Top News Press Conference of the President of the Pharmaceutical Manufacturers Association of Japan held. Business Models of the Pharmaceutical Industry and Pharmaceutical Industry Policies and Recommendations 2023

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On February 16, 2023, the "Pharmaceutical Manufacturers Association of Japan Press Conference" was held at Muromachi Mitsui Hall & Conference (Chuo-ku, Tokyo). The presentation by Yasushi Okada, Chairman of the Pharmaceutical Manufacturers Association of Japan (PMAJ), focused on "Business Models of the Pharmaceutical Industry and Pharmaceutical Industry Policies and Policy Recommendations 2023". The event was conducted in a hybrid format with both on-site and online participation, and was attended by 39 people from 19 media companies. Below is a summary of Chairman Okada's presentation and the Q&A session.

Figure 1 Business Model of the Pharmaceutical Industry

Regarding intangible assets, which are future investments, time-series data from eight major Japanese pharmaceutical companies shows that they have invested more than 2 trillion yen in intangible assets over the past 10 years. The large amount of investment in intangible assets is a characteristic of the pharmaceutical industry. About 30% of these investments are impaired due to development failures, lower-than-expected sales, and other factors. As an investment in future innovation, the business of an R&D-based pharmaceutical company is not viable unless it can also cover these impairment risks and generate revenue.

Looking at the number of new drugs created by 53 domestic companies out of 71 pharmaceutical association member companies since 2010, we see that 9 companies have created 9 or more new drugs. These nine companies will account for 70% of total pharmaceutical sales in 2021. Furthermore, the operating profit margins of these nine companies are twice as high as those of other companies. Please understand that this means they are earning and reinvesting their operating cash flow. We hope that the Japanese government understands this structure and supports companies that are fighting the world and creating new drugs.

The pharmaceutical industry takes risks to develop new drugs and invests the profits earned in further development of new drugs. As a contribution to the Japanese economy, a look at the domestic sales, overseas sales, and non-consolidated tax expenses (tax payments to Japan) of the nine major global pharmaceutical association member companies shows that domestic sales are shrinking while overseas sales are growing. The comparison of the increase and decrease in tax payments in representative industries such as automobiles and electronics, in addition to pharmaceuticals, shows a significant increase compared to other industries, with the amount of tax payments in 2014 as 100.

In Japan's pharmaceutical market, the reality is that the government has been reducing the prices of innovative drugs through re-calculation and other measures while balancing the books financially through annual drug price revisions amid a tight fiscal situation. Many Diet members describe this as a balance between the sustainability of universal health insurance and the promotion of innovation, but we believe this to be a mistake. As a result, these measures have stagnated the Japanese pharmaceutical market, discouraged companies from investing in the market, and worsened drug lag and drug loss. Generic drugs are generating sufficient profits under the price of 40-50% of brand-name drugs, depending on the number of companies entering the market, immediately after their launch. On the other hand, they are known to be heavily discounted, and the cycle of eventually becoming unprofitable under cyclical price reductions thereafter has resulted in a prolonged supply uncertainty at the moment.

In order to make Japan an attractive market, it is necessary to achieve at least a slight increase in the market as a whole. To this end, we believe that pharmaceuticals should be promptly replaced by generics after patent expiration, and that the prices of long-term listed drugs should also be promptly reduced. Innovative new drugs should be evaluated by global standards. The global standard is the idea that the value of a drug should be objectively evaluated and priced, and that the drug price should be maintained as long as its scientific value remains unchanged. This allows for sustainable growth of the patented product market ( Figure 2 ). For example, if the market as a whole can grow by 1-2% annually until 2030, the market for patented drugs with additional drug-discovery benefits, which currently account for about half of all patented drugs, can be expected to grow by 4-5% annually. In order to achieve this type of growth, we need to be more flexible with drug prices, and we have already accepted that we will not rely on long-listed products when the additional drug-discovery benefit was introduced in 2010. We have no objection to pursuing more flexibility in the pharmaceutical market.

