Joint statement by the three pharmaceutical organizations of Japan, the U.S., and Europe:
Recommendations for the 2024 NHI Reform
April 14, 2023
Japan Pharmaceutical Manufacturers Association (JPMA)
Pharmaceutical Research and Manufacturers of America (PhRMA)
European Federation of Pharmaceutical Industries and Associations (EFPIA Japan)
The Japan Pharmaceutical Manufacturers Association (JPMA), the Pharmaceutical Research and Manufacturers of America (PhRMA) and the European Federation of Pharmaceutical Industries and Associations (EFPIA) represent the world's leading research-based, innovative pharmaceutical companies operating in Japan.
We seek to create a drug discovery innovation ecosystem that encourages the creation of new medicines that matter to patients. The ecosystem we advocate begins with research and development to address unmet medical needs, followed by internationally harmonized pharmaceutical regulations that rapidly approve safe and effective medicines, and insurance reimbursement that appropriately recognizes innovation. In this context, all elements of the ecosystem must function without delay to ensure stable and timely access to new medicines for patients and to enable companies to reinvest in the next generation of treatments and vaccines.
Japan has long been a global leader in the life sciences and a crucial partner in developing new medicines for patients around the world. However, in recent years, repeated changes in NHI drug pricing rules and annual price revisions for new drugs off-patent have put Japan's drug discovery innovation ecosystem at a competitive disadvantage. Currently, Japan is considered a negative growth market, and investment in the life sciences sector continues to decline, in contrast to the global upward trend. As a result, Japan's share of the early-stage pipeline is declining and new clinical trials are stagnant. And a drug lag has resurfaced, with innovative drugs that address unmet medical needs not being launched in Japan in a timely manner, or not at all. Under these circumstances, the NHI drug price reform in FY2024 (FY2024) is an important opportunity to change the negative trend.
In order for Japan to regain sustainable market growth and not be left behind in the development of and access to the world's latest treatments and vaccines, we believe that strengthening the drug discovery innovation ecosystem, including drug price reform, is an urgent issue. Therefore, we have decided to hold an "Expert Panel on Comprehensive Measures to Achieve a Rapid and Stable Supply of Pharmaceuticals" (hereinafter referred to as the "Expert Panel") at the Ministry of Health, Labour and Welfare (MHLW) to discuss the following issues. We therefore propose three reform proposals that we believe should be given priority for consideration in the reform of the NHI drug price system in fiscal 2024 (FY2024).
Proposal 1: Maintenance of NHI drug prices during the patent period
Due to significant changes in the criteria for application of the Additional Allowance for New Drug Creation and the introduction of annual NHI price revisions, approximately half of all innovative drugs are now subject to annual NHI price reductions. In addition, the price of innovative drugs can be significantly and repeatedly reduced due to market expansion re-calculation, even for items subject to the Additional Allowance for New Drug Creation.
As a result, many innovative drugs in Japan face business uncertainties in contrast to other developed countries.
In order to resolve these issues, we recommend that innovative drugs in the patent period be exempted from revision based on prevailing market prices, and that discussions continue toward shifting to a system that does not cause excessive or unevenly distributed NHI price differentials, as well as improving the rules for market expansion re-calculation and application to similar drugs (i.e., "bring together") based on the current issues raised by the Expert Panel. and the application to similar drugs) rules are recommended to be improved.
Recommendation 2: Improvement of NHI drug price calculation for new drugs
The current NHI drug price calculation method for new drugs is based on restrictive calculation criteria that do not reflect the value of innovation. Two-thirds of innovative drugs do not receive an additional fee when they are listed on the NHI drug price list, and even if they do, most of these fees are minimal. In particular, advanced innovative drugs with new treatments or modalities are in a difficult situation because there are no suitable similar drugs under the current calculation criteria and they are not properly recognized, even though they provide considerable value to patients, the healthcare system, and society.
As a result, the selling prices of new drugs, especially first-in-class products, in Japan are further divergent from those in other developed countries, reducing incentives for early launch in Japan.
In order to improve the calculation of NHI prices for new drugs, we recommend that the evaluation criteria be expanded to enable a more comprehensive evaluation of the value of drugs that are difficult to evaluate under the current requirements, and that the scope of selection of similar drugs be expanded.
Recommendation 3: Reduce inefficient spending on non-innovative drugs
We want to see sustained growth of the innovative drug market in Japan and believe that there are many opportunities throughout the healthcare system to create the financial space to implement the above recommendations. We, the pharmaceutical industry, would also like to play a role in cost reduction measures proposed by various stakeholders, such as reducing duplicate dosing and multiple dosing, promoting the introduction of clinically appropriate generics and biosimilars, and facilitating rapid price reductions for long-term listed drugs while ensuring stable supply.
Need to strengthen public-private dialogue to formulate and implement reforms
We understand that these policy changes will not be simple, but we believe that the best measures will emerge when all stakeholders come together and work as partners with each other toward a common goal. We hope that regular and fruitful dialogue will take place between the Japanese government and innovative pharmaceutical companies, both domestic and foreign, to ensure the success of these necessary reforms.
Our industry is on the verge of one of the biggest medical breakthroughs in decades, a discovery that could transform people's lives in ways that were unimaginable just a few years ago. We are committed to working with the Japanese government to solve the challenges of science, economic growth, and a robust drug discovery innovation ecosystem that promotes timely access to new medicines for Japanese patients. We are confident that together, we can achieve these common goals.
Organization Profile
Japan Pharmaceutical Manufacturers Association (JPMA)The JPMA is a voluntary association of 71 R&D-oriented pharmaceutical companies (as of October 1, 2022). established in 1968, the JPMA has contributed to global healthcare through the development of innovative new drugs for ethical drugs under the motto "Realization of Patient Participatory Medicine".
The Pharmaceutical Manufacturers Association of Japan (PMAJ) is engaged in a multifaceted program of activities to solve various problems common to the pharmaceutical industry, to deepen understanding of pharmaceuticals, and to promote international collaboration. In particular, we are working for the sound development of the pharmaceutical industry by strengthening our policy formulation and advocacy activities, addressing internationalization, and enhancing our public relations structure.
Pharmaceutical Research and Manufacturers of America (PhRMA)
PhRMA represents the leading research-oriented biopharmaceutical companies worldwide. Member companies strive to discover and develop new medicines so that patients can live longer, healthier, and more active lives. Member companies have invested more than $1.1 trillion in new drug research and development since 2000, with an estimated $102.3 billion in 2021 alone.
European Federation of Pharmaceutical Industries and Associations (EFPIA Japan)
Established in April 2002, EFPIA Japan is comprised of 23 European R&D-oriented pharmaceutical companies operating in Japan. EFPIA Japan aims to strengthen the dialogue with policy makers to improve healthcare in Japan.
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