NHI Drug Price Reform in Fiscal 2022

From the perspective of contributing to the improvement of the quality of medical care and economic growth by promoting innovation, the JPMA has expressed its opinions at the discussions on the NHI drug price system, mainly at the Central Social Insurance Medical Council (hereafter referred to as Chuikyo).

We believe that the "Framework for FY2022 NHI Drug Price System Reform" approved by the Chuikyo has made certain improvements to the rules based on the "Perspective of Evaluation of Innovation in Innovative Drugs" described in the "Basic Policies for Economic and Fiscal Management and Reform 2021" (approved by the Cabinet on June 18, 2021). We believe that the study to establish a system to maintain appropriate NHI price levels for new drugs should continue, and that it is important for the policy-making process to be fully based on careful and transparent discussions at the Chuikyo. Based on this, I would like to express my impressions on the following major issues.

1) Evaluation of innovation after NHI drug price listing

With regard to the additional payment for promotion of new drug creation and resolution of off-label drug use, "evaluation of additional indications" has been added to the product requirements, and certain improvements have been made as a mechanism to promote innovation. On the other hand, we believe that there are other values that cannot be captured at the time of NHI drug price listing, such as items whose usefulness that could not be confirmed at the time of NHI drug price listing was recognized through post-marketing evidence, etc. Therefore, we believe it is necessary to continue to review the system.

(2) Treatment of Similar Products Subject to Market Expansion and Re-calculation

It was decided that items subject to the special exception for market expansion and re-calculation or items reduced as similar products will be excluded from similar products only once within a certain period of time. However, the fundamental issues related to the exclusion criteria for similar products have not been resolved. We believe that essential discussions are still needed, including how the recalculation should be made.

3) Improvement of disclosure of manufacturing costs under the cost accounting method

We agree with the JPMA's position that efforts should be made to improve the level of disclosure under the cost accounting method, and we will continue to take this seriously. However, we believe that the current revision (with an additional coefficient of "0"), whereby the additional cost for usefulness and the additional cost for pioneering drugs are not reflected in NHI prices for all items with a disclosure ratio of less than 50%, is not appropriate from the perspective of evaluating innovation and promoting the development and marketing of drugs that are particularly needed in the medical field. We believe that this is not appropriate. It is necessary to closely monitor the impact of this review on the development and marketing of new drugs in Japan.

In addition, from the perspective of improving the transparency and acceptability of drug price calculation, it is important to continue to study the introduction of a system to comprehensively determine the existence of similar drugs, including "actual medical conditions such as clinical positioning," while accumulating examples. We will also continue to study a mechanism that could reflect the various values that pharmaceutical products have.

NHI price revisions in years when there are no medical fee revisions (midyear revisions)

The scope and method of future midyear NHI price revisions should not be an extension of the FY2021 midyear revisions, but should return to the concept of "NHI price revisions for items with large price deviations," as indicated in the Fundamental Reform of the NHI Drug Price System. In addition, we believe that new drugs that are still under patent should not be subject to the mid-year revision.

The "Framework for Reform of the Cost-Effectiveness Evaluation System in FY2022" was also approved by the Chuikyo, and the review will focus on the operation of the system without changing the general framework of the system. We believe that it is necessary to continue to accumulate case studies and to continue to consider improvements to the system, including issues related to the method of price adjustment in cases where costs increase while effectiveness remains the same (cost increase) and in cases where costs are reduced in comparison to the dominant technology (dominance).

The Corona disaster has reaffirmed the importance and necessity of vaccines and medicines. Against this backdrop, the Cabinet approved the "Growth Strategy Action Plan" in June of this year, which positioned life sciences as an important strategic field along with digital and green, as well as an important field in terms of national security. In September, the Ministry of Health, Labour and Welfare (MHLW) issued the "Pharmaceutical Industry Vision 2021" for the first time in eight years. The issues in the NHI drug pricing system regarding the evaluation of innovation are directly related to the main themes of this vision, such as "innovative drug discovery" and "economic security. JPMA will continue to actively participate in the discussions between the public and private sectors to realize this vision, and to study and make proposals on various issues in the NHI drug pricing system, including the above-mentioned points.