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Pharmaceutical Pricing and Reimbursement in Japan, 2008

Published by: Decision Resources

Published: May. 27, 2008 - 39 Pages


Table of Contents


Executive Summary

Strategic Considerations

Stakeholder Implications

Overview

Organization and Funding of the Healthcare System

Healthcare Expenditures

Pharmaceutical Prices in Japan

Price Setting

Initial Pricing of Branded Prescription Drugs

Similar-Effi cacy Comparison Methods

Price Comparators

Price Premiums

“Me-Too” Drugs

Cost Calculation Method

Foreign Price Adjustment Rule

Postmarketing Price Changes

Biennial Price Revision

Price Cuts for Long-Listed Drugs

Repricing in Response to Market Expansion

Promoting the Use of Generics

Evolution of the Japanese Generics Market

Recent Changes in the Generics Market

Generics Substitution

Use of Generics in Hospitals

Measures to Improve the Generics Supply

Increasing Competition in the Japanese Generics Market

Health Technology Assessment

Outlook for the Japanese Pricing and Reimbursement Environment

Tables

1. Japanese Prices of Best-Selling Drugs as a Percentage of U.S. and European Average Prices, 2006

2. Prices of Leading Biologics in the Major Markets as a Percentage of U.S. Prices, 2006

3. Changes to the Hierarchy of National Health Insurance Price Premiums in Japan

4. Price Premium Trends, June 2004-December 2007

5. Comparison of Average Foreign Prices with Japanese List Prices Using the Cost Calculation Method, April 2006-December 2007

6. Drugs Repriced in Response to Market Expansion, 2000-2008

7. Key Trends in the Japanese Prescription Drug Market: Implications for the Pharmaceutical Industry

Figures

1. Annual Growth Rates in Japanese Healthcare Expenditures and Gross Domestic Product, 2000-2005

2. Japanese Population Trends, 2000-2050

3. Pharmaceutical Spending as a Percentage of Total Healthcare Expenditures, 1991-2004

4. Average Prices of Leading Biologics, Small-Molecule Drugs, and Pharmaceuticals Overall in the Major Markets as a Percentage of U.S. Prices, 2006

5. Procedure for Setting National Health Insurance Reimbursement Prices for New Prescription Drugs

6. Methods Used for Pricing New Drugs in Japan, June 2002-December 2007

7. Criteria for Determining the Pricing Method Used for New Prescription Drugs

8. Percentage of New Drugs Awarded Price Premiums for Therapeutic Advances, June 2002- December 2007

9. Average Biennial Price Revisions, 1994-2008

10. Price Adjustment Range, 1994-2008

11. Generics’ Share of the Japanese Pharmaceutical Market, 2002-2006

12. Generics’ Impact on Hospital Drug Expenditures, 2004-2006

Abstract

The pharmaceutical industry faces challenging times in the Japanese market. The government has expressed its desire to reward the development of innovative medicines and has promised more-generous price premiums for innovative drugs. At the same time, the government strictly controls launch prices and continues to erode prices throughout the product life cycle. There are, however, pricing changes effective in 2008 that could signal the beginning of pricing reforms that promote therapeutic innovation.

Get the Answers You Need to Shape Your Strategy
  • Japan has the world’s second-largest pharmaceutical market, and the world’s largest price-controlled pharmaceutical market. How do the country’s governing agencies control the prices of newly launched prescription drugs? What types of postmarketing price cuts are in place to curb pharmaceutical expenditures?
  • The reimbursement prices of new drugs in Japan are determined by confidential negotiations between the manufacturer and the Japanese Ministry of Health, Labor, and Welfare as soon as the drug wins regulatory approval. What methods are used to calculate drug reimbursement prices? What criteria are used by the governing agencies to determine the pricing method for a given drug?
  • The Japanese market for generics has begun to grow steadily, albeit slowly. What factors account for the modest market share of generics in Japan? Which pharmaceutical companies are looking to capitalize on the growing demand for generics in Japan? What is the government doing to improve the generics supply and the reputation of the generics industry among patients and medical professionals?
Scope
  • Overview: organization and funding of the Japanese healthcare system; soaring growth of the country’s healthcare expenditures; prescription drug prices in Japan compared with other major markets.
  • Price setting: initial pricing of branded drugs; similar-efficacy pricing methods; price premiums; cost calculation method; foreign price adjustment rule.
  • Postmarketing price changes: the government’s biennial National Health Insurance price revisions; price cuts for long-listed drugs; repricing in response to market expansion.
  • Promoting the use of generics : evolution of the Japanese generics market; recent changes in the generics market; use of generics in hospitals; measures to improve the generics supply; increasing competition in the Japanese generics market.


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