Figure 2 Building an Attractive Pharmaceutical Market to Attract Investment

Let me explain the structure of the generic drug industry. The number of generic companies in Japan is larger than in the U.S., the U.K., and Germany. In terms of sales, Japan is characterized by a large number of small companies. According to the profit structure of a certain generic company, about 120 of the approximately 660 products it supplies are in the red. We believe that this snarled profit structure of the generic industry is caused by the fact that immediately after a drug's patent expires, companies compete for the market by offering large discounts based on high drug prices, and then drug prices continue to fall until they become unprofitable. This issue is currently being taken up by an expert panel of the Ministry of Health, Labour and Welfare, and we hope that discussions will proceed toward a drastic solution to create an industrial structure that will realize a stable supply of high-quality pharmaceuticals. The reason why the Pharmaceutical Manufacturers Association dares to mention the topic of generics is that the idea is to give up the seat to generics as soon as possible after the expiration of pharmaceutical patents, and because of the industrial structure that causes problems of stable supply and quality of generics, a structure that is not viable for the so-called industry as a whole, government support for generics companies is essential. Therefore, it is essential that the government provides sufficient support to generic companies.

In the healthcare delivery system, the Reform Process Chart 2022 of the New Economic and Fiscal Revitalization Plan lists the following items: promotion of digital transformation (DX), healthcare service reform, and review of benefits and burden. In an environment of dramatic progress in digital technology and major changes in the demographic composition of the population, it is imperative to improve the efficiency of healthcare. We hope that the government will engage in a national debate on these issues and steadily promote reform. The Japan Research Institute's report on cost reductions suggests points where the efficiency of medical care should be improved, and we need a national debate on the effective provision of such medical care. And the financial resources generated by efficiency improvement should be reallocated to investment in further innovation, including various innovations in the medical field, in order to improve the quality of national healthcare as well as the sustainability of social security.

Appropriate use of pharmaceuticals is also essential to optimize healthcare costs. The Pharmaceutical Manufacturers Association of Japan (PMAJ) is vigorously promoting various initiatives to address the AMR problem and eliminate polypharmacy.

In summary, in order for the pharmaceutical industry to extend healthy life expectancy and contribute to economic growth, it is necessary to establish a drug price system that is both global standard and flexible as a pharmaceutical industry policy that firmly fosters companies that create innovative new drugs and companies that provide a stable supply of high-quality drugs. We believe that the industrial structure will naturally move in this direction through the establishment of a balanced NHI drug price system.

Policy Recommendations 2023

The overall vision of the "Pharmaceutical Manufacturers Association of Japan Policy Proposal 2023" is to create innovations originating in Japan and to create a pharmaceutical market that attracts investment from around the world, thereby growing the pharmaceutical industry into a world-class one and eliminating drug lag and drug loss to provide the public with access to cutting-edge medical care. We believe that our mission and role are to create a world-class pharmaceutical industry and to eliminate drug lag and drug loss by creating a market for pharmaceuticals that attracts global investment.

Establishment of an innovation creation ecosystem

We must evolve our business model to create new healthcare solutions that go beyond therapeutic drugs through the development of new modalities and the utilization of big data. At the same time, it is essential for the government and companies to work together to create groundbreaking innovations. I would like to emphasize the importance of the government promoting the development of a national strategy to support the nurturing of drug discovery startups and the development of an environment for the utilization of health and medical big data, and the pharmaceutical industry making a firm commitment to these efforts and working together with the public and private sectors to promote them.

As part of our commitment to building an ecosystem, I would like to talk about collaboration with academia and start-ups, which will be the driving force to strengthen Japan's drug discovery capabilities, and the development of human resources for biotech development and manufacturing ( Figure 3 ). First, regarding collaboration with academia, we propose to focus on basic research in which Japan can lead the world, and to establish a competitive consortium. Then, we will promote collaboration with academia and create new knowledge through "in-kind contributions" from pharmaceutical companies in the form of human resources, information, and know-how.

We are also strengthening our efforts to support the sustainable startup and growth of drug discovery startups. The University of Tokyo, Tokyo Medical and Dental University, and the Pharmaceutical Cooperative Association of Japan are leading the activities of the Greater Tokyo Biocommunity in the Hongo, Ochanomizu, and Tokyo Station area, and are already working to promote open innovation. The University of Tokyo, Tokyo Medical and Dental University, and the Pharmaceutical Manufacturers Association of Japan are leading the activities of the center as the lead organizations. We are also strengthening support for startup development in collaboration with the Ministry of Health, Labour and Welfare's Medical Venture Total Support Organization (MEDISO), and are working on the Ministry of Economy, Trade and Industry's project to strengthen the drug discovery venture ecosystem, for which 300 billion yen was allocated in the 2022 supplementary budget, to link innovation products to social implementation. It is important for the pharmaceutical industry to contribute to the exit strategy to link the products of innovation to social implementation.

