Global Insight Perspective | |
Significance | Japan's HPB has described the impact of new generics-friendly prescription forms, introduced at the beginning of April, as "very encouraging". |
Implications | A survey conducted in the Nihon Chouzai pharmacy chain during the first week of April revealed that 51.1% of prescriptions permitted generic substitution, and that 24.4% of prescriptions were ultimately filled by generics. |
Outlook | If Nihon Chouzai's early experience is mirrored in other pharmacies, the government will be well on its way towards its target for generics to account for 30% of the drug market by volume by 2012. |
According to the director of the HPB's Economic Affairs Division (EAD), Toshiko Takeda, who was quoted in Pharma Japan: "Prescriptions that do not forbid generic prescription are being issued at a fairly high rate… in some cases, the percentage of prescriptions that permit generic substitution [have] increased from 2% to 90%."
Nihon Chouzai Reports 6% Cut in Expenditure as Result of Generic Substitution
Feedback provided by generics manufacturer and pharmacy retailer Nihon Chouzai (Japan) also suggests that the new prescription forms have been having an effect. The company operates approximately 250 retail pharmacies throughout Japan, of which 235 are operated directly. These directly run pharmacies—each of which stock almost 500 generic products—received a cumulative total of 112,722 prescriptions in the 1-6 April period. Of these, generic substitution was permitted in 57,629 cases, which equates to approximately 51.1% of the total. Generic substitution was actually made on 27,558 occasions, which corresponds to 47.8% of permissible cases, or to 24.4% of the total number of prescriptions.
Nihon Chouzai calculated that the total cost of drugs dispensed through its 235 directly operated outlets amounted to ¥963 million (US$9.4 million) on a National Health Insurance (NHI) price basis. However, the total cost would have amounted to as much as ¥1.025 billion if no generic substitutions had been made. This indicates that savings of approximately 6% of the total potential price were made on account of generic substitution.
Outlook and Implications
The 6% saving reported by Nihon Chouzai is not entirely attributable to the introduction of the new generics-friendly prescription forms, given that there would have been a limited amount of generic substitution in any case: a survey conducted by the MHLW in July last year revealed that 17.4% of prescriptions allowed generic substitution, and that 8.2% of these were actually filled with a generic (see Japan: 21 November 2007: New Figures Reveal Gradual Rise in Generic Substitution).
However, it appears that—at least in the case of Nihon Chouzai—the government is well on the way to meeting its target, which is for generics to account for 30% of the overall drug market in terms of volume by 2012. Indeed the current shortfall may be made up fairly readily if the government is able to persuade a small core of medical institutions to drop their strong resistance to generics: Nihon Chouzai reported that, out of a total of 230 medical institutions that issued prescriptions received in its 235 stores, 36 of these institutions permitted generic substitution in fewer than 10% of their prescriptions. A previous survey had indicated that 12 out of 230 medical institutions refused generic substitution in over 99% of cases (see Japan: 15 April 2008: New Generic Substitution Rules Initiated in Japan).
Although most generics players appear to be optimistic about the effects of the new prescription forms, some still feel that the overall generic substitution rate is unlikely to reach much higher than 10%. They continue to argue that generics are at a disadvantage because their indications do not always exactly match those of their originator drug, while they also feel that pharmacies will be deterred by the need to stock additional drugs, and by the extra time that will be required to explain the generic substitution process to customers.