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Pharmaceutical Pricing and Reimbursement in Japan

Decision Resources
November 13, 2006
38 Pages - SKU: DECR1378421

Abstract Table of Contents Related Reports

Countries covered: Japan

Japan is the world's largest price-controlled market for prescription drugs. With few exceptions, the Japanese government sets the reimbursement prices for all newly launched drugs. If pharmaceutical firms hope to survive-and thrive-in the Japanese market, they must thoroughly understand the unique Japanese pricing system and acquaint themselves with its recent changes.

Get the Answers You Need to Shape Your Strategy
To control Japan's total health care expenditures devoted to drugs, the government sets the reimbursement prices for new branded drugs, rewarding companies that manufacture innovative products. The government also mandates revisions in the prices of all drugs every other year. How are drug prices currently calculated, and how does the Japanese government plan to enhance its control over drug prices? What is the pharmaceutical industry's best hope in infl uencing the pricing system?

Growth of the Japanese generics market is expected as generics substitution expands and higher copayments compel patients to seek out lower-cost alternatives. However, the market is still relatively underdeveloped. What factors contribute to the relatively small market share for generics? Will the government's intent to encourage use of generics prompt greater expansion?

The Japanese pharmaceutical market is likely to continue to grow modestly through 2011. Competition among companies (including generics manufacturers) is expected to grow ever fiercer, as domestic and foreign firms battle for shares of this rich market. What strategies should companies, particularly smaller ones, pursue to ensure their survival?

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Additional Information

Companies Mentioned in This Spectrum Report
Astellas
Banyu
Chugai
Daiichi Sankyo
Eisai
Fujisawa
Genzyme
GlaxoSmithKline
Hexal
Kissei Pharmaceutical
Meiji Seika Kaisha
Merck
Mitsubishi
Nichi-iko
Nidek
Nihon Chouzai
Nippon Boehringer Ingelheim
Nihon Pharmaceutical Industry
Nippon Chemiphar
Novartis
Pfi zer
Ranbaxy Laboratories
Sandoz
Sankyo
Sanofi -Aventis
Sawai
Taiyo Yakuhin
Takeda
Tanabe Seiyaku
Teva Pharmaceutical
Towa
Toyamakagaku
Yoshitomi

Executive Summary: Strategic Considerations; Stakeholder Implications; Introduction; The National Health Insurance System; Health Care Expenditures; The Pharmaceutical Pricing Environment; Initial Pricing of Branded Prescription Drugs; Methods for Calculating Reimbursement Prices; Similar-Efficacy Comparison Methods; "Me-Too" Drugs; Price Comparators; Cost Calculation Method; Foreign Price Adjustment Rule; Price Premiums; Biennial Price Revision; Repricing; Price Cuts for Long-Listed Drugs; Ongoing Discussions on the Future Pricing System; Cost-Containment; Prescriber-Targeted Measures; Patient-Targeted Measures; Sales and Prescribing Trends; Generic Drugs; Current Status of the Generics Market in Japan; Participants in the Generics Market in Japan; Market Leaders; New Entrants; Recent Changes in the Generics Market; The Japanese Government's Stance on Generics; Introduction of the New Prescription Form; Generics Use in the Diagnosis-Procedure System; Increasing Public Awareness of Generics; Efforts to Improve the Reliability of Generic Drugs and Generics Manufacturers; Outlook for the Generics Market in Japan; Outlook for the Japanese Pricing and Reimbursement Environment
Tables: 1. Methods Used for Pricing New Drugs in Japan, June 2002-September 2006; 2. Initial Prices of Molecular-Targeted Oncology Drugs Marketed in Japan; 3. Hierarchy of National Health Insurance Price Premiums; 4. Number of New Drugs Awarded Price Premiums for Therapeutic Advances, June 2002-September 2006; 5. Revision Rates for Japanese Reimbursement Prices, 1994-2006; 6. Percentage Reductions in Average NHI Prices for Leading Pharmaceutical Companies in Japan, 2006; 7. Reimbursement Price Reductions for Selected Drug Classes in Japan, April 2006; 8. Selected Drugs Targeted for Repricing in Japan; 9. The Ten Best-Selling Drug Classes in Japan, 2004 and 2005; 10. The Ten Best-Selling Drugs in Japan, 2004 and 2005; 11. Sales of the Four Largest Generics Manufacturers in Japan, 2005; 12. Prescription Data for Nihon Chouzai, April-June 2006; 13. Effects of the Introduction of the DPC System on the Use of Generics, July 2002-June 2004
Figures: 1. Ratio of Drug Costs to Total Health Care Expenditures in Japan, 1991-2002; 2. Procedure for Setting National Health Insurance Reimbursement Prices for New Prescription Drugs; 3. Criteria for Determining the Pricing Method Used for New Prescription Drugs; 4. Size of the Japanese Pharmaceutical Market, 2002-2005; 5. Generics' Share of Major Pharmaceutical Markets, by Sales Volume, 2004; 6. Generics' Share of the Japanese Pharmaceutical Market, by Prescription Volume, 2002-2004
Appendix: Glossary of Japanese Terms Used in This Report

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