In order to develop biotech human resources, which is the key to driving the ecosystem, we are considering a new trial to develop human resources for immediate and future biotech development and manufacturing in collaboration with the Biologics Research and Training Center (BCRET), a general incorporated association, where personnel and students from other companies are invited to our manufacturing facilities to receive on-the-job training. We are considering a new approach to cultivate human resources for immediate and future biotechnology development and manufacturing.

Figure 3 The Future Aimed for by Realizing Policy Recommendation 2023

By implementing the three new initiatives described above, the pharmaceutical industry will strengthen its drug discovery capabilities in collaboration with academia, start-ups, and the government, and deliver drug discovery innovations to the world with Japan as a global center of innovation.

Pharmaceutical companies can create various values by utilizing health and medical big data. This includes not only the rapid development of new drugs, but also the development of treatments best suited to individual patients and the safe use of pharmaceuticals, thereby providing benefits to the public and patients from various aspects.

In the world, we recognize that stratification of patients using genome information, regulatory approval and evidence building using real world data (RWD) have made great progress. The utilization of big data is indispensable as a prerequisite for supporting future drug development, improving the quality of medical care, promoting innovation, and ensuring universal health coverage.

An amendment to the Next Generation Medical Infrastructure Act, which is a very important law for promoting the utilization of health and medical big data, is expected to be submitted to the ordinary Diet session. The main point of the amendment is to allow the provision of pseudonymized medical information, whereas previously only anonymized processed information could be handled, and to make it possible to apply for pharmaceutical approval using the collected and provided data. The Pharmaceutical Manufacturers Association of Japan (PMAJ) strongly hopes that the bill will be enacted in this ordinary session of the Diet.

The most important thing in the development of an environment for data utilization is to backcast the construction of a data infrastructure and the development of a legal system from the perspective of how to utilize and provide benefits to realize patient-centered medicine. We are strongly urging government officials to do so. A leading example is the European Health Data Space (EHDS). While the European Union (EU) has very strict personal data protection regulations called the General Data Protection Regulation (GDPR), the EHDS initiative is a plan to enforce data collection and exit regulations for the use of medical data, and to use this data as a public good to return benefits to the people of the EU (Figure 4). The EHDS concept is to provide benefits to the people of the EU by making use of this data as a public good ( Figure 4 ).

Figure 4 Toward Future Healthcare

Establishment of a global standard drug pricing system

Recent reforms to the NHI drug price system include the introduction of a new drug creation surcharge system on a trial basis in 2010 and measures to promote the use of generics, which led to a shift to a business model that does not rely on long-listed drugs. The 2023 midyear revision is also a continuation of the previous revision, with an average deviation ratio of 0.1% and an average deviation ratio of 0.1 The 2023 midyear revision follows the previous revision, and items that exceed 0.625 times the average discrepancy rate are subject to revision. In consideration of the promotion of innovation, a temporary and exceptional increase in the additional allowance for new drug creation was implemented, but as a result, half of the items were subject to price revisions. This system of frequent price reductions for new drugs in the patent period has greatly undermined the attractiveness of the Japanese market as an investment destination.

The number of unapproved drugs that cannot be used in Japan despite their use in Europe and the U.S. is increasing every year and will exceed 70% by 2020. The contribution of emerging biopharmaceutical companies to drug discovery is increasing dramatically, and it has been analyzed that many of the unapproved drugs in Japan are the products of these companies. Biotech ventures seem to be avoiding Japan due to their limited funding and pipelines, making them less attractive and predictable to the market.

In September 2022, the Pharmaceutical Manufacturers Association of Japan (PMAJ) recommended reform of the NHI drug price system at an expert panel of the Ministry of Health, Labor and Welfare (MHLW). The proposal aims to promote the early launch of innovative new drugs in Japan as two priorities: a new drug price maintenance system and a new value assessment mechanism for innovative new drugs ( Figure 5 ).

Figure 5 Improving Patient Access

The first proposal is to simply maintain the NHI price of innovative new drugs during the patent period by exempting them from the conventional revision based on the prevailing market price. However, the proposal is not to unconditionally maintain the NHI price during the patent period, but to introduce a mechanism to review the price in accordance with evidence obtained after the drug is launched and changes in its position in the guidelines.

