China Strengthens Priority Provision and Use of Essential Medicines

On August 20, 2026, China’s National Health Commission (NHC) published the “Notice on Prioritizing the Provision and Use of Essential Medicines (Document No. 20 of 2026).” Jointly issued with the National Administration of Traditional Chinese Medicine and the National Disease Control and Prevention Administration, the notice follows the release of the 2026 National Essential Medicines List (NEML).

The notice sets requirements for hospital medicine catalogs, clinical use, real-world evaluation, staff training, performance assessment, and primary healthcare. For pharmaceutical companies, it is particularly relevant to institutional market access and medicine use, as provincial authorities will progressively increase essential-medicine targets and include implementation in public-institution performance evaluations.

Key Takeaways

• 2-Month Deadline: Public medical and health institutions must update their medicine supply catalogs within 2 months after the 2026 NEML takes effect.
• Alliance-Wide Coordination: Tightly integrated urban and county medical alliances must align drug catalogs and update them at least annually to expand primary care drug access.
• Four Performance Indicators : Provincial authorities will guide public healthcare institutions in establishing and progressively increasing targets for essential medicine catalog inclusion, consumption volume, expenditure, and prescription share.
• Clinical Use and Evaluation: Hospitals must identify essential medicines in their information systems, encourage their priority use, and use real-world clinical data to support evaluation.
• Performance Evaluation and Subsidies: Essential medicine provision and use will be incorporated into public healthcare institution performance evaluations, with evaluation results serving as an important basis for allocating government subsidies supporting the national essential medicine system at the primary healthcare level.

Operational Directives for Hospital Medicine Catalog Updates

Health administrative departments across all provinces, autonomous regions, and municipalities must now guide public healthcare institutions through a structured overhaul of their medicine supply lists. This policy reinforces national objectives to prioritize essential medicines, ensure equitable access, and promote rational medicine use.

Public institutions must complete their catalog review within 2 months after the new National Essential Medicines List takes effect. The updated catalogs must identify each medicine by its generic name, dosage form, and strength or specification. Institutions must also prioritize essential medicines when selecting products for their catalogs.

Tightly integrated urban medical groups and county-level medical alliances must coordinate their medicine catalogs and expand the range of essential medicines available at primary healthcare institutions. These catalogs should be adjusted when needed, with no more than one year between updates in principle.

Essential Medicine Use and Performance Indicators

Updating a hospital catalog is only the first part of implementation. Provincial health authorities must also guide public institutions in setting and progressively increasing 4 indicators:

• Catalog Inclusion Ratio: The proportion of total institutional supply catalog listings represented by essential medicines.
• Consumption Volume Ratio: The volume of essential medicines consumed relative to total pharmaceutical volume.
• Total Expenditure Ratio: The percentage of overall hospital drug spending allocated to essential medicines.
• Prescription Share Ratio: The proportion of total patient prescriptions containing essential medicines.

The notice does not establish fixed national percentages. Instead, provincial authorities will set targets based on local circumstances and medicine-use data. Public institutions must then establish corresponding indicators for their clinical departments.

Clinical Use, Information Systems, and Training

To guarantee that catalog adjustments translate into actual bedside prescribing, the National Health Commission is enforcing strict integration with hospital administrative operations, electronic clinical infrastructure, and medical staff education.

Public institutions must identify essential medicines in their information systems and use prompts to support their priority selection. The priority and appropriate use of essential medicines should also be a focus of routine prescription reviews.

When physicians follow clinical pathways, treatment guidelines, or clinical principles, they should prioritize national essential medicines over similar options when treatment effectiveness can be maintained.

The NHC will also develop a National Essential Medicines Formulary and Clinical Application Guidelines. Health authorities must include the appropriate use of essential medicines in continuing medical education, with training covering physicians and pharmacists in public institutions. Relevant administrative staff should also receive training.

Clinical Data, Financial Stakes, and Reporting

The directive moves beyond policy guidance by linking essential medicine adoption directly to annual hospital ratings and regional funding disbursements.

Real-World Evidence (RWE) Evaluations

Institutions should make full use of real-world clinical data to conduct comprehensive clinical evaluations of medicines, with particular emphasis on essential medicines. These evaluations should consider four key factors :

• Efficacy outcomes in diverse patient populations.
• Real-world safety and adverse event profiles.
• Comparative cost-effectiveness within clinical pathways.
• Innovative features that improve patient compliance or therapeutic outcomes.

The evaluation results should inform institutional medicine catalog selection, optimize medicine use, support the development of clinica-use standards, and strengthen adverse drug reaction risk management. i

Subsidies Tied directly to Performance

Provincial authorities must incorporate essential medicine provision and usage metrics into public hospital performance evaluations and broader healthcare reform assessments. These evaluation results will serve as an important basis for allocating of government subsidies supporting implemention of the national essential medicines system at the primary healthcare level.

Annual Compliance Reporting Schedule

Provincial health authorities must monitor implementation and submit an annual evaluation report to the NHC’s Department of Drug Policy by December 10 each year. In ethnic minority regions, provincial authorities may also add a limited number of eligible ethnic medicines under strict procedures and file the results with the NHC.

Strategic Implications for Pharmaceutical Companies

Although the notice is directed mainly at health authorities and public institutions, it may affect how pharmaceutical companies approach hospital access and medicine use in China.

Primary Healthcare Access

The expansion of essential medicine availability through integrated medical alliances may increase the importance of county-level and other primary healthcare institutions. Companies should monitor how these alliances revise their catalogs and which products become more widely available at the primary level.

Catalog Inclusion and Actual Use

Catalog inclusion is only one of the four indicators. Hospitals will also monitor consumption, expenditure, and prescription use. For products competing with therapeutically similar alternatives, this could increase the importance of clinical positioning and demonstrated value after catalog inclusion.

Evidence and Economic Value

The focus on effectiveness, safety, economy, innovation, and real-world clinical data reflects a more evidence-based approach to institutional medicine evaluation. Companies should monitor how hospitals use these factors in catalog selection and clinical-use decisions.

Provincial Implementation

As provincial authorities will set local targets and oversee implementation, pharmaceutical companies should monitor:

• Provincial utilization targets
• Hospital catalog revisions
• Medical-alliance catalog consolidation
• Prescription-review practices
• Use of real-world data in medicine evaluation
• Inclusion of essential-medicine performance in institutional assessments

Final Thoughts: Navigating Essential Medicines Policy Changes in China

The National Health Commission's notice establishes specific implementation timelines and reinforces the priority use of essential medicines across China’s public healthcare. As public healthcare institutions update their medicine catalogs and integrated medical alliances implement dynamic catalog adjustments, pharmaceutical companies should assess potential implications for product positioning, institutional access, and prescribing practices.

Succeeding in this evolving landscape requires a combination of local regulatory intelligence, strategic compliance planning, and continuous market monitoring. Cisema provides end-to-end guidance to help international healthcare companies navigate complex regulatory frameworks across Asia Pacific, optimize hospital access strategies, and maintain full compliance with evolving national standards.

To learn how Cisema can support your regulatory affairs, market access, and compliance requirements across China, contact our regulatory experts today.

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References

Notice on Ensuring the Priority Supply and Use of Essential Medicines