Although the possibility of drug-price cuts in Japan in fiscal year 2017 has all but vanished after the government delayed a rise in the country's consumption tax, debate continues around the issue of high-cost pharmaceuticals, according to Pharma Japan.
Implications | Any irregular price revision would be expected to be introduced in April 2018, according to Pharma Japan. |
Outlook | Superficially, the disappearance of the threat of three consecutive years of drug-price cuts in Japan is positive; however, the authorities' overall emphasis on reducing drug prices is not expected to change, with irregular price revisions a genuine possibility. |
According to the source, several Ministry of Health, Labour and Welfare (MHLW) officials have stated that there was now "no reason to raise drug prices" in April 2017, after Prime Minister Shinzo Abe announced a delay in raising Japan's consumption tax to 10% (from the current 8%); however, the postponement of the consumption tax rise to fiscal year (FY) 2019 has raised the possibility of irregular drug-price cuts in 2017.
A further point of concern among the pharmaceutical industry is that the postponed consumption tax hike could potentially increase pressure on the prices of high-cost drugs. Some members of Japan's Central Social Insurance Medical Council (Chuikyo) have called for high-cost drugs – such as PD-1 inhibitor Opdivo (nivolumab; Bristol-Myers Squibb, US) – to undergo repricing, irrespective of the biennial National Health Insurance (NHI) price revision, if the drugs' sales have risen significantly after gaining approval for new indications.
The likelihood of an irregular revision of drug prices remains difficult to determine, though any such move would be expected to be introduced in April 2018, according to Pharma Japan. In addition, Opdivo is increasingly referred to during public debate as a symbol of Japan's high-cost drug issue; in September 2014, Japan became the first country in the world to reimburse Opdivo, granting the drug a 60% pricing premium. Opdivo is expected to earn sales of JPY126 billion (USD1.2 billion) in the year to March 2017.
Outlook and implications
The disappearance of the threat of three consecutive years of drug price cuts in Japan is at first glance a positive development, judging by the pharmaceutical industry's furious response and arguments that the price cuts would stifle innovation and growth (see Japan: 12 January 2016: Japan's pharma sector fiercely opposes huge-seller re-pricing proposal for April NHI drug reform). However, the overall emphasis among Japan's drug-pricing policymakers is not expected to change – despite the delay in the consumption tax increase to FY 2019 – as the fundamental preoccupation with soaring healthcare costs remains unchanged.
Given these considerations, it is therefore unsurprising that Japanese drug makers anticipate increased pricing pressure going forward. Generic-maker Mitsuo Sawai (Japan) was separately reported as saying that it expects the government to promote the uptake of generics even more aggressively, in order to restrain healthcare costs (source: Pharma Japan).
In addition, given the increasing threat of additional pressure on drug pricing, Japanese drug makers are expected to continue efforts to source a greater proportion of sales from overseas markets (see Japan: 3 June 2016: Japanese drug makers earn a record 45.8% of sales from overseas markets in FY 2015).
Overall, the mood among Japanese drug makers was reflected in a comment from Takeda (Japan) chairman Yasuchika Hasegawa: "We shouldn't ride an emotional roller coaster. All we have to do is to endeavor to deliver good drugs to patients." (source: Pharma Japan)