We recognize that the calculation of NHI drug prices in Japan is based on the review report for the purpose of determining whether or not to approve a drug at the pharmaceutical affairs examination, and that the value of innovation is not adequately evaluated. If companies are not able to proactively promote the value of their innovations and there is concern that there is a risk in terms of drug prices, there could be a corporate decision not to include Japan in international joint trials, especially in bio ventures.

The second point of the proposal, the new value evaluation process, will cover highly novel and innovative items that are difficult to properly evaluate under the current NHI drug price calculation rules. The proposal is for companies to proactively explain the value of their pharmaceutical products, and a value evaluation report that has been publicly assessed for appropriateness will be published and used to calculate the NHI price. This evaluation report should go into assessing not only the medical value but also the various values of the drug, and the selection of similar drugs will be done flexibly, taking into account the actual state of medical care, such as clinical positioning.

As a flexible selection of similar drugs, we would like to see the introduction of a system to comprehensively determine whether or not similar drugs exist, including clinical positioning such as disease and drug characteristics, as well as actual medical conditions. This will not only enable appropriate evaluation, but also reduce the number of cases of calculation based on the cost accounting method, which is expected to improve transparency and acceptability.

A web-based survey conducted by the National Institute for Policy Studies (NIPR) on what the public values in terms of the value of medicines shows that, from the viewpoint of more efficient allocation of financial resources, a certain evaluation should be given to values that contribute to the sustainability of social security by increasing the number of supporters in society and improving the efficiency of medical resource consumption. The results are as follows.

Some specific examples of the various values, including the social value that pharmaceuticals bring to society, were presented at the "Pharmaceutical Cooperative Media Forum" held in 2022, where the results of a study that tracked the increase and decrease in salaries of rheumatoid arthritis patients in the United States over a five-year period were presented. Salaries increased by approximately 15% for patients who received biologic agents. This result is comparable to the general rate of salary increases in the U.S., meaning that biologic therapy allows patients to work as hard and earn the same compensation as the general population.

An example of a qualitative value factor that is not easy to quantify is the data on migraine headaches. Several breakthrough antibody drugs have been introduced for the indication, and new innovations have the potential to reduce or eliminate the burden in areas that are difficult for patients to see. Migraine is a disease burden that is higher in the very young generation, especially women, and the introduction of new drugs has contributed significantly to the productivity of the working population.

Next is the value of the diversification of modalities for spinal muscular atrophy (SMA), for which there has been no fundamental treatment. The availability of modalities with different routes and intervals of administration has made it possible for patients and their families to choose the treatment that best suits their lifestyles. The result is improved labor productivity, reduced burden of caregiving, and positive hope value for the patients themselves and their families.

In 2022, a report on value-based pricing of pharmaceuticals published by Dr. Naka Igarashi, Associate Professor at Yokohama City University, calculated prices reflecting value for quantifiable portions of drugs in several disease areas. In the case of hepatitis C drugs, the calculated value is very high compared to the actual drug price. On the other hand, in the case of the molecular-targeted cancer drug, the increase in life expectancy due to the drug is considered a plus, while the increase in medical costs is considered a minus, resulting in a lower value compared to the actual drug price. Mr. Igarashi considers that the study also revealed cases in which quantifiable values are not sufficient to reflect the value of the drug. The major point is that this diverse value assessment is currently not systematized, generalized, and widely accepted, and the value elements vary greatly depending on disease characteristics and modalities. We believe that the start of this discussion is very important because discussions on value-based pricing will not progress unless companies proactively explain their value based on evidence and introduce a system to be publicly evaluated and accumulate examples.

Finally, we would like to reiterate that the best option at this major turning point is to realize a growth market comparable to that of major industrialized countries by building an efficient healthcare system with a well balanced drug pricing system, while at the same time ensuring the sustainability of universal healthcare and valuing innovation ( Fig. 6 ).

Figure 6 The Aim

As a corollary to this policy recommendation, we also recommend the promotion of measures to combat infectious diseases. This is a follow-up to the recommendations on infectious disease control that we published in 2020, the year of the spread of novel coronavirus disease (COVID-19). The discussion to review the status of new coronavirus infection from category 2 to category 5 effective May 8, 2023 is underway, and now that normalcy is returning, we have formulated these recommendations in order to steadily advance preparations for the next pandemic.

