5 Min Read
TOKYO (Reuters) - Japan said on Tuesday it will step up the pace and expand the scope of drug price reviews, one of the most aggressive measures it is taking to rein in ballooning healthcare costs for a rapidly ageing nation.
The plans, which follow drastic price cuts for two blockbuster drugs, have been opposed by drugmakers worried about hits to revenue and who argue that frequent reviews will stifle investment by creating greater uncertainty over pricing.
They also come amid a backlash against the high costs of a new wave of medicines for cancer and other serious diseases. U.S. president-elect Donald Trump has promised to "bring down drug prices", while a number of European countries have taken a hard line on treatments deemed not to offer value for money.
Japan, the world's third-largest market for prescription medicines, said it now plans to review its official pricing every year instead of once every two years and will expand the scope of the review to include all prescription drugs.
Previously the government only reviewed drug prices where there was a large discrepancy between the official price - which determines how much medical providers are reimbursed by the National Health Insurance system - and the actual price used when drugmakers sell to wholesalers.
"The new regulations...will reduce the burden on the public while also improving the quality of healthcare in the country," Chief Cabinet Secretary Yoshihide Suga told reporters.
The government spent 7.9 trillion yen ($67 billion) on prescription drugs in the last financial year, and the change reflects a economic advisory panel recommendation that such a move could save 190 billion yen a year in healthcare costs.
Details of the review criteria will be determined next year but market participants said they were drawing some comfort from comments by Health Minister Yasuhisa Shiozaki that while the scope of the review had been expanded, it did not mean across-the-board cuts.
"We regret the introduction of the annual re-pricing and the nature of the process – it was a hurried process that didn't allow the sort of consultations we would like to have seen," said Simon Collier, director general of the Japan branch of the European Federation of Pharmaceutical Industries and Associations.
He added that he expected some impact on drug prices but hopefully it would not be enormous.
The next review under the current system will occur in 2018 and annual reviews will take place after that.
The most impact is likely to be seen in generic drugs, which have big gaps between official prices and market prices, and on drugs that are rapidly adopted after approvals for new indications as those prices may now be reviewed four times a year, said Atsushi Seki, an analyst at UBS Securities.
"This could be painful for the industry if price cuts are implemented in a way that is a penalty for success. It could be that foreign drug makers will be discouraged from embarking on lengthy clinical trials," Seki said.
It was not immediately clear if more drastic cuts for blockbuster drugs would be in the offing.
Last month, the government halved the price of cancer drug Opdivo, developed by Bristol Myers Squibb Co and Ono Pharmaceutical Co, on fears that a rapid uptake of the medicine would prove an intolerable burden on the healthcare system.
The cut brought Opdivo, which has been approved in Japan for advanced melanoma, non-small cell lung cancer and kidney cancer, more into line with pricing in the United States.
Earlier this year, the government also cut the price of Gilead Science Inc's hepatitis C drug Sovaldi by about a third.
Other measures being considered by the government to reduce costs include restrictions on some medicines to patient groups who show the best response or to certain specialist centres.
The government has asked industry bodies to draw up such guidelines for Opdivo and similar medicines as well as for Amgen Inc's Repatha, a potent but expensive cholesterol fighter.
Reporting by Ritsuko Shimizu; Additional reporting by Linda Sieg, Naomi Tajitsu, Izumi Nakagawa, Marika Tsuji and Taiga Uranaka; Editing by Edwina Gibbs