Joint Statement by the Three Pharmaceutical Manufacturers' Organizations of Japan, the U.S. and Europe
Opinion on Reform of the NHI Drug Price System and Cost-Effectiveness Evaluation System in Fiscal 2026

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December 16, 2025
Japan Pharmaceutical Manufacturers Association (JPMA)
Pharmaceutical Research and Manufacturers of America (PhRMA)
European Federation of Pharmaceutical Industries and Associations (EFPIA Japan)

The Central Social Insurance Medical Council (Chuikyo) is currently discussing the "Fiscal 2026 NHI Reform" and the "Fiscal 2026 Cost-Effectiveness Evaluation System Reform". From the standpoint of the pharmaceutical industry, which aims to realize a society of longevity and health through the research, development, and stable supply of innovative new drugs, we would like to express our opinions as follows.

Statement of Opinion

We have expressed our concern over the past 10 years that the environment of Japan's drug discovery innovation ecosystem has been put at a competitive disadvantage due to repeated changes in NHI drug price calculation rules and annual NHI price revisions for new drugs that are still under patent. While we share the Japanese government's goal of ensuring the sustainability and fiscal soundness of universal health care, the current ecosystem is not fully functioning. In fact, Japan's share of the early-stage pipeline has declined, R&D investment has stagnated, and there is a drug loss where innovative drugs available in other countries are not launched in Japan. In this regard, while R&D investment in the innovative drug industry has doubled globally over the past decade, growth in Japan has been very modest, resulting in Japan's share of the global market being cut in half.

Strengthening Japan's drug discovery innovation ecosystem is an urgent priority if Japan is not to be left behind in the development of and access to the world's most advanced therapies and vaccines. However, current drug pricing policies undermine international competitiveness and prevent innovative pharmaceutical companies operating in Japan from realizing their true potential. In addition, the U.S. MFN pricing policy, which could make Japan a reference country for NHI prices, is changing the global incentive structure, and individual pharmaceutical companies are beginning to rethink their product development and launch strategies in Japan. The urgency for reform has increased further, and agile action is required.

Given these serious challenges, it is essential that the new Takaichi cabinet make progress in expanding investment in innovation, as well as implement reforms that appropriately reflect the contents of the Public-Private Council Working Group for Enhancing Drug Discovery Capability interim report (summary of discussions) compiled on November 5, 2012. In addition, in order to ensure long-term fiscal soundness and attract investment, the current fiscal frame, which is overly dependent on drug price reductions, should be reviewed. Even though drug expenditures account for less than 10% of the social security budget, 70% of budget cuts are due to NHI price reductions. In order to reverse this negative trend and ensure Japan's future as a leader in innovation, the following two reforms should be prioritized in the reform of the NHI drug price system in FY2026 and the reform of the cost-effectiveness evaluation system in FY2026.

Dikei 1: Maintain NHI drug prices during the patent term

Under the current system, products not subject to the additional payment for new drug creation, which account for half of all patented drugs, are subject to annual drug price reductions. Even products that are subject to the additional payment for new drug creation can be subject to price reductions based on cost-effectiveness evaluations and re-pricing for market expansion. Furthermore, the gap between the prices of these products and those of other major industrialized countries continues to widen as time goes by. In order to resolve these issues, the following efforts in particular are essential to maintain NHI drug prices during the patent term.

Recommendation 2: Improve NHI drug price calculation for new drugs

The current NHI drug price calculation method for new drugs is restrictive in its calculation criteria and does not properly reflect the value that new drugs bring to Japanese patients, healthcare system, and society. In particular, the situation is even more difficult for highly innovative drugs with new treatments and modalities, such as regenerative medicine products, because there are no suitable similar drugs available under the current calculation criteria. In order to improve the calculation of NHI drug prices for innovative new drugs, we recommend that the scope of selection of similar drugs be expanded, that the operation of NHI drug price calculation for regenerative medicine products be reviewed, and that the value revealed after the product is listed on the market be evaluated.

The End

Reference

Joint Statement by the Pharmaceutical Manufacturers' Associations of Japan, the U.S., and Europe

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