Questions and Answers

Q&A session

	Research and development of next-generation modalities of pharmaceuticals, such as gene therapy, cell medicine, and antibody drugs, is progressing. With the prospect of soaring development costs and complex manufacturing processes, will a flexible comparable drug pricing system fit in?
	In some cases, drugs of new modalities cannot be compared with existing drugs. Therefore, it is difficult to use the comparable drug method when calculating drug prices for completely new technologies. It is a difficult issue to determine the extent to which the long research period and investment in various technologies should be taken into account in the costing method. On the other hand, with the emergence of diverse modalities, we believe that further discussion on the selection of similar drugs is needed. The current recommendations indicate the need to consider a wide range of clinical positioning, including disease characteristics and drug characteristics, as well as even similar therapies. In addition, the evaluation of the multifaceted value of drugs must be initiated.
	Please tell us about the global bio-community, the significance of the separation of academia and industry, and the seriousness of its new establishment.
	If the current situation remains unchanged, there is a concern that drug discovery innovations will not be born in Japan, and we are very much aware of the need to immediately begin taking action to address this issue. In Japan, where the mobility of human resources is low, we believe that innovation will be born if the pharmaceutical industry works together with academia or accompanies them as an incubator. The Japanese government has allocated a budget of 300 billion yen for a project to strengthen the drug discovery venture ecosystem. The government has taken a major step in this direction, and the pharmaceutical industry is committed to working in unison with the public and private sectors. If you ask me how serious we are about this, I would say that we are very serious about this major activity.
	I would like to clarify the scope of "innovative new drugs that are still under patent. If a drug is still under patent, should the drug price be protected for all drugs, or should it be limited to innovative new drugs, etc. Please tell us how the scope of coverage should be drawn.
	Based on the current system, we believe that a certain line will be drawn as to whether or not a drug is eligible for the additional payment for new drug creation, etc.
	At the press conference held one year ago, you mentioned the difficulty of coming together as an industry. Today, you also emphasized that the truly strong companies will remain, regardless of whether they are new drugs or generics. What was the background to the change in the content that the Chairman has strongly advocated over the past year?
	In a word, it is due to a sense of crisis. The current industrial structure, which is like a convoy, has reached its limits when considering both the promotion of innovation and universal health care. In addition, as mentioned in the past history of drug price reform, we are strongly aware of the need to change to an industrial structure that draws out the power of drug discovery. The government announced more than 10 years ago that it would shift to a structure that does not depend on long-term listed drugs once their patents expire, and the pharmaceutical industry has expressed its acceptance of this change. Today, we have made a broad distinction between companies that continue to produce new drugs and companies that continue to provide a stable supply of high-quality drugs, but each pharmaceutical company must consider its future development, including its own raison d'etre, in order to overcome the situation it faces. 　This is not an argument for unconditional salvation by a convoy, but rather for companies to be able to fulfill their missions. He uses the word "meritorious" in the hope of building an industrial structure that will allow companies that create new drugs and companies that provide a stable supply to remain and develop.
	In "building an attractive pharmaceutical market that attracts investment," the goal was "a slight increase in the market as a whole. If the goal is to become a growth industry, growth of 10% or 20% is mentioned, and we believe that "slight increase" may lead to a decrease in attractiveness. In the dialogue with METI, the limits were sometimes mentioned, and we wondered whether "slight growth" is sufficient, and what they think is necessary to make the industry a growth industry that is not "slight".
	Under the circumstances in some developed countries where the growth of the pharmaceutical market is outpacing the growth of GDP, there is a viewpoint that this proposal is a compromise. However, the discussion of total drug cost management, which has been raised at the MHLW's expert panel, is very incompatible with the cutting-edge innovation area of medicine. If an innovation originating in Japan emerges, it should be well evaluated and its contribution to the Japanese economy will be returned to the people. While this is the best scheme, we believe there are things that need to be done to reach this point. First, it is necessary to review the current system. Second, as new modalities such as antibody drugs, cellular medicine, and gene therapy emerge, there is a debate over whether public insurance can provide free access to all increasingly sophisticated medical technologies. We believe that we will eventually have to confront this debate, which many experts have also expressed concern about. It would be good if significant market growth can be realized in the future, but under the current situation where all drugs, including innovative new drugs and those that have fallen outside the guidelines, are covered by universal health insurance, we believe that the discussion of benefits and burden should come first. After that, the discussion will probably be about the allowable scope of market growth.
