Core Viewpoint - The article emphasizes the accelerating role of commercial health insurance in the payment for innovative drugs and medical devices, driven by recent policy measures aimed at enhancing the multi-tiered medical security system in China [1][4]. Group 1: Policy Developments - The National Healthcare Security Administration and the National Health Commission have issued measures to support the high-quality development of innovative drugs, including the establishment of a "commercial health insurance innovative drug directory" [1]. - Local governments, such as Shanghai and Chengdu, have introduced supportive policies to facilitate the integration of innovative drugs into insurance coverage, addressing the affordability and accessibility of these treatments [1][2]. Group 2: Market Insights - The innovative drug and medical device market in China is projected to reach approximately 1.62 trillion yuan (about 1620 billion yuan) in 2024, with commercial health insurance contributing only 124 billion yuan (7.7% of the total) [1]. - If the share of commercial health insurance payments increases to 44% by 2035, the market size could reach 440 billion yuan, significantly alleviating the financial burden on patients [2]. Group 3: Challenges and Recommendations - Despite policy incentives, commercial health insurance faces challenges such as inadequate data sharing and payment integration with basic medical insurance, which hampers product design and scalability [3]. - Recommendations to enhance commercial health insurance's support for innovative drugs include improving funding efficiency, optimizing product design, establishing a unified drug directory, and leveraging technology to enhance payment and management efficiency [3]. Group 4: Future Outlook - The gradual implementation of policies is expected to allow commercial health insurance to play a larger role in the payment system, fostering a complementary and collaborative relationship with basic medical insurance [4]. - The development of a multi-channel payment mechanism for innovative drugs is crucial for both patient welfare and the health of the pharmaceutical industry [4].

Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - The demand for high-quality medical resources and innovative drugs in China is continuously increasing due to economic development and rising health awareness among residents [5] - A multi-payment system, including commercial health insurance and charitable assistance funds, is essential to address the accessibility challenges of innovative drugs [5] - The report highlights the structural challenges faced by China's innovative drug payment system, with a significant reliance on personal cash payments and limited contributions from commercial health insurance [8] Summary by Sections Research Background and Methodology - The report defines innovative drugs and multi-payment mechanisms, emphasizing the importance of commercial health insurance in reducing out-of-pocket expenses for patients [18] - It discusses the increasing health demands of the population and the economic pressures due to aging demographics [19][20] International Practices in Innovative Drug Payment - The report compares the multi-payment systems for innovative drugs in the US, Germany, the UK, and Japan, identifying key characteristics such as the dominant role of commercial health insurance outside of social insurance [6][32] - It notes that commercial health insurance is crucial for managing costs and facilitating the participation of pharmaceutical companies in risk-sharing mechanisms [6][33] Current Payment Structure for Innovative Drugs in China - The report estimates that the innovative drug market in China will reach CNY 162 billion in 2024, with a payment structure heavily reliant on personal cash payments (49%) and limited commercial health insurance contributions (7.7%) [8][38] - It highlights the need for commercial health insurance to become the primary payer for innovative drugs to alleviate the financial burden on patients [38] Challenges and Potential of Commercial Health Insurance - The report outlines the current state of commercial health insurance in China, with a premium scale of CNY 977.3 billion in 2024, and discusses the types of insurance products available for innovative drug coverage [53][54] - It projects that by 2035, the market for innovative drugs could reach CNY 1 trillion, with commercial health insurance needing to cover 44% of this market [44][47] Policy Support for Multi-Payment Mechanisms - The report details recent government policies aimed at enhancing the multi-payment mechanisms for innovative drugs, emphasizing the role of commercial health insurance in this framework [48][49][50]