June 9, 2017 / 10:08 AM / a month ago

Japan government scraps proposals for drug-price cuts in policy guidelines

3 Min Read

TOKYO (Reuters) - Japan has dropped proposals on price cuts for prescription drugs aimed at boosting the use of generic drugs, underscoring the government's struggle to rein in bulging social security costs for a rapidly ageing nation.

The step comes as Japan looks to boost the use of generics to 80 percent by September 2020 from about 56 percent now, thus saving the government hundreds of billions of yen every year.

To ease the burden on the national health insurance system, the government last month said it would consider having patients who prefer expensive advance prescription drugs pay the difference in cost over generic drugs.

In an annual draft of policy guidelines that incorporated the change, the government also floated the idea of lowering the prices of these prescription drugs to the levels of generic drugs.

But the proposals were missing from the final version of the annual policy guidelines approved by Prime Minister Shinzo Abe's cabinet on Friday.

"These proposals serve as materials for consideration but should not be taken as a certain course of direction," a Cabinet Office official told reporters on condition of anonymity.

A decision made by the end of year would weigh up various factors, he added, without elaborating.

The change followed deliberations on the draft by ruling party officials, including those voicing the interests of drugmakers worried about hits to revenues.

In December, the government said it would review official pricing every year, instead of every two years, and would widen the review to cover all prescription drugs, following drastic price cuts for two blockbuster drugs.

Previously the government only reviewed cases of a large discrepancy between the official price, which determines how much the National Health Insurance system reimburses medical providers, and the actual price charged to wholesalers.

On the fiscal front, the government's policy guidelines set a new fiscal goal, the ratio of debt to gross domestic product, along with its primary budget surplus target, in what investors view as a shift toward diluting fiscal reform.

The government's guidelines made no mention of a twice-delayed sales tax hike to 10 percent from 8 percent now, a measure now planned for October 2019, fuelling speculation that it is preparing to further put it off.

Separately, Abe's cabinet also approved the government's economic growth plans, which target package delivery by drone sometime in the 2020s.

Reporting by Tetsushi Kajimoto; Editing by Clarence Fernandez

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