China’s Health Ministries (Pt. 3): Who Controls the Money – and Why the NHSA Matters Most
An essential guide to the National Healthcare Security Administration - the gatekeeper of market access, at the hardest edge of China’s health system.
🔬Welcome to Part 3 of my deep dive series into China’s key health ministries.
Part 1 covered China’s core Ministry of Health, the National Health Commission, Part 2 covered the drug regulators at the centre of Chinas biotech rise, the National Medical Products Administration, and my foundational explainer “Who Actually Runs Health in China?” mapped out the main stakeholders of health policy and power.
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Winter in China is NRDL season.
For anyone working in China’s life sciences sector, it marks the most consequential period of the year. As the National Healthcare Security Administration releases China’s annual National Reimbursement Drug List, the biopharma industry collectively holds its breath.
Treatments need to be on this list to reach patients at scale in China. List inclusion allows drugs to be reimbursed through the public health insurance system, which today covers roughly 95–98% of the population. Getting listed is therefore essential to accessing the majority of China’s patients - but it comes at a steep cost. Savage price cuts averaging 60–90% are common.
Failing to list, meanwhile, means that most patients who want the drug will not be able to afford out-of-pocket costs, effectively shutting companies out of most of China’s otherwise immense patient market. As both a gateway to mass access and a source of relentless price pressure, the system forces biopharma companies to design their entire China strategy around anticipated price cuts and to make volume economics work on razor-thin margins - this is what is referred to as volume-based procurement (VBP).
This is why, from late summer onwards, anxiety begins brewing across the sector. Large and small companies alike, and foreign and domestic both, all start to reorganise themselves around this singular drive. Scenarios are modelled and remodelled. Prices are cut on spreadsheets, restored, and cut again. Internal decks circulate. Board conversations are rehearsed across global and China teams.
When companies enter reimbursement negotiations, they arrive with internal “walk-away” prices based on what they are willing to give up, and what they cannot survive losing. And yet, despite all of that preparation, they cannot control outcome.
The NHSA’s deliberations are not public, and the rationales of its judging panels are not published in detail. It’s not certain whether a drug will make the list. It’s not known how a final price will compare with competitors until after it becomes public. And there is no appeal process that resembles the transparency of Western health technology assessment. That is why the entire process still feels like a black box, particularly to players who are fresh to China, and new to this brutal game.
So when the public announcement comes (usually late December to mid-January), it arrives as a definitive binary outcome. If your drug does not enter China’s public health insurance system, you regroup and try again next year. If it does, the celebration is still often muted, because the next step is immediately unforgiving: sell enough volume to make enough returns, and survive.
This annual theatre of power and influence is concentrated within a single institution. China’s NHSA may be the most powerful health ministry of them all, because it decides what the system will pay for, at what price and on whose terms. I’ve already written about how the National Health Commission sets strategic direction and reform priorities, and how the National Medical Products Administration decides which products are safe and effective. But though policy can suggest, and regulation can approve, money ultimately disciplines behaviour.
And so, to understand how the entire health system behaves, we need to look at its hardest edge: the institution that decides what the system will pay for, at what price and on whose terms.
This post focuses on the institution of the NHSA itself: how it came to wield this power, how it operates and where its limits lie. When the 2026 National Reimbursement Drug List is released, I will return to analyse what changed, who gained access, who absorbed the cost and what it reveals about the direction of China’s health reforms in practice.
NHSA 101
Founded only in 2018, the National Healthcare Security Administration is one of China’s youngest ministries.
Its Chinese name 国家医疗保障局 is revealing. 医疗 yiliao refers to medical / healthcare, and 保障 baozhang refers to security, protection or guarantee, drawn from the same linguistic family as social security, pensions and employment protections. In everyday shorthand, the NHSA is simply referred to as 医保局, medical security. The emphasis is on protection as a system function rather than insurance itself as a product. The agency’s mandate is less about optimising individual coverage decisions, and more about ensuring that China’s healthcare can remain financially sustainable and socially reliable.
That mandate emerged from a specific problem. For decades, responsibilities for health insurance, pricing, and payment in China were scattered across multiple ministries. As the country moved toward near-universal insurance coverage, costs began rising faster than the system could comfortably absorb. By the mid-2010s, it was clear that expanding access alone was no longer the core challenge; enforcing affordability had become the binding constraint.
The creation of the NHSA came as part of China’s sweeping reorganisation of health governance in 2018, alongside reforms to the National Health Commission and the National Medical Products Administration (I’ve written about this here and here). Beijing’s objective was to centralise financial control, and to consolidate fragmented health financing powers into a single, purpose-built ministry that delivers access through affordability and enforces cost discipline at scale. In effect, a payer with teeth.
Today, the NHSA oversees China’s state-backed healthcare security system, including the basic medical insurance schemes, maternity insurance, and medical aid programmes. In practice, this means running the insurance funds, setting reimbursement and payment rules, and controlling the centralised purchasing of drugs and medical supplies.
