest rating), a significant

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jump from the previous year’s 28%, and more than

four times the 9% of 2008. This surge moved it ahead

of food safety to rank as the second most significant

issue, behind only corruption. As China continues to

expand and improve its healthcare to meet the needs

of its people and mitigate these rising concerns, U.S.

companies have valuable expertise to contribute. Many

of these companies have been in China a long time and

are committed to improving healthcare for the Chinese

people. But growing market access barriers for foreign

companies have brought new challenges and make it

more difficult for these companies to contribute to the

realization of China’s goals. AmCham Shanghai strongly

advocates a more level playing field to allow U.S. and

Chinese companies to work side by side in addressing

the health needs of China’s citizens.

Conclusion & RecommendationsAmCham understands the difficulties associated with

providing healthcare on such a massive scale, and

applauds China’s efforts to improve the well-being of its

citizens. We offer the following recommendations to better

enable U.S. companies to contribute to the realization of

China’s healthcare ambitions.

Recommendations1. Make market access simpler and more efficient. The

fundamental priority should be to reduce the length of

time required to bring a product to market. This includes

reducing approval times, creating clearer regulations, and

minimizing unnecessary barriers, and should include the

following actions:

a) Increase CFDA capacity. A major impediment to the

approval process is the lack of adequate resources

and the resulting approval backlog. The government

has been adding staff and working toward reducing

this backlog. We support these efforts and hope to

see them continue. This process could be sped up by

opening regional sub-centers to handle the initial steps

of the approval process and pre-approving a product

before sending it to Beijing for final confirmation. This

could begin with a pilot center in Shanghai.

b) More clearly define regulations and harmonize

the approval process with international standards.

Many challenges arise as a result of differing

legal requirements and approval procedures, both

provincially within China and internationally between

China and the world. Complications resulting from this

could be minimized by more clearly defining Chinese

laws and requirements so companies can incorporate

any necessary tests or data into their clinical trials and

testing procedures in their home countries.

c) Minimize redundant clinical trials. China’s Center

for Drug Evaluation (CDE) rarely accepts clinical trial

results from the U.S., Europe or other major markets

even if the product has been approved by the U.S.

FDA. Due to genetic and dietary differences in regional

populations, we understand that localized clinical

trials are important. We do not recommend the

elimination of such trials, but if a drug or a device has

reliable clinical trial data from the U.S., Europe or other

locations demonstrating its safety and effectiveness,

CDE should consider reducing the number of local

trials required so as to shorten the approval time.

2. Increase emphasis on quality as a determining factor

during the tendering process. Recent pushes to control

costs have been accompanied by a reduction in concern for

quality in order to meet budget constraints. This is resulting

in high-quality and high-technology products being priced

out of the market in exchange for less effective healthcare

products. National lowest-cost price negotiations are

working in opposition to the desired expansion and

improvement of healthcare provision, and therefore should

be abandoned. This practice, in combination with the price

data sharing mechanism, is paralyzing price negotiations

and disallowing discount prices or special offers to large-

quantity buyers. This results in less access to quality

products for Chinese citizens and lack of market access

for foreign companies.

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a) Do not link price and approval. Proposed legislation

that seeks to add a price commitment as a requirement

of the CFDA approval process is currently under

discussion. AmCham Shanghai strongly opposes this

policy change. CFDA approval should be determined

entirely on scientific data evaluating a product’s safety

and effectiveness. Price is irrelevant to this process.

Numerous other agencies already evaluate drug pricing,

and there is no reason for the CFDA to be involved in

pricing decisions.

3. Improve reimbursement mechanisms. Products not

featured on reimbursement lists have a significantly

more difficult time gaining widespread use. Irregular,

unclear, and often delayed updates present major

challenges. Additionally, the lack of reimbursement

coverage by basic medical insurance reduces patients’

options for treatment. Private insurance should be more

strongly encouraged to allow patients greater access to

the products they want.

a) Regularly update reimbursement lists. Lists should

be consistently updated at the specified time, whether

this is every two, three or four years. Failure to regularly

update reimbursement lists denies Chinese citizens

access to some of the most modern, innovative and

high-quality healthcare. It similarly limits the ability

of innovative manufacturers to access the healthcare

market. This is a simple and effective reform that would

produce significant results.

b) Allow greater participation from companies.

The “opaque and chaotic” process of updating

reimbursement lists needs to be more clearly defined.

Product manufacturers and distributors should be

allowed a greater role in the process. Reimbursement

updates fail to keep pace with technological changes,

and companies seeking to include new technologies

on reimbursement lists have no avenue for pursuing

such goals. If manufacturers can regularly engage

in discussions with the relevant agencies, they can

better prepare to meet the required criteria and

address any potential challenges ahead of time. In

the years between updates, the government should

hold workshops, seminars and other dialogues to keep

companies involved in the process and abreast of any

potential changes.

c) Encourage private health insurance. According to

a recent Boston Consulting Group report, only about

1 in 20 people in China have supplemental private

insurance. Foreign insurance providers face numerous

restrictions - including a 50% ownership limit and a

limited ability to open branch offices - that restrain their

ability to expand. Such restrictions should be eased to

allow the insurance market to develop more rapidly.

Furthermore, the public is largely unaccustomed to

using private insurance, so the government should

encourage education and awareness of options. A tax

subsidy pilot program was launched in numerous major

cities in 2015, including Shanghai and Beijing, providing

tax incentives for purchasers of private health care. The

government should expand these programs.

4. Do not over emphasize localization.

Excessive reliance on local products can limit patients’

access to high-quality products from abroad. While this

has led to some foreign manufacturers expanding their

operations to include facilities in China, so that they will

be viewed as “local,” sourcing the necessary components

for some high-end and cutting-edge products can prove

very difficult. Increased costs from importing components

could work in opposition to the desired goal of achieving

price reductions. Furthermore, some companies have

expressed concerns about weak intellectual property

rights protection and are thus reluctant to expand into

China. If the government forces localization of products,

it could shut out some of the best healthcare technology.

We understand that China wants to encourage the

development of local products, but forcing localization

by creating barriers to foreign competition will discourage

innovation, constrain the development of local producers,

and bar Chinese patients from the best medical treatment

possible. We believe it is imperative that U.S. companies

be treated in a transparent, fair, and equitable manner. Any

emphasis on localization should be implemented in a fair

and open way that does not exclude foreign players. V

VIEWPOINTT h e A m e r i c a n C h a m b e r o f C o m m e r c e i n S h a n g h a i - V i e w p o i n t J a n u a r y 2 0 1 7

T h e A m e r i c a n C h a m b e r o f C o m m e r c e i n S h a n g h a i - V i e w p o i n t J a n u a r y 2 0 1 7

The American Chamber of Commerce in Shanghai

(AmCham Shanghai), known as the “Voice of

American Business in China,” is one of the largest

and fastest growing American Chambers in the Asia

Pacific region. Founded in 1915, AmCham Shanghai

was the third American Chamber established

outside the United States. As a non-profit, non-

partisan business organization, AmCham Shanghai

is committed to the principles of free trade, open

markets, private enterprise and the unrestricted flow

of information.

For more information, please visit:

www.amcham-shanghai.org

2017