	Pharmaceutical companies' mission is to create new drugs, and when their patents expire, they switch to generics and do not depend on long-term listed drugs. It is questionable whether new drug makers really do not depend on long-term listed drugs. The expert panel also discussed whether the "concept of additional payment for new drug creation, etc." is really feasible, but is it possible to avoid dependence on long-term listed drugs?
	The concept of the additional payment for new drug creation, etc. is to recover the investment during the patent period and to give up the seat to generics when the patent expires, which was the idea when the additional payment for new drug creation, etc. was introduced in 2010, and there is no denying it now, more than 10 years later. It is a basic national policy to promptly replace drugs with generics after patent expiration, and at the same time, the entire market is built on the idea of lowering prices. It is true that it will be difficult for individual companies, but if they do not take this step, they will simply be clinging to their vested interests. At this turning point, it is necessary for the reform to proceed at least based on this philosophy.
	It has been quite some time since the government set a goal of not relying on long-term listed drugs, but looking at the disastrous state of the generic market, it is doubtful whether it is really giving up its seat to generics. You have clearly stated that you will not rely on long-term listed drugs, but is it safe to assume that the Japanese generic market will grow in the future? Also, some say that authorized generics (AGs) are long-term listed products in a different form, but do you agree with this?
	The price of AGs is basically to be lowered significantly as a product whose patent has expired. For our part, as we concentrate on new drug development, we have sounded the alarm about the reality of generic companies. The current system, including the pricing of generics, has led to the reality of the profit structure of generic companies (a business structure in which they absorb drug price reductions by introducing new products and increasing the volume of existing products, and supply unprofitable products). This issue is now being discussed in considerable depth by the panel of experts, and we expect that a major breakthrough will be made.
	I felt that "value-based pricing" is exactly what we are talking about when we talk about health technology assessment (HTA), quality-adjusted life years (QALY), and incremental cost-effectiveness ratios (ICER). Mr. Igarashi pointed out that HTA and the discussion of value-based pricing are conflated, but why shouldn't they be?
	In general, the point was made about HTA and the various value discussions. However, there are areas of incompatibility between the new value evaluation process we are proposing and the current Japanese cost-effectiveness evaluation system. The current system in Japan is to verify the cost-effectiveness of a product after it is listed on the market and use it for price adjustment. Today's proposal is out of line with that concept. Mr. Igarashi indicated that there is a large gap between the value accumulated as an academic study and actual drug prices. He argued that this is not necessarily a bad thing, but that we should think deeply about how to define, for example, the value of a breakthrough treatment option brought to terminally ill cancer patients.
	While the number of unapproved drugs in Japan is increasing, pediatricians or pediatric oncologists told us that it is serious because pediatric drugs are not included in international clinical trials more often than adult drugs. Does the Pharmaceutical Manufacturers Association of Japan (PMAJ) also feel the seriousness of drug-loss, especially in pediatric diseases?
	This is precisely the case. Drugs in the field of pediatric oncology are a prime example of a serious problem: drugs that can be used overseas but not in Japan. We are aware of this issue from our conversations with Key Opinion Leaders (KOLs) in this field.
	Can the current proposal be an effective measure to solve this issue in the pediatric field?
	We have made recommendations on the NHI drug pricing system as a measure to address this issue. Currently, bio-ventures developing innovative new drugs are passing through Japan unnoticed due to issues such as lack of value evaluation in the Japanese market and lack of market predictability. We believe that a new value evaluation process may be necessary for bio-ventures to be given higher priority in Japan to conduct clinical trials and obtain approval.
	As part of the national strategy to promote the pharmaceutical industry, what do you expect from the government's strategy to strengthen drug discovery capabilities? Also, what kind of picture do you envision for the world, given the situation of over-importation?
	In reality, the Japanese economy is superficially in excess of imports, since products are made at overseas manufacturing bases and brought to Japan. However, Japanese companies earn money overseas and pay taxes in Japan. I would like to mention that there is a different perspective here, that of intellectual property, which is different from the flow of products. In terms of the other aspect of "preparedness," because Japan's drug discovery and innovation capabilities will continue to decline if nothing is done, the government has committed a massive 300 billion yen as an investment to support drug discovery ventures and has taken the helm to create innovations originating from Japan. In response, the pharmaceutical industry must work to build a drug discovery ecosystem in Japan that will create something from nothing. The Japanese bio-community is not mature enough yet to be accompanied by venture capital alone, and the pharmaceutical industry should be involved in the entire value chain from the birth of seeds to their exit in Japan, including human resources. I myself am very determined to do this, and I intend to further strengthen my efforts in the future.