Related:
Responsibilities: How the NHSA Exercises Power
Substantively, the NHSA sits downstream of clinical regulation, but directly upstream of real-world access, constantly negotiating between financial discipline and service delivery. That positioning turns it into the system’s practical chokepoint, and explains why its role is inherently relational rather than siloed. Alongside its coordination with the National Health Commission and the National Medical Products Administration, it also interacts closely with the Ministry of Finance when insurance sustainability intersects with the broader fiscal envelope. As demographics shift and welfare pressures grow, healthcare financing increasingly sits alongside pensions and social spending in the same political conversation.
The NHSA was designed to be blunt, fast and enforceable. It shapes which innovations survive commercially and how providers adjust prescribing and utilisation to stay within budget ceilings. In this system, reimbursement itself has become a behavioural tool. By tightening payment rules and standardising how services are reimbursed, the NHSA influences what hospitals prioritise, how costs are managed and where discretion narrows.
Indeed, when I first visited the NHSA’s Beijing headquarters a few years ago while leading health policy work for the UK government in China, I was struck by its certainty of its own authority, compared to the other ministries I engaged with. That power was evident even in the architecture: a purpose-built, monumental complex of marble corridors, grand reception rooms, long tables, and oversized lacquered chairs designed for ceremony. The atmosphere was calm and controlled, with little emphasis on messaging or symbolism. Officials spoke fluently about cost containment and long-term viability, focused less on narrative and more on execution.
The ministry’s influence is only continuing to expand as China’s health system becomes digitised. Technology platforms increasingly design around NHSA requirements, realising that alignment with the payer on everything from claims validation to utilisation monitoring and compliance, is one of the surest route to scale.
The NHSA has effectively evolved from payer to auditor. As I have written before, it now houses one of the world’s most comprehensive cloud-based drug-traceability systems, scaling from regional pilots to near-nationwide coverage in little over a year. More than 90% of medicine packages in China now carry a unique code that links a rich array of data,including on manufacturing origin, prescribing, dispensing and cost. This infrastructure enables population-scale pharmacovigilance, strengthens reimbursement oversight, to turn data itself into a powerful governing tool.
Why international comparisons only go so far
When those outside China try to understand the NHSA, they often reach for familiar reference points. In the UK, that comparison is usually the National Institute for Health and Care Excellence (NICE). In Europe, similar analogies are made with agencies in Germany, France or the Nordic countries. The instinct is understandable: many countries have institutions that sit between regulators and payers, reviewing evidence and informing reimbursement decisions.
Those institutions are usually built around the Health Technology Assessment, or HTA. At its simplest, the HTA is a structured way of deciding whether new medicines, devices or interventions should be publicly funded: what benefit does this treatment deliver relative to existing options, and is it worth the price being asked? Over time and across different countries, it has evolved into a toolkit that combines clinical evidence, economic modelling, and budget impact analysis to support coverage decisions.
Crucially, HTA bodies in most countries are advisory institutions, sitting quite separately from government, or adjacent at most. They were designed to inform decision-making rather than enforce outcomes. Their authority rests on transparency: published methods, open deliberations and explicit reasoning. Their recommendations can be adapted, delayed or overridden, within systems that tolerate a degree of uncertainty and political compromise.
China has studied international HTA systems closely and learned a great deal from other countries. I saw this firsthand when delivering UK–China programmes on reimbursement and cost-effectiveness between the NHSA’s think tank, CNHDRC, and the UK’s NICE. But while the tools may have travelled, the philosophy has not. This is where the comparison breaks down.
The NHSA does not weigh value at the margin and make recommendations. It operates as a key ministry that makes executive decisions on payment and sets out binding terms under which treatments are reimbursed. Evidence informs those decisions, but it does not constrain them in the way HTA frameworks do elsewhere.
Where international HTA bodies ask whether a drug is worth paying for, the NHSA asks whether the system can afford it, and if not, how far the price must fall to make it viable.
Strengths & Costs
These are two sides of the same institutional bargain. The NHSA is built to keep the system standing. Whether innovation thrives inside that bargain is a separate question—and that tension is now one of China’s defining health stories.
What the NHSA Does Well
Access at scale, and fast: Once a price is agreed, the NHSA can move therapies into nationwide reimbursement with remarkable speed. Coverage decisions cascade rapidly through provincial and hospital systems, allowing treatments to reach patients across the country in a way few health systems of comparable size can match. For conditions where access gaps would otherwise persist for years, this centralised approach materially shortens the time between approval and real-world use.
Discipline in a system that would otherwise drift: By enforcing hard budget constraints, the NHSA anchors a vast and heterogeneous health system to a shared financial reality. Without this discipline, cost pressures including ageing, rising chronic disease and expanding therapeutic options, would accumulate unevenly and unpredictably. The NHSA’s role is not to optimise at the margin, but to prevent systemic overshoot in a system serving hundreds of millions of patients.
