China On The Move: Key Takeaways From The 2025 NRDL Negotiations And Adjustment

China's role in the global pharmaceutical innovation market is undergoing a substantial shift. As of 2025, China's share of global drug development has risen to 20%, with a pipeline of investigational new drugs that now accounts for approximately 30% of the world's total. Against this backdrop of rapid industrial maturation, the 2025 National Drug Price negotiations and the subsequent update to the National Reimbursement Drug List (NRDL) represent a paradigm shift in how the country's economy manages market access.

Unlike previous years, the 2025 adjustment introduces a structural reform designed to balance broad patient affordability with the need to incentivize high-value innovation: the Dual-Catalog system. This GT Advisory analyzes the legal and commercial implications of these developments for multinational pharmaceutical companies (MNCs) and investors, offering a narrative analysis of the new market access landscape.

• Strategic Bifurcation: The 2025 reforms introduce a "Dual-Catalog"system, forcing a choice between a Volume Play (Basic NRDL: 95% coverage but deep price cuts) and a Value Play (Commercial Catalog: protects global pricing for breakthroughs like CAR-Ts and Alzheimer's drugs).
• Stricter Innovation Filter: While final negotiation success hit an 88% peak, the shortlist pass rate hit a record low of 41%, signaling that regulators are aggressively rejecting "me-too" drugs in favor of "genuine innovation" that fills specific clinical gaps.
• Forced Hospital Access: To end the "In-NRDL, Out-of-Hospital" bottleneck, the NHSA has mandated that hospitals finalize formularies by Feb. 28, 2026, and has exempted high-value drugs from the restrictive budget caps (DRG/DIP) that previously stifled prescriptions.

1. The Dual-Catalog System: Bifurcating Volume and Value

The formal operationalization of a dual-track reimbursement framework marks one of the most significant regulatory developments of the 2025-2026 cycle. This system addresses the historical tension between providing basic coverage for the mass market and funding high-cost, advanced therapies.

The Basic NRDL (The Volume Strategy): The updated 2025 Basic NRDL added 114 new drugs, including 50 Class 1 innovative drugs, bringing the total list to 3,253 entries. This track remains the primary vehicle for mass-market access, covering 95% of the population. However, inclusion on this list continues to demand significant price concessions — averaging over 60% in the 2025 negotiations — to ensure cost-effectiveness. This pathway is strategically suited for therapies where volume can offset price erosion, such as Eli Lilly and Company (Lilly)'s Tirzepatide (Mounjaro); the company accepted price cuts to secure dominance in China's Type 2 diabetes market.

The Commercial Catalog (The Value Strategy): In a move to protect global pricing structures for "genuine innovation," China launched its inaugural Commercial Health Insurance Innovative Drug Catalog. This list, which debuted with 19 drugs, including 10 from foreign firms, allows manufacturers to maintain higher price points while securing coverage through commercial health insurance, rather than the basic state fund. Therapies such as Lilly's Donanemab and Eisai's Lecanemab used this track to preserve global pricing while entering the Chinese market.

To ensure the viability of the Commercial Catalog, the National Healthcare Security Administration (NHSA) has implemented a Three-Exception Policy. Drugs on this list are:

• Exempt from the out-of-pocket ratio caps typically applied to basic insurance reimbursements.
• Exempt from generic substitution monitoring in bulk procurement.
• Eligible for "case-by-case pricing," effectively bypassing the Diagnosis-Related Groups (DRG) and Diagnosis-Intervention Packet (DIP) budget restrictions that often stifle the hospital prescription of high-cost drugs.

The 2025-2026 reforms include the debut of China's first Commercial Health Insurance Innovative Drug Catalog (Commercial Catalog), launched alongside the updated 2025 National Basic Medical Insurance, Maternity Insurance, and Work-Related Injury Insurance Drug Catalog (Basic NRDL). This dual-catalog framework seeks to address the longstanding gap between "basic" coverage (for mass-market drugs) and "high-value" innovation (for rare diseases, advanced oncology, and complex conditions).

Details of the Dual Catalogs (2025) can be found here:

2. Targeted Expansion: Prioritizing Clinically Urgent Therapeutic Areas

The 2025 negotiation outcomes underscore a policy pivot from prioritizing "quantity" to emphasizing "quality" in recent years. While the final negotiation success rate reached a seven-year peak of 88%, the shortlist pass rate (the percentage of candidates advancing to formal negotiations) dropped to a record low of 41%. This divergence signals stricter screening during the initial phase, where regulators actively rejected "me-too" products that offered no clinical advantage over existing NRDL incumbents.