	With regard to the multifaceted value of pharmaceuticals, I feel that it is difficult under the current NHI drug price system to evaluate the care and social benefits of pharmaceuticals.
	In terms of how to evaluate the value of drugs, we have presented several examples today. When we actually calculate the value of the drug, there are cases where the price is higher or lower than the actual drug price. It is difficult to evaluate and calculate under the current rules. In order to solve this problem as modalities become more diverse in the future, the only way is to create a system and accumulate actual cases. In addition to explanations by the pharmaceutical industry, discussions by a public third party are necessary.
	Is it correct to assume that in the new value evaluation process for pharmaceuticals, pharmaceutical companies will proactively participate in the pricing of drugs in Japan?
	Although the national government will ultimately determine drug prices, we believe that pharmaceutical companies should have the opportunity to explain the value of their drugs and that discussions on drug price calculation should be based on such explanations.
	While in the rest of the world, pharmaceutical companies determine prices and regulatory authorities evaluate them, in Japan there appears to be a strong resistance to pharmaceutical companies' participation in the pricing process. Even at the Central Social Insurance Medical Council (Chuikyo), I feel that pharmaceutical companies are always treated like advisors. Is it correct to understand your explanation as meaning to go one step further and show the government that "this drug has this kind of value"?
	You are correct. There are examples in the world where companies determine prices, but in Japan, they are not involved in the mechanism. We also believe that the transparency of the system is low. We would like you to see this as an issue to be addressed. Regarding value evaluation, we would like to aim for a direction in which pharmaceutical companies present the necessary data and a third party evaluates the data.
	With regard to the stable supply of generics, I understand well the idea of shifting to management that does not depend on long-term listed drugs, but I wonder if the replacement with generics has not been done too quickly under the current circumstances where supply uncertainty is occurring. However, in the current situation where supply instability is still occurring, is it possible that the replacement with generics has been done too hastily or should brand-name companies cooperate in manufacturing? Are there any such discussions within the Pharmaceutical Manufacturers Association?
	The government policy issued in 2010 was to create an industrial structure in which R&D-oriented manufacturers would specialize in the creation of new drugs, and when their patents expired, they would hand over their positions to generic manufacturers, a policy that has continued to this day. While we have explained our "resolve" regarding our responsibility to create innovation, we would like to ask the government to take the lead on the issue of supply uncertainty caused by generic companies. 　The member companies of the Pharmaceutical Manufacturers Association of Japan (PMAJ) are also aware of the crisis concerning quality issues. Key members of the Pharmaceutical Manufacturers Association of Japan (PMAJ) Quality Committee proactively participate and cooperate in the Quality Committee of the Federation of Pharmaceutical Manufacturers' Associations of Japan (JFPMA). As a member of the drug discovery community, we are not strangers to supply concerns.
	Zocova was recently listed on the NHI drug price list and the calculation method was approved. What are the Pharmaceutical Manufacturers Association's (PMA) thoughts on the listing of drugs for the treatment of infectious diseases and the rules for re-calculation after listing?
	The special characteristics of drugs for infectious diseases, such as epidemics and mutations, make the predictability of the business difficult. Although we have managed to cope with the recent threat of various infectious diseases, we must never allow the development of drugs for infectious diseases to become obsolete. The government has budgeted for this project in 2022, and we will keep a close eye on how the government will respond to the situation. The development of drugs for infectious diseases must continue, as the AMR problem is expected to continue to be serious even after the coronary crisis is over. Please understand that this is an area where predictability as a business is difficult. 　New incentives for therapeutic drugs and vaccines for infectious diseases are described in the addendum to "Policy Recommendation 2023". In addition, the arguments raised in recent discussions at the Chuikyo by the Japan Pharmaceutical Manufacturers Association, the Pharmaceutical Research and Manufacturers of America (PhRMA), and the European Federation of Pharmaceutical Manufacturers and Associations (EFPIA) should provide an understanding of the pharmaceutical industry's approach to infectious disease drugs in their drug pricing.

( Naoyuki Iwata, Public Relations Committee, Ondmedia Promotion Subcommittee)

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