Aricept, Lyrica, and Nexavar Among 16 APIs to Be Repriced in Japan Following Market Expansion

Japan's Central Social Insurance Medical Council (Chuikyo) has approved a proposal by the Ministry of Health, Labour and Welfare (MHLW) to reprice 16 active pharmaceutical ingredients (APIs) following market expansion. The main brands that will be affected by the repricing are shown in the table below. In total, the 16 APIs correspond to as many as 48 products, with the repricing also applying to generic versions of Aricept (donepezil), Artist (carvedilol), Flolan (epoprostenol sodium), and Maintate. In the case of Aricept, 30 generics were given a National Health Insurance (NHI) price listing in November 2011.

Most of the drugs will be repriced on the basis of a long-standing rule that applies to products whose sales exceed JPY15 billion (USD190.3 million) and which have reached more than double their original sales forecasts. One exception to this is Flolan, which will be repriced on the basis of a new rule introduced in 2012, which applies to drugs whose sales exceed JPY10 billion and which have experienced a 10-fold increase relative to their original forecasts.

In addition, a number of 16 APIs are being repriced because of their similarity to other drugs on the list, rather than on the basis of their own high sales. This applies to Reminyl (galantamine), because of its similarity to Aricept (donepezil); Maintate (bisoprolol), because of its similarity to Artist (carvedilol); Sutent (sunitinib), because of its similarity to Nexavar (sorafenib); and Famvir (famciclovir), because of its similarity to Valtrex (valacyclovir). Several similar APIs do not feature on the list of 16 because they have been given a special exemption in order to ensure that their supplies remain stable.

Meanwhile, other APIs that would have been deemed similar under previous regulations on the basis that they have a "similar pharmacological effect" are no longer deemed similar under new guidelines, given that they are considered to be "not directly competitive". In this case, their lack of direct competitiveness stems from factors such as the market size, the timing of their first NHI listing and the range of applications.

The downward repricing rate will fall within a range of 10–25% for drugs which were originally priced via the cost-calculation method, and within a range of 10–15% for those originally priced via the similar efficacy comparison method. That said, Alimta and Avastin will each be granted a premium of 5% on the basis of the "true clinical benefits" that have been demonstrated by post-marketing studies.

Outlook and Implications

The repricing of the 16 APIs will be implemented in the context of Japan's next round of biennial price adjustments, which is due to take effect from the beginning of April. In keeping with this, the MHLW has already announced other price adjustments that will be taking place, including additional price cuts for long-listed drugs (see Japan: 16 January 2012: Long-Listed Drugs to Bear Brunt of Additional Price Cuts in Japan).

In most cases, the repricing of the 16 APIs has followed a tried and tested formula, which means price adjustments would have been foreseen and planned for by marketers. That said, the introduction of a number of new modifications to the methodology and a degree of discretion over whether or not a drug is considered to be "similar" to a price-modified drug means that the MHLW's proposed price adjustments were more than just a formality.

In the case of Aricept, which was originally launched in 1999, it is the second time the drug will be repriced following market expansion, with its initial repricing having taken place in 2006. Its subsequent surge in sales was fuelled by its approval for the treatment of severe Alzheimer's disease as an additional indication (for which its patent has been extended to June 2013).

Meanwhile, in the case of Lyrica (pregabalin), its repricing will take place in just the second year after its launch. Once again, this is due to increased sales following the approval of a new indication—the treatment of peripheral neuropathic pain—to complement its original indication for treating postherpetic pain. The downward price revision will reduce the growth in value-based drug sales and health spending, but with a moderate magnitude, considering the mild price reduction rate.