The updated list reflects a prioritization of clinically urgent therapeutic areas, driven by China's aging demographic and disease burden:

• Oncology: 36 drugs were introduced in 2025, which fills certain gaps in treatment options. Examples include:
  • Sacituzumab Tirumotecan (sac-TMT) by Kelun Biotech for triple-negative breast cancer (TNBC) and non-small cell lung cancer (NSCLC);
  • Irinotecan Hydrochloride Liposome Injection (II) by Hengrui Pharma for pancreatic cancer;
  • Three KRAS G12C inhibitors by Innovent Biologics for NSCLC — two of which were approved in 2024 and fast-tracked into the NRDL.
  • AstraZeneca's Truqap and Roche's Itovebi for PIK3CA-mutated breast cancer — both were approved by China in 2025 and fast-traced into the NRDL;
  • Sanofi's Sarclisa (isatuximab), a CD38-directed antibody for multiple myeloma, which was approved by China in 2025 leveraging real-world evidence from China's early access program, and was included in the NRDL the same year.
• Chronic Diseases: 12 new drugs are included in the 2025 Basic NRDL, including:
  • Novartis' first-of-its-kind siRNA therapy Leqvio (inclisiran) for hypercholesterolemia;
  • Tirzepatide (a GLP-1 agonist) from Lilly for Type 2 diabetes.
• Rare Diseases: 10 new inclusions, down slightly from 15 in 2023 but focused on high-value products, for example:
  • Fosun Pharma's FCN-159 tablets (luvometinib tablets) for neurofibromatosis type 1 (NF1) -associated plexiform neurofibromas (PN) and Langerhans cell histiocytosis.
• Infectious Diseases: 13 new drugs, including:
  • Guangdong Zhongsheng's onradivir tablets for flu treatment.
  • Pfizer's Emblaveo for three indications including complicated intra-abdominal infection (cIAI), etc.

3. Breaking the Hospital Access Bottleneck: Solving the "In-NRDL, Out-of-Hospital" Dilemma

Historically, a successful NRDL negotiation did not guarantee revenue, as hospitals frequently delayed listing new drugs due to budget constraints and administrative hurdles — a phenomenon known as the "In-NRDL, Out-of-Hospital" dilemma. The 2025 reforms introduce mandatory enforcement measures to dismantle these barriers:

• Mandatory Hospital Adoption: The NHSA has issued a mandate requiring all designated medical institutions to convene Pharmacy and Therapeutics (P&T) committee meetings by February 2026. The explicit purpose of these meetings is to finalize hospital formularies for newly listed drugs or to establish temporary procurement channels for immediate clinical needs.
• Policy Waivers: To further facilitate access, negotiated drugs are now legally exempt from "one drug, two specifications" limits and total medical insurance budget restrictions — rules that previously blocked access to innovative therapies.
• Case-by-Case Pricing: For high-value drugs unsuitable for bundled disease payment (e.g., CAR-Ts), hospitals may apply for "special case review," with quarterly expert evaluations to determine project-based reimbursement.
• Transition Period: Drugs removed from the NRDL (due to obsolescence or supply issues) retain six months of reimbursement at the original rate (until June 30, 2026) to ensure patients' continued use.

4. Value-Driven Innovation: Rewarding 'Genuine' Innovations

The 2025 NRDL negotiations signal a shift from "quantity" to "quality" in innovation support. While 50 class 1 drugs were added, certain class 1 drugs were rejected—primarily for being "me-too" products (duplicating existing NRDL drugs with no significant clinical advantage) or for having prices misaligned with value.

A comparative analysis of the 2022–2025 NRDL cycles shows a shift toward prioritizing "genuine innovation" over sheer volume. While the final negotiation success rate reached a seven-year high of 88% in 2025, the shortlist pass rate (the share of initial candidates advancing to formal negotiations) hit a record low of 47%, indicating stricter screening of drug value during the initial screening phase:

The "value-first" approach demonstrates the incentives to First-in-Class (FIC) and Best-in-Class (BIC) therapies, a trend that aligns with China's growing leadership in global FIC development.

