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[Introduction] In response to the public inquiry from the National Medical Insurance Administration, Sinomed Medical responded urgently that the company will further proactively adjust prices

China Fund News reporter Lu Yu

In response to the situation where the relevant stent products had a "factory price of 50,000 yuan and the agent sold them for 120,000 yuan", the National Healthcare Security Administration publicly inquired into the Science and Technology Innovation Board-listed medical device company, Mindray Medical.

Industry insiders said that this may be the first time that the National Healthcare Security Administration has publicly inquired about a medical device company, and similar situations have rarely been seen before.

In response, Sinomed said in the morning of August 20, "The company is willing to further proactively adjust prices under the guidance of the National Medical Insurance Administration so that more patients can benefit from its excellent products."

In the morning of August 20, the share price of Sinomed Medical opened sharply lower. As of press time, its share price was 85.16 yuan, a sharp drop of 11.92%, with a market value of 20.5 billion yuan.

Urgent response: Further proactive price adjustments will be made

On the morning of August 20, Xinmai Medical announced:

"The issues mentioned in the Inquiry Letter are still in the stage of further communication and preparation for response. In the first half of 2024, the company reported and communicated with relevant departments of the National Medical Insurance Administration and relevant local medical insurance bureaus. Combined with the pricing system of similar products in the industry, the company made a preliminary reply and explanation to the relevant issues of the inquiry letter, and promised to reduce the price of Castor products and the initial reduction, and also expressed its willingness to further reduce prices within the scope of centralized procurement rules in the future."

Xinmai Medical said, "The company is willing to further proactively adjust prices under the guidance of the National Medical Insurance Administration so that more patients can benefit from its excellent products."

As the world's first and the first domestically approved covered stent that can simultaneously achieve endovascular repair of the aorta and supra-aortic branch arteries through minimally invasive treatment, Castor products are used to treat thoracic aortic dissection involving arch lesions. In 2017, the "Key Technology Development and Large-Scale Industrialization of Large Vascular Covered Stent Series Products" project won the "Second Prize of the National Science and Technology Progress Award". In 2021, the product was selected into the national "Manufacturing Single Champion Product" list.

Sinomed said that the company has always attached great importance to the research and development of various products, including Castor products, and will continue to invest in research and development. Castor's next-generation upgraded products are currently undergoing pre-market clinical trials in Europe. The company will invest more resources to maintain its leading position in the aorta field in China, and will also further promote the development of the company's products in the international business market. As of June 30, 2024, overseas sales revenue has increased by more than 65% over the same period last year, and product sales have covered 34 countries and regions in Europe, Latin America, Southeast Asia and other places.

The National Health Insurance Administration rarely conducts public inquiries

On the afternoon of August 19, the National Healthcare Security Administration issued an open inquiry letter to Sinomed on its official website and official WeChat account.

The public inquiry letter stated:

"Recently, our bureau has received a series of letters from the public, reporting that your company's Castor thoracic aortic stent graft and delivery system (hereinafter referred to as Castor stent) is overpriced. After preliminary verification and inquiry into public information, your company's Castor stent (200mm length) ex-factory price is about 50,000 yuan, and the price supplied to medical institutions by agents exceeds 120,000 yuan. After the preliminary interview, your company proposed a price adjustment plan, but did not change the fact that the price difference significantly exceeded the necessary range."

After preliminary interviews and communications, the National Medical Insurance Administration believes that the price adjustment plan proposed by Sinomed Medical still has a high price risk. Now, through public inquiries, we ask them to publicly respond to the following questions:

1. Describe in detail the Castor bracket's ex-factory price, terminal price, and the price composition of R&D investment, production and manufacturing, period expenses, etc.

2. Describe in detail the annual sales volume and sales amount of Castor stents in the past five years, as well as the actual profits of the company as a production and research and development enterprise.

3. Explain in detail the rationality and necessity of the price difference between the Castor bracket’s ex-factory price and the terminal price, as well as the whereabouts of the funds for all sales expenses included in the terminal price structure.

4. Respond positively to issues such as whether the Castor stent sales process involves raising the listing price through agents, engaging in unfair marketing practices, and thereby increasing the burden on patients and medical insurance funds.

The National Healthcare Security Administration requires Sinomed to make a written explanation on the above issues and submit the relevant explanatory materials to the National Healthcare Security Administration before August 26, and promise to bear legal responsibility for the authenticity of the reply content. If there is any intention to adjust the price, it can also explain it.

Subsequently, the National Healthcare Security Administration will also, in accordance with the pharmaceutical price risk management mechanism, formally call in Mindray Medical for talks on regulating pricing behavior, depending on the circumstances. If necessary, it will implement a credit rating and take corresponding measures in accordance with the pharmaceutical price and procurement credit evaluation system.

Editor: Captain

Audit: Wooden Fish

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