China will improve its drug price formation mechanism to support the high-quality development of the pharmaceutical industry and enhance public access to affordable, high-quality medicines, according to a document released by the General Office of the State Council this week.

Shi Zihai, deputy director of the National Healthcare Security Administration, said during a news conference on Wednesday that the document proposes an initial pricing model for newly launched drugs based on their level of innovation, while also improving pricing systems for bulk procurement drugs.

"The measures aim to encourage enterprises to continue R&D and innovation, while guiding fair and reasonable pricing for other drugs," he said. At the same time, public hospitals, insurance-designated pharmacies, and online drugstores are encouraged to play a role in drug discovery, making drug price formation more open, transparent, and comparable, he added.

Efforts will also be made to promote diversified payment and rational price formation for innovative drugs, enhance the supply and price stability of drugs in short supply, strengthen price management of narcotics and psychotropic substances, and regulate pricing behavior for raw materials.

Wang Xiaoning, head of the administration's pharmaceutical pricing and bidding procurement department, said that a total of 199 innovative drugs have been added to the national drug reimbursement list over the past eight years. As of February, the insurance fund had spent 504.8 billion yuan ($74 billion) on covered medicines, driving sales of 740 billion yuan and benefiting 1.17 billion patient visits.

The total profit of the pharmaceutical industry has grown at an average annual rate of 11.3 percent, while R&D investment has increased by an average of 23 percent per year, he said.

Wang added that the administration is now researching policies to enable enterprises to self-assess their drugs' clinical evaluation and innovation to help determine a launch price that is commensurate with high investment and high risk and that remains stable over a certain period.

Drugmakers will also be allowed to make adjustments based on real-world studies and clinical outcomes. Their pricing behavior will be subject to oversight from all sectors and peer review, he said.