• FIC Prioritization: China's pipeline of clinical-stage FIC drugs has grown rapidly in recent years, with Chinese companies accounting for approximately 24% of the global FIC pipeline by 2025 (second only to the United States). The NRDL increasingly prioritizes innovative therapies, with oncology and chronic disease drugs seeing higher success rates in recent updates. Examples include:
  • Novo Nordisk's Awiqli: a first-in-class once-weekly basal insulin approved in China in June 2024 (ahead of U.S. FDA approval) and included in the 2024 NRDL for its unique dosing and efficacy in Type 2 diabetes management.
  • Novartis' Leqvio (Inclisiran): added in the 2025 NRDL for its transformative twice-yearly dosing schedule for hypercholesterolemia, marking the first siRNA therapy on the list and justifying inclusion despite prior setbacks.
• Renewal Price Adjustments Tied to Budget Impact: For existing NRDL drugs up for renewal, price adjustments are primarily linked to sales volume and budget expectations, rather than direct real-world effectiveness metrics. In the 2025 update, renewals achieved about a 92% success rate overall, with most qualifying for simple renewal (no price cut) if budget impacts were managed effectively; re-negotiated drugs faced an average cut of around 14%.

5. Opportunities for Multinational Companies (MNCs) and Global Investors

For MNCs, these trends may require a recalibration of market access strategies. The emergence of the Dual-Catalog system offers a choice: pursue volume through the Basic NRDL with price concessions or protect value through the Commercial Catalog.

Potential Opportunities

• Leverage the Commercial Catalog for High-Value Drugs:

MNCs with high-value therapies (e.g., Alzheimer's drugs, CAR-Ts) may use the Commercial Catalog to access China's market without compromising on price. For example, Lilly's Donanemab and Eisai's Lecanemab — which cost around CNY 200,000–300,000 annually — are now eligible for coverage through commercial insurance. Certain cities in China, such as Shenzhen and Shantou, have already integrated all 19 drugs in the first version of the Commercial Catalog into local supplemental insurance programs (called Huiminbao), with other big cities like Beijing, Guangzhou, Ningbo, and Nanjing also expanding coverage.

• Focus on Clinical Gaps in Key Therapeutic Areas:

MNCs with products addressing unmet clinical needs continue to succeed. Novartis, for instance, added two new drugs and four new indications to the 2025 NRDL, bringing its total number of NRDL-listed drugs to over 40. Johnson & Johnson's Tremfya (guselkumab, for Crohn's disease and ulcerative colitis) also secured inclusion. These successes underscore that MNCs may maintain competitive advantages in therapeutic modalities where China's innovation pipeline remains less mature. For instance, while Chinese companies lead global development in ADCs (54%) and cell therapies (48%), they account for only 38% of mRNA vaccine and 34% of gene therapy pipelines, leaving whitespace for MNCs to deploy BIC assets via NRDL or the new Commercial Catalog.

• Deepen Local Collaboration via Innovative BD Models:

The regulatory environment increasingly appears to favor localized operational models. The 2025 cycle saw a boom in "NewCo" structures, where MNCs license assets to newly formed entities backed by global investors and local partners. Examples include AstraZeneca's $5.2 billion agreement with CSPC Pharmaceuticals and Hengrui's "Hercules" deal. These structures allow MNCs to mitigate risk while aligning incentives with local research and development (R&D) priorities and navigating the NRDL process more effectively.

• Plan for Predictable Processes Amid Growth:

Participants and officials described the 2025 NRDL negotiations as "more transparent and predictable" than earlier cycles, with streamlined procedures and clearer communication of clinical value expectations. MNCs should consider aligning their R&D timelines with China's annual NRDL adjustment cycle (typically July submission deadlines for apply for NRDL inclusion) and may wish to prioritize recently approved breakthroughs. With China's patent drug market projected to reach RMB 760 billion (approximately $105 billion) under global alignment scenarios, early entry via NRDL or the Commercial Catalogue may offer first-mover advantages.

6. Conclusion

The 2025 NRDL adjustment helps evolve China's healthcare payment system. By bifurcating the reimbursement market, Chinese regulators have created a pathway for high-value innovation that was previously incompatible with the basic medical insurance fund.

Legal and commercial teams may wish to consider the immediate priority to be compliance with the Feb. 28, 2026, deadline for hospital P&T committee engagement. Looking ahead, success in this market may depend on companies' ability to articulate "genuine clinical value" and the strategic selection of the appropriate catalog pathway.

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