Reiwa 4 Fiscal Year Drug Pricing System Reform

From the perspective of contributing to the improvement of healthcare quality and economic growth by promoting innovation, the JPMA has been presenting its views in forums regarding the drug pricing system, primarily within the Central Social Insurance Medical Council (hereinafter referred to as the Central Council).

We understand that the “Outline of the Reiwa 4 Drug Pricing System Reform,” recently approved by the Central Social Insurance Medical Council, incorporates certain rule improvements based on the “Perspective on Evaluating Innovation in Innovative Pharmaceuticals” outlined in the “Basic Policy on Economic and Fiscal Management and Reform 2021” (approved by the Cabinet on June 18, Reiwa 3).Discussions toward establishing a mechanism to maintain appropriate drug price levels for new drugs should continue, and we believe it is important that the policy-making process fully incorporate the thorough and transparent discussions held within the Central Social Insurance Medical Council. With that in mind, we would like to offer our views on the following key points.

1. Evaluation of Innovation After Drug Price Listing

Regarding the “Surcharge for Promoting the Creation of New Drugs and the Resolution of Off-Label Use,” the requirement for “evaluation of additional indications and effects” has been added to the product criteria, resulting in certain improvements to the mechanism for promoting innovation.However, since there are likely other forms of value that cannot be fully captured at the time of drug price listing—such as products for which benefits that could not be confirmed at the time of listing are subsequently recognized based on post-marketing evidence—I believe it is necessary to continue deliberations on this matter.

2. Treatment of Similar Products to Those Subject to Market Expansion Reassessment

It has been stipulated that products whose prices were reduced as products subject to the special provisions for market expansion re-pricing, or as similar products, shall be excluded from the scope of similar products only once within a specified period. However, the fundamental issues regarding the criteria for excluding similar products have not yet been resolved. We believe that substantive discussions, including the appropriate approach to re-pricing, are still necessary.

3. Improving the Level of Disclosure of Manufacturing Costs Under the Cost-Based Pricing Method

We support efforts to improve the level of disclosure under the cost-based pricing method, and the JPMA intends to continue addressing this matter with the utmost sincerity.However, we believe that the recent revision—under which the usefulness surcharge and surcharges related to pioneering pharmaceuticals are not reflected at all in drug prices (surcharge coefficient “0”) for all items with a disclosure rate of less than 50 percent—is inappropriate from the perspective of evaluating innovation and promoting the development and market launch of pharmaceuticals that are particularly medically necessary.We must closely monitor the impact of this revision on the development and market launch of new drugs in Japan.

Furthermore, from the perspective of improving the transparency and acceptability of drug price calculations, it is important to continue gathering case data and advancing discussions on the introduction of a system that comprehensively assesses the existence of comparable drugs, taking into account “clinical positioning and other medical realities.” We will also continue to explore mechanisms capable of reflecting the diverse values inherent in pharmaceuticals.

4. Drug Price Revisions in Years Without Medical Fee Schedule Revisions (Interim Year Revisions)

Regarding the scope and methods of future interim year revisions, we believe they should be examined not as an extension of the Reiwa 3 interim year revision, but by returning to the principle outlined in the fundamental reform of the drug pricing system: “to revise drug prices for items with significant price discrepancies.”Based on this, we believe that new drugs still under patent protection should not be subject to interim price revisions.

Furthermore, the “Outline of the Reform of the Cost-Effectiveness Evaluation System for Reiwa 4” was approved by the Central Social Insurance Medical Council (CSIMC), and it was decided that the system’s overall framework would remain unchanged, with revisions focused primarily on operational aspects.I believe it is necessary to continue examining ways to improve the system, including issues related to pricing adjustment methods in cases where efficacy is equivalent but costs increase (cost increase) or where costs are reduced compared to the reference technology (dominant), while accumulating more case studies.

The COVID-19 pandemic has led to a renewed recognition of the importance and necessity of vaccines and pharmaceuticals. Against this backdrop, the “Growth Strategy Implementation Plan” was approved by the Cabinet in June of this year, positioning the life sciences as a key strategic sector on par with digital and green technologies, as well as a field critical to national security.Furthermore, in September, the Ministry of Health, Labor and Welfare issued the “Pharmaceutical Industry Vision 2021” for the first time in eight years.Issues within the drug pricing system regarding the evaluation of innovation are directly related to the key themes of this vision, such as “innovative drug discovery” and “economic security.” Going forward, the JPMA intends to actively participate in public-private discussions aimed at realizing this vision, while also examining and making proposals regarding various issues within the drug pricing system, including those mentioned above.