Japan's next National Health Insurance (NHI) drug-price revision, due in April 2016, is expected to implement average price cuts of 6.8%, according to Pharma Japan, with the maximum premium for the fast-track Sakigake approval pathway also expected to double to 20%.
IHS Life Sciences perspective | |
Implications | The price cut follows a market-price survey by Japan's Ministry of Health, Labour and Welfare (MHLW), in which delivery prices of listed drugs came in at an average of 8.8% lower than their NHI prices. |
Outlook | The proposals are expected to be carried out in the fiscal year 2016 NHI pricing-system reform, after encountering no objections from the Central Social Insurance Medical Council (Chuikyo)'s drug-pricing committee. |
Japan's fiscal year (FY) 2016 National Health Insurance (NHI) drug-price revision is expected to bring price cuts of an average of 6.8%, according to Pharma Japan, with the maximum premium for the fast-track Sakigake approval pathway doubled to 20%.
Based on a market-price survey by Japan's Ministry of Health, Labour and Welfare (MHLW), delivery prices of listed drugs came in at an average of 8.8% lower than their NHI reimbursement prices. This would equate to a 6.8%-price cut under the routine revision in April 2016, according to preliminary figures.
The survey reflects a widening of 0.6 percentage points of the average gap – between market prices and those under the NHI – since the previous FY2014 drug-price revision. According to the source, the widening of the gap is due to deeper-than-usual discounts offered by wholesalers as of September 2015 (when the latest survey was conducted), in order to conclude price negotiations early, thus allowing customers (healthcare providers) to avoid a penalty fee-cut rule introduced in 2014.
In addition, the premium rate for the fast-track Sakigake approval pathway is expected to double to 20%. Although the 10% premium rate will remain the general rule, premium rates of up to 20% will be allowed, so as to reward treatments expected to genuinely contribute to healthcare in Japan based on the results of clinical trials based in the country.
Outlook and implications
The proposals are expected to be implemented in the next NHI pricing-system reform, expected in April 2016, after meeting no objections from the Central Social Insurance Medical Council (Chuikyo)'s drug-pricing committee. Typically, two percentage points are subtracted from the average market–NHI price gap as a price-adjustment rate, in addition to which some treatments undergo further price cuts – for example, through market-expansion re-pricing. Japan's Ministry of Finance has also floated the idea of implementing NHI price revisions annually, inviting fierce criticism from the pharmaceutical industry. However, while the NHI prices of pharmaceuticals in Japan are revised once every two years based on market prices (based on the results of the market-price survey), the Japanese government is also expected to raise its sales tax to 10% in FY2017. This has led to calls for NHI price reductions based on market prices not to be carried out in April 2017.
In the short term, the increase in the maximum premium for drugs approved under the fast-track Sakigake pathway will affect only the first batch of treatments which received the designation in October (see Japan: 27 October 2015: Japan's MHLW announces first batch of six drugs to receive new sakigake fast-track designation), after the drugs receive NHI reimbursement prices. The treatments include Astellas (Japan)'s acute myeloid leukaemia treatment ASP-2215, and Merck & Co (US)'s gastric cancer drug Keytruda (pembrolizumab).