Recently, National Healthcare Security Administration issued a number of reply letters to the recommendations of the National people's Congress, mentioning the innovative medical device health insurance payment policy.

On September 3, 2022, National Healthcare Security Administration issued the reply to recommendation 4955 of the Fifth session of the 13th National people's Congress, which mentioned that it will improve and innovate the price formation mechanism of medical devices. As the clinical use of innovative medical devices is not yet mature and the amount of use is temporarily difficult to predict, it is still difficult to implement the quantity mode.

National Healthcare Security Administration issued the reply to recommendation No. 8013 of the Fifth session of the 13th National people's Congress on August 24, 2022, mentioning that National Healthcare Security Administration is studying and perfecting relevant policies. guide all localities to timely bring qualified innovative medical consumables into the scope of health insurance payments according to procedures. In the process of promoting the reform of DRG/DIP medical insurance payment mode, we should support innovative medical consumables in accordance with relevant regulations and procedures.

Volume procurement: the risk of innovative equipment collection is relatively controllable, and conventional product collection is expected to reserve space for innovative products.

1) according to the reply of the Medical Insurance Bureau to the recommendations of the National people's Congress, "because the clinical use of innovative medical devices is not yet mature and the use of innovative medical devices is difficult to predict for the time being, it is still difficult to implement the quantity mode." We expect that the collection risk of innovative equipment is relatively controllable in the short term, but in the long run, the collection of consumables with large market scale and full competition will be a normal trend. 2) National Healthcare Security Administration proposed: "in the process of collection and acquisition, medical institutions should determine the demand according to historical usage, combined with clinical use and medical technological progress. And according to the characteristics of clinical use, the pattern of market competition and the number of selected enterprises and other factors to reasonably determine the proportion of belt quantity, set aside a certain market in addition to centralized volume procurement, and provide space for innovative products to open up the market." We believe that in the design of reporting rules in the future, we will also fully consider the different clinical needs of conventional products and innovative products, so as to provide more opportunities for the use and promotion of innovative products.

Medical insurance access: promote and improve the inclusion of innovative devices in the health insurance payment policy, and the efficiency of medical insurance access for innovative products is expected to improve

According to National Healthcare Security Administration's reply to the proposal of the National people's Congress, the Medical Insurance Bureau proposed that "it is studying and improving the networking mechanism of the centralized pharmaceutical procurement platform, promoting the establishment of national unified networking and transaction rules, and optimizing the process, even if the response is open and transparent." reduce the related costs of enterprises, help new medical devices to participate in market transactions smoothly, "and" National Healthcare Security Administration is studying and perfecting relevant policies. Guide all localities to timely bring qualified innovative medical consumables into the scope of medical insurance payment according to procedures, and steadily improve the protection level of insured patients. Prior to this, on November 19, 2021, National Healthcare Security Administration issued the interim measures for the Administration of the payment of Medical consumables for basic Medical Insurance (draft for soliciting opinions) and the naming Standard for the General name of Medical Insurance for Medical Insurance (draft for soliciting opinions). It is proposed that "the exclusive varieties under the new general name will, in principle, determine the standard of the first medical insurance payment through negotiations. If the negotiation is successful, the payment standard shall be determined according to the outcome of the negotiation. The medical security administrative department of the State Council may conduct access negotiations on some varieties that are expensive and have a great impact on the fund, and the negotiations can be successfully included in the scope of payment nationwide. "We expect that after the innovative medical devices are approved to be put on the market, the efficiency of putting them online on the platform and including health insurance will be improved, thus helping to promote the faster commercialization of innovative devices.

DRGs: innovative devices are expected to be considered separately in the process of health insurance payment reform.

According to National Healthcare Security Administration's reply to the proposal of the National people's Congress, National Healthcare Security Administration proposed that "in promoting the reform of medical insurance payment methods, determining the payment standards of disease diagnosis-related groups (CHS-DRG) and disease score payment (DIP), we should support innovative medical consumables in accordance with relevant regulations and procedures. Previously, on July 10, 2022, the Beijing Medical Insurance Bureau issued a notice on the issuance of payment management measures for the exception of new drug technologies paid by CHS-DRG, with the exception of payment methods for innovative medical devices. We believe that in the process of reform of medical insurance payment methods such as DRG and DIP, innovative devices are expected to be considered separately, which is conducive to ensuring a reasonable life cycle and profit space of innovative products.

Marginal relaxation of medical insurance policy for innovative devices, continue to be optimistic about investment opportunities for innovative devices

Based on the relevant policy viewpoints of the Medical Insurance Bureau in the near future, we think that the policy of medical insurance for innovative devices has a marginal relaxation: 1) the clinical use of innovative medical devices is not yet mature, and the usage is difficult to be estimated for the time being, and it is still difficult to implement the volume method; 2) in the process of centralized volume procurement, set aside a certain market to provide space for innovative products to open up the market. 3) improve the networking mechanism of the centralized pharmaceutical procurement platform to help new medical devices participate in market transactions smoothly; 4) study and improve relevant policies to guide all localities to timely bring qualified innovative medical consumables into the scope of medical insurance payment according to procedures; 5) in the process of promoting the reform of DRG/DIP medical insurance payment methods, support innovative medical consumables in accordance with relevant regulations and procedures. Up to now, the State Drug Administration has approved the registration and listing of 173 innovative medical devices, mainly related to cardiovascular intervention, IVD, medical imaging, peripheral intervention, surgical robots, auxiliary diagnosis software, tumor treatment and other fields. This catalogue may be of reference significance for National Healthcare Security Administration to formulate health insurance payment policies related to innovative medical devices.

Recommended concerns are as follows:$Shanghai MicroPort Endovascular MedTech(Group)Co.,Ltd. (688016.SH)$、$Lepu Medical Technology (300003.SZ)$、$APT Medical Inc. (688617.SH)$、$MICROPORT (00853.HK)$、$MEDBOT-B (02252.HK)$、$Venus Medtech (Hangzhou) Inc. (02500.HK)$、$CARDIOFLOW-B (02160.HK)$、$Peijia Medical Limited (09996.HK)$等。

Risk Tips:The risk of industry policy change, the risk that the progress of research and development is not as good as expected, and the risk that the progress of commercialization of innovative products is not as expected.