Drug Information Q&A Q41. Please tell me about the prices of ethical drugs.
Answer
Prices of ethical drugs are determined by the Ministry of Health, Labour and Welfare, taking into consideration the effectiveness of the drug and other factors. In principle, prices are revised every two years.
Explanation
The price of an ethical drug is called a "drug price. NHI drug prices are the prices paid to hospitals and pharmacies by the government's medical insurance system, and are "official prices" determined by the MHLW based on data from pharmaceutical companies.
In many cases, the price of a newly developed prescription drug is determined by comparing it with the price of a prescription drug already in use that has similar efficacy (the "similar drug efficacy comparison method"). If the drug is found to be more effective or novel than similarly effective drugs, the price will be increased (additional price adjustment). In the case of an ethical drug with little novelty, the price is set to the lowest price among drugs sold in the past several years.
On the other hand, if there are no ethical drugs with similar efficacy and no comparison can be made, the price is determined based on the cost of raw materials and manufacturing costs of the ethical drug (cost accounting method).
Since prices of ethical drugs in Japan, which are officially fixed prices, are in principle reduced every two years, prices tend to be lower than in other countries where pharmaceutical companies are free to set their own prices.
Lower prices are good for those who use them. However, if the price of prescription drugs continues to fall, pharmaceutical companies will have fewer resources for research, and their ability to create new drugs will be impaired.
The price of ethical drugs includes various costs such as research and development, raw material costs, manufacturing costs, labor costs, and marketing costs. It is desirable not only for the price to be low, but also for the price to be appropriate and acceptable to patients in accordance with the efficacy of the drug.
Based on this concept, in April 2010, the Japanese government decided to introduce, on a trial basis, a system in which prices of new drugs that meet certain requirements will not be revised during the patent period, but will be lowered collectively after the launch of a generic drug (additional fee for promoting the creation of new drugs and the resolution of off-label drug use).
MINI Column: Additional Payment for Promotion of New Drug Creation and Elimination of Off-label Drugs
This system was introduced on a trial basis in 2010, based on the idea that profits from the sale of a new drug that meets certain conditions can be used to acquire the next new drug or a drug for which an indication has not yet been approved, without lowering the drug's price. The scope of new drugs eligible for the additional subsidy and the conditions under which the subsidy is granted are strictly defined, but only if these conditions are met. One of these conditions is the development of off-label drugs requested by the Ministry of Health, Labor and Welfare.
As a result of this system, many unapproved drugs and drugs for unapproved indications that were available overseas but could not be used by Japanese patients are now available to Japanese patients.
- *Please see Q52 for details.
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