Joint Statement by Three Pharmaceutical Associations from Japan, the U.S., and Europe
Opinions on the FY2026 (Reiwa 8) Drug Pricing System Reform and Cost-Effectiveness Evaluation System Reform
December 16, 2025
Japan Pharmaceutical Manufacturers Association (JPMA)
Pharmaceutical Research and Manufacturers of America (PhRMA)
European Federation of Pharmaceutical Industries and Associations (EFPIA Japan)
Discussions are currently underway at the Central Social Insurance Medical Council (CSIMC) regarding the “FY 2026 (Reiwa 8) Drug Price System Reform” and the “FY 2026 (Reiwa 8) Cost-Effectiveness Evaluation System Reform.”From the perspective of the pharmaceutical industry, which aims to realize a society of healthy longevity through the research, development, and stable supply of innovative new drugs, we hereby express our views as follows.
Details
For approximately the past 10 years, we have expressed concern that Japan’s drug discovery innovation ecosystem has been placed at a competitive disadvantage due to repeated changes in drug pricing calculation rules and annual drug price revisions for new drugs during their patent terms.While we share the Japanese government’s goal of ensuring the sustainability of universal health insurance and fiscal soundness, the current ecosystem is not functioning adequately. In fact, Japan’s share of the early-stage development pipeline has declined, R&D investment has stagnated, and “drug loss”—where innovative medicines available in other countries are not launched in Japan—is occurring.In this regard, while global R&D investment in the innovative pharmaceutical industry has doubled over the past decade, growth in Japan has been minimal, resulting in Japan’s global market share being cut in half.
Strengthening Japan’s drug discovery innovation ecosystem is an urgent priority to ensure that Japan is not left behind in the development of and access to the world’s most advanced treatments and vaccines. However, current drug pricing policies are undermining international competitiveness and preventing innovative pharmaceutical companies operating in Japan from realizing their full potential.Furthermore, given the possibility that Japan could become a reference country for drug pricing under the U.S. Most-Favored-Nation (MFN) pricing policy, the global incentive structure is shifting, and individual pharmaceutical companies are beginning to reevaluate their product development and market launch strategies in Japan. The urgency for reform is growing even more, and a flexible response is required.
In light of these serious challenges, it is essential to move forward with the expansion of investment in innovation championed by the new Takaichi Cabinet, while also implementing reforms that appropriately reflect the contents of the interim report (summary of discussions) by the Public-Private Council Working Group on Enhancing Drug Discovery Capabilities, which was finalized on November 5.Furthermore, to ensure long-term fiscal soundness and attract investment, the fiscal framework—which currently relies excessively on drug price reductions—should be revised. Although drug expenditures account for less than 10% of the social security budget, 70% of budget cuts stem from drug price reductions.Therefore, to reverse this negative trend and secure Japan’s future as a leader in innovation, the following two reforms should be prioritized in the FY2026 (Reiwa 8) drug pricing system reform and the FY2026 (Reiwa 8) cost-effectiveness evaluation system reform.
Proposal 1: Maintaining Drug Prices During the Patent Term
Under the current system, products not eligible for the “New Drug Creation, etc. Surcharge”—which account for half of all pharmaceuticals during the patent term—are subject to annual drug price reductions. Furthermore, even products eligible for the surcharge may be subject to price reductions resulting from cost-effectiveness evaluations or market expansion reassessments.Furthermore, following listing, the price gap with other major developed countries continues to widen over time. To resolve these issues, the following measures—in particular—are essential for maintaining drug prices during the patent term.
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Regarding the cost-effectiveness evaluation system, objective verification by third-party experts should be conducted rather than simply expanding the scope of the system.
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Regarding the drug pricing system, the “special exception for expanded reassessment” and the “tag-along” rule—which significantly hinder innovation—should be abolished, and the market expansion reassessment rules should be improved to accommodate new modalities such as regenerative medicine products. Furthermore, interim annual revisions for pharmaceuticals during the patent term should be abolished.
Proposal 2: Improving Drug Price Calculation for New Drugs
The current method for determining drug prices for new drugs employs restrictive calculation criteria that do not adequately reflect the value they bring to Japanese patients, the healthcare system, and society. In particular, highly innovative pharmaceuticals featuring new treatments or modalities—such as regenerative medicine products—face an even more challenging situation under the current calculation criteria, as there are no appropriate comparable drugs available.To improve the pricing of innovative new drugs, we propose expanding the scope of comparable drugs, reviewing the implementation of pricing for regenerative medicine products, and evaluating the value that becomes apparent after a drug is listed.
Reference
Contact Information
Japan Pharmaceutical Manufacturers Association (JPMA), Public Relations Department
- Phone
- 03-3241-0374
- Contact Form
- https://www.jpma.or.jp/inquiry/
Pharmaceutical Research and Manufacturers of America (PhRMA) Public Affairs Office
- Phone
- 03-5427-7322
European Federation of Pharmaceutical Industries and Associations (EFPIA Japan), Public Affairs Committee, Yue Shimono (c/o Sanofi K.K.)
- Phone
- 090-2736-8171