China has embarked on a program in which major cities bulk-buy certain drugs together, forcing companies to bid for contracts and driving down prices by an average of 52 per cent, one by as much as 90 per cent.

Beijing introduced the bulk-buy program last year, allowing some cities to band together to negotiate lower prices for medicines for use at public hospitals.

The program, when it was rolled out, saw 11 Chinese cities work together on a process to bulk-buy 25 types of drugs. This caused the price of some medicines to decrease over 90 percent.

Early this year, Chinese Vice-Premier Sun Chunlan said China would be expanding the program to cover more cities and drugs, as medicine prices must fall for health care to be affordable for the people.

China has now expanded a pilot drug bulk-buying program to almost the entire country in an attempt to negotiate lower prices from drug manufacturers, Reuters has reported. This is adding pressure on multinational pharmaceutical companies and their domestic rivals.

Medicines where generic versions are significantly cheaper than branded drugs will be prioritized for inclusion in a centralized procurement program, a State Council meeting chaired by Premier Li Keqiang said.

Drugs on the list so far include off-patent cancer treatment drug Pemetrexed, sold by Eli Lilly under the brand name Alimta, and leukemia therapy Imatinib, which is sold by Novartis as Gleevec. Local companies produce generic versions of both drugs.

The move caused the price of some medicines to plunge more than 90%, state news agency Xinhua said.