China's healthcare security authority on Tuesday announced a series of measures to encourage novel drug development, including the creation of a commercial insurance catalog for innovative medicines that patients could be reimbursed for.

The list will feature highly innovative drugs and those with significant clinical value or that offer substantial patient benefits that are not covered by the nation's basic medical insurance. It will be recommended for reference and adoption by commercial health insurance programs, medical aid programs and other healthcare insurance plans, according to a notice jointly issued by the National Healthcare Security Administration and the National Health Commission.

Official data shows that China's basic medical insurance program covered 1.326 billion people last year, with cumulative spending reaching 2.97 trillion yuan ($414.6 billion).

However, the funding capacity of the nation's basic insurance program is limited, said Huang Xinyu, head of the administration's medical services management department. Nearly 1 billion people have enrolled in the residents' insurance program, with an average premium of 1,070 yuan, about two-thirds of which is covered by financial subsidies.

"As a result, it is essential to uphold the program's role as a safety net for basic medical needs," Huang said.

Huang noted that advances in medical science and technology have produced some highly effective and innovative treatments that exceed the coverage capacity of basic medical insurance, leaving them off the reimbursement list.

"We believe that establishing a commercial healthcare insurance list for innovative drugs will help clarify the scope of coverage under the basic plan and create more room for the development of commercial plans," Huang said.

He added that the move is also expected to consolidate funds from basic and commercial insurance programs, strengthening public health protections while supporting the development of the innovative drug sector.

China's commercial health insurance industry recorded 977.3 billion yuan in original premium income last year, marking year-on-year growth of 8.2 percent.

Huang said the new list will be formulated by the administration and that "the formulation and adjustment of the list will reflect full respect for the market entity status of commercial insurers." Insurance industry experts will participate actively in the process and hold substantial decision-making authority, he said.

Enterprises will be able to apply for inclusion on both the basic and commercial insurance lists simultaneously, with the procedures set to remain similar to reduce administrative burdens, he added.

Bolstering drug innovation has been a priority in the administration's annual adjustments to its basic reimbursement list in recent years. Wang Guodong, an official with the administration, said 149 innovative drugs have been added to the list since 2018, representing 17 percent of all additions.

For drugs added to the list following price negotiations with manufacturers, which are often classified as innovative medicines, the national insurance fund spent 410 billion yuan on them by the end of May. Their inclusion is estimated to stimulate over 600 billion yuan in drug sales, Wang said.

To support the overseas expansion of homegrown innovative drugs, the administration plans to align with international practices and implement confidential pricing negotiations on a voluntary basis for pharmaceutical companies, particularly for drugs listed in the commercial catalog, said Wang Xiaoning, another official within the administration.