Improving drug accessibility and rational drug use are major challenges for China's healthcare reform. In 2018, the Chinese government introduced a novel nationwide policy of centralized drug procurement for off-patent drugs, focusing on improving drug utilization patterns of public medical institutions. To estimate the impacts of the Chinese centralized drug procurement policy (the so-called "4 + 7" policy) on drug utilization in public medical institutions. A retrospective natural experimental design and difference-in-difference method were applied using cross-region data extracted from the national procurement database. Eleven "4 + 7" pilot cities (intervention group) and eleven non-pilot provinces (control group) were matched. In addition, "4 + 7" policy-related drugs ( = 116) were selected as study samples, including 25 drugs in the 4 + 7" procurement List ("4 + 7" List drugs) and their alternative drugs ( = 91) that have not yet been covered by centralized procurement policy. Then, the "4 + 7" List drugs were divided into bid-winning and non-winning drugs according to the bidding results, and they were sorted into generic and original drugs. Defined daily dose (DDD) was used to standardize the quantity of drugs used. In the 1-year procurement period, the overall completion rate of agreed procurement volume reached 191.4% in pilot cities. Owing to policy impact, the consumption increased by 405.31% in bid-winning drugs ( = 1.62, < 0.001) and decreased by 62.28% ( = -0.98, < 0.001) in non-winning drugs. The overall use proportion of bid-winning drugs increased from 17.03% to 73.61% with statistical significance ( = 1.48, < 0.001), and increments were also detected in all healthcare settings, regions, and anatomical therapeutic chemical (ATC) categories (all -values < 0.05). Generics and originators were detected with 67.53% increment ( = 0.52, < 0.001) and 26.88% drop ( = -0.31, = 0.006) in consume volume. The use proportion of generics increased from 59.23% to 78.44% with significance ( = 0.24, < 0.001), as well as in tertiary hospitals ( = 0.31), secondary hospitals ( = 0.23), and primary healthcare centers ( = 0.11) (all -values < 0.001). The use proportion of relatively quality-guaranteed drugs (i.e. bid-winning and original drugs) increased from 56.69% to 93.61% with significance ( = 0.61, < 0.001), and similar increments were also detected in all healthcare settings, regions, and ATC categories (all -values < 0.05). Healthcare providers demonstrated good compliance with the "4 + 7" policy in completing contracted procurement volume. Centralized drug procurement policy promoted drug consumption gradually concentrated on bid-winning drugs, generic drugs, and more importantly, quality-guaranteed drugs.