Deteriorating drug pricing environment concerns Japan's pharmas

The government plans to impose another price cutting mechanism in April 2020.

The environment for Japan’s drug pricing and reimbursement has significantly deteriorated over the last few years, particularly between 2018 and 2019, said a report by Fitch solutions.

Over the past two years, the Central Social Insurance Medical Council (Chuikyo) has approved a number of new pricing cutting efforts that have significantly undermined Japan’s pro-innovation environment.

Japan imposed its first out-of-cycle price cuts on pharmaceuticals in 2019 in conjunction with the increase of the consumption tax from 8-10%. On top of this, the Japanese government has announced that another price cutting mechanism will be imposed in April 2020, amidst evidence that costs of medicines are under control.

Member companies of the Pharmaceutical Research and Manufacturers of America (PhRMA) have also raised concerns on the lack of predictability in the Japanese marketplace, according to PhRMA’s special 301 report.

Changes to the pricing rules such as huge seller repricing and optimal use guidelines have been imposed without meaningful stakeholder involvement by the Japanese government, said the report. As such, there is reduced transparency of the drug pricing system in Japan, noted PhRMA.

PhRMA also said that another issue of concern is the stated intention by the Japanese government to move from the current biennial price revision system into an annual revision system. Furthermore, the Japanese government has indicated that it plans to implement a new Health Technology Assessment in Japan by early 2019 for the sole purpose of repricing patented medicines.

Such undecided elements of the reform continue to make the Japanese market highly unpredictable, noted the PhRMA report.