New Year's Greetings from the President of JPMA, 2023

As we begin 2023, I would like to extend my sincere New Year’s greetings.

The number of new infections remains high, and the battle against COVID-19 continues, with concerns also arising about a simultaneous outbreak of influenza. On the other hand, discussions have begun regarding a revision of the classification under the Infectious Diseases Control Law, partly because the Omicron variant tends to result in fewer severe cases compared to previous strains.Last year, an oral COVID-19 treatment developed in Japan was finally approved under the newly established “Emergency Approval System,” and an application for approval of a Japanese-developed vaccine was also submitted.As we transition into the “living with COVID-19” era, in preparation for the next pandemic, the Strategic Center for Advanced Research and Development on Infectious Diseases (SCARDA) under the Japan Agency for Medical Research and Development (AMED) has been launched, and decisions have been made to establish the Cabinet Office’s Infectious Disease Crisis Management Agency and a Japanese version of the CDC.Measures against infectious diseases and viruses are a top priority for national security. Preparedness during peacetime is essential for responding swiftly and appropriately in times of crisis, and I believe we must steadily advance these initiatives.

The surge in energy and consumer prices caused by the situation in Ukraine, along with the weakening of the yen due to interest rate differentials with Europe and the United States, is dealing a severe blow to the Japanese economy. Pharmaceutical companies are no exception, facing various impacts such as rising costs for raw materials, active pharmaceutical ingredients, and transportation, as well as increased research and development expenses, including those for overseas clinical trials.Amid these circumstances, during discussions regarding this year’s interim drug price revision, the pharmaceutical industry argued that, given the unique nature of pharmaceuticals—which do not allow for passing on cost increases through price hikes or adjusting supply volumes—we are not in a position to lower drug prices. As a result,as with the previous revision in fiscal year 2021, products with an average deviation ratio exceeding 0.625 times will be subject to price adjustments. At the same time, from the perspective of supporting innovation, the amount of the “New Drug Creation, etc. Surcharge” will be temporarily and exceptionally increased, and to address issues such as stable supply, the “Unprofitable Product Re-evaluation” will be applied to all eligible products.

Currently, due to factors such as the declining attractiveness of the Japanese market resulting from its stagnation, the number of unapproved drugs—which are approved overseas but cannot be used in Japan—is increasing. To prevent “drug lag” and “drug loss” and ensure the public’s access to innovative new drugs, an appropriate evaluation of innovation is essential.Last year, the Ministry of Health, Labor and Welfare established the “Expert Panel on Comprehensive Measures for the Rapid and Stable Supply of Pharmaceuticals,” and discussions began on a fundamental overhaul of the drug pricing system.In light of the declining attractiveness of the Japanese market and the current increase in unapproved drugs domestically, the pharmaceutical industry has proposed the introduction of a new drug price maintenance system to replace the current “New Drug Creation, etc. Surcharge,” as well as a process to evaluate the diverse values of pharmaceuticals objectively and transparently.We will continue to engage in thorough discussions with relevant stakeholders to ensure these measures are implemented in the upcoming drug pricing system reform.

Last year was also a year in which we took a major step toward strengthening Japan’s drug discovery capabilities. Today, many of the new drugs currently in development originate from startups, and strengthening support for academia and startups is key to building a drug discovery ecosystem in Japan.The government has designated the Greater Tokyo Biocommunity (GTB) and BioCommunity Kansai (BiocK) as global biocommunities. Furthermore, at the end of last year, it decided to expand the scope of support for drug discovery ventures—which had been launched as part of measures to combat infectious diseases—to cover all areas of drug discovery and to allocate a budget of 300 billion yen for this purpose.These policy decisions demonstrate the nation’s commitment to building a drug discovery ecosystem, and the pharmaceutical industry strongly welcomes them.

The utilization of big data in health and medicine is essential for the creation of innovative new drugs or entirely new healthcare solutions. Last year, the government established the Headquarters for Promoting Digital Transformation in Healthcare, and discussions on digital transformation in the healthcare sector began in earnest.To ensure these initiatives are effective, we hope the government will draw on the European Health Data Space (EHDS) concept, adopt a “backcasting” approach focused on the value provided to patients, and advance a comprehensive policy driven by two key pillars: the development of data infrastructure and the establishment of a legal framework geared toward exit regulations.

The pharmaceutical industry is in the midst of significant environmental changes, but our vision and mission remain clear: to contribute to extending the healthy life expectancy of the Japanese people and, as a key industry, to contribute to the growth of the Japanese economy. To fulfill these missions, the pharmaceutical industry will devote its full efforts to the research and development of innovative new drugs and the stable supply of high-quality pharmaceuticals.I ask for your understanding and support, and with that, I conclude my New Year’s message.