Turning policy into behaviour: Through its purchasing power and payment rules, the NHSA translates central priorities directly into operational choices on the ground. Hospitals adjust procurement, prescribing patterns, and care pathways in response to reimbursement signals rather than policy statements alone. In this way, the NHSA functions less as a rule-maker and more as a behavioural engine, converting abstract reform goals into everyday practice.
The Costs
Bluntness: Deep, standardised price cuts apply uniformly across very different therapies, disease areas, and clinical contexts. While this accelerates access and simplifies administration, it flattens distinctions between treatments and leaves limited room to recognise differences in timing, delivery conditions or clinical complexity across the system.
Opacity: Decisions are rarely explained in detail, and the reasoning behind outcomes is not systematically published. Companies, clinicians, and local implementers are left to infer priorities and thresholds after the fact - learning from results rather than from process. This complicates planning, weakens predictability, and shifts adaptation toward informal signal-reading.
Operational risk pushed to providers: Hospitals and physicians are left to make constrained reimbursement work in practice, adjusting prescribing, managing utilisation and absorbing the friction between clinical judgment and fixed payment ceilings.
Economic risk pushed to innovators: By enforcing early, steep price compression, the NHSA places the burden of viability on biopharmaceutical developers, particularly domestic firms, who must fund R&D, scale manufacturing and compete internationally on far thinner margins.
What to watch
The NHSA sits at the centre of China’s health system as the driver of its accessibility, affordability, and equality. I will be watching closely around March, for the Two Sessions. Language emerging from the Two Sessions and the 15th Five-Year Plan will clarify how Beijing intends to manage the next phase of its health reform, system strengthening and care financing, in order to sustain broad public coverage while adapting to slower growth, an ageing population, and rising demand for care.
For years, policy signals around “multi-channel payment” and partial marketisation have been cautious and incremental. Public insurance is here to stay, of course, but policy-makers face growing pressures to define where responsibility for higher-cost or differentiated care should sit. The next planning cycle will show whether these ideas will become coherent financing strategy, to determine where future cost pressure lands - whether with the state, providers, private capital or even households.
1. Whether commercial insurance pathways become meaningfully complementary, or remain marginal.
From a consulting perspective, this is one of the areas I have focused on the most. China has been steadily building parallel financing layers in healthcare - not as a wholesale retreat from public provision, but as a pragmatic response to rising demand, fiscal pressure, and the economic opportunity embedded in health services.
Commercial and supplementary insurance serve two functions at once: they create growth space for the health sector, and they skim demand from the top of the system, easing pressure on public insurance by shifting some cost and choice to those who can afford it. I’ve written previously about the Commercial Insurance Innovative Drug List as one early signal of this direction, but whether these pathways become structurally meaningful, and to matter as much, or more than any single reimbursement round, will only become clear over time.
2. Whether domestic biotech can survive and scale under these access bargains.
In headline terms, China’s domestic biotech sector is booming: pipelines are deeper, science quality has improved, and clinical execution has accelerated. But a central paradox in China’s health system is becoming harder to ignore. On one hand, industrial and innovation policy continues to actively encourage biotech growth, and to support R&D, talent return and global ambition. But on the other, health reform remains firmly oriented toward affordability, cost containment, and rapid access at scale. The two logics of industrial and health policy are increasingly misaligned.
China needs to reconcile its ambition to be a global biotech powerhouse with a reimbursement system designed for fiscal discipline. Despite strong assets and genuine innovation, all firms are required to compress prices sharply in order to reach the public system. Yet durable development, manufacturing, and commercialisation are distinct capabilities from high-quality R&D. Sales volumes take time to build, cash flows drain in the meantime, and pressure intensifies precisely at the moment when companies are expected to reinvest, expand pipelines and compete internationally.
3. How far digital supervision and traceability can extend.
The NHSA has already begun to evolve from payer to auditor. As reimbursement, claims and utilisation data move fully onto unified digital rails, oversight has become embedded in the act of payment itself. As China’s digital health continues to transform, the NHSA has the potential to observe, compare, and correct care at scale, as well as pay for it.
It may choose to stay narrow, and use data primarily for fund supervision, fraud detection and post hoc compliance. Or to expand more consequentially, to deploy digital oversight as an active steering tool for prescribing norms, tolerated variation and to link reimbursement more directly to standardised pathways and expected behaviour. Whether that power is exercised lightly or assertively will matter enormously for how care is delivered on the ground in China.
🔬This was Part 3 of CHP’s deep dive series into China’s key health ministries.
Part 1 covered China’s core Ministry of Health, the National Health Commission, Part 2 covered the drug regulators at the centre of Chinas biotech rise, the National Medical Products Administration, and my foundational explainer “Who Actually Runs Health in China?” mapped out the main stakeholders of health policy and power.
