Japan’s Ministry of Health Proposes Finalized Off-Year Re-pricing for All Medicines

TOKYO, Japan – Japan’s Ministry of Finance (MOF) has presented its proposal on the country’s planned off-year drug re-pricing, and called for a total revision of all products including patent-protected medicines, in order to reduce the financial burden on patients.

At a subcommittee of the Fiscal System Council, the involved bodies debated what measurement the government would use to define “price discrepancies” – and whether it would go by “value (monetary amount)” or “rate (percentage).”

The Ministry of Health has previously cautioned against “discrepancy rates (percentages)”, as apparently, it would only subject low-cost generics to the cuts.

MOF noted in the proposal: “FY2021 is the first fiscal year of annual NHI price revisions, and from the standpoint of reducing people’s burdens and sustaining universal coverage, a revision suitable for the first fiscal year needs to be implemented.”

“The ministry then continued that when defining the scope of products based on “discrepancies,” not only “discrepancy rates” and “the number of products” but also “the amount of discrepancies” should be looked at, adding that “with an eye to all-product revisions, a wide range of products should be covered, including original drugs that tend to have relatively small discrepancy rates due to their high NHI prices.”

In the recent proposal, the MOF also suggested that the MHLW revises and reduces the current 2% adjustment rate, which has remained unchanged for two decades since April 2000.

Off-year Pricing in Japan

Previously, Japan performed biannual price revisions, but due to the adoption of a new basic policy for drug pricing reforms in 2016, price surveys were determined to be conducted annually.

This go at off-year re-pricing will be the first attempt at annual re-pricing of medicines in Japan. A government survey will seek to find major discrepancies between NHI and market prices.

For off-year re-pricing, NHI prices will be implemented based on results from a survey of 67% of wholesaler offices and half the number of healthcare institutions. In 2019, the Ministry of Health, Labor, and Welfare (MHLW) found that a sampling rate of 67% uncovered an 8% discrepancy, whereas a 30% sampling rate found there to be an 8.2% discrepancy.

Criticism

Industry officials have questioned this latest proposal, with one saying, “An all-product revision seems to be too much of a stretch of the four-minister agreement.”

Further, nearly all of Japan’s pharmaceutical industry groups have requested the government delay its scheduled off-year re-pricing of pharmaceuticals in 2021 due to the impact of the COVID-19 pandemic on the health system.

The Federation of Japan Pharmaceutical Wholesalers Association (JPWA) was the most recent organization to rally against the plan, issuing an emergency statement imploring the government to rethink its planned re-pricing.

The pharmaceutical manufacturers’ association federation (FPMAJ) was also pushing the government to delay the off-year re-pricing initiative scheduled to take effect in April 2021 due to the impact of the pandemic.

FPMAJ argued that there’s been a major delay in price negotiations between wholesalers and medical institutions, frontline healthcare providers are already burdened by the virus, and the industry is doing its best to ensure stable prices, despite COVID-19.

As such, the off-year re-pricing could significantly impact an industry struggling to remain stable.

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