Press Conference by the President of the Pharmaceutical Manufacturers Association of Japan Expectations for the New Administration

On October 8, 2024, a "Pharmaceutical Association of Japan (PSA) Presidents Press Conference" was held at Muromachi Mitsui Hall & Conference (Chuo-ku, Tokyo) in a hybrid face-to-face and web-based format. At the same press conference, Hiroaki Ueno, Chairman of the Pharmaceutical Manufacturers Association of Japan (PMAJ), gave a presentation to the new Ishiba administration, which took office on October 1, titled "Expectations for the New Government - For Strengthening Drug Discovery Capability and Further Enhancing the Attractiveness of the Japanese Market". The message included expectations for the continuation and further strengthening of support related to the pharmaceutical industry, continuing the positive trend from the previous Kishida administration. A lively Q&A session was held with 41 members of the press from 17 participating companies (28 at the venue and 13 via the web). The following is a summary of Chairman Ueno's presentation and the Q&A session.

Scene of the press conference

1. Introduction

Review of pharmaceutical industry policies under the previous Kishida administration

Fig. 1 Review of industrial policy under the previous Kishida administration

Toward the realization of the vision

When I took office as president of the Pharmaceutical Manufacturers Association of Japan (PMAJ) in May 2023, I said that in order for the pharmaceutical industry to contribute to the health of people around the world and to the Japanese economy, it is important to create a virtuous circle between "strengthening Japan's drug discovery capabilities," which we call the entry point, and "appropriately evaluating innovation," which we call the exit point. In order to realize these goals, we have been discussing entrance and exit measures within the Pharmaceutical Manufacturers Association of Japan (PMAJ), and have been taking actual actions to implement them. In the process, we have realized once again the importance of the linkage of exit measures to entrance measures and the "linkage" of each measure within the entrance measures.

Therefore, I would like to appeal to the new administration to fully recognize the importance of this linkage in formulating and implementing policies for the pharmaceutical industry, and I would like to discuss the contents of this appeal today.

Importance of "linkage" between exit measures and entry measures

With regard to "entry measures" related to the drug discovery process from research to regulatory approval, various efforts have been made to strengthen Japan's drug discovery capabilities, including the formulation of the Health and Medical Care Strategy and the establishment of the Japan Agency for Medical Research and Development (AMED) based on this strategy. Looking back, while various initiatives and budgets have been made, they seem to have been implemented in a disjointed manner. From now on, I believe it is fundamental that initiatives in the same category be operated in an integrated manner. In addition, we believe that the key to success is to operate efficiently and effectively toward the goal while being aware of the connections (vertical) between initiatives at the same stage, which are easy to coordinate in the basic research stage, and the temporal connections (horizontal) between each initiative when it comes to practical application research.

In addition, "exit measures," which are the mechanisms by which innovative new drugs created through enhanced drug discovery are evaluated, also have a significant impact on the entry point. The recent drug lag/loss problem is another example of this relationship. the drug price reform in April 2024 marks a turning point from the previous policy of focusing on drug cost containment to the evaluation of innovation. Since pharmaceutical R&D requires a great deal of money and time, it is important to ensure that this policy of innovation evaluation is continued in order to promote R&D.

Thus, in the continuous creation of innovative new drugs originating in Japan, we believe it is important to look at the pharmaceutical industry as a whole, to be aware of the connections between each entrance policy, and between exit and entrance policies, and to implement policies in a continuous and integrated manner. (Figure 2)

Figure 2: The importance of "connections" that I would like to talk about today

2. the linkage of exit measures to entrance measures: the impact of the FY2024 system reform

Impact of System Reform in 2024

The reform of the NHI drug price system in FY2024 incorporates many of our requests, and we believe that it is the first step toward encouraging innovation in our country. The pharmaceutical affairs system was also reviewed, and various studies were conducted by the "Study Group on the Regulatory System for Strengthening Drug Discovery and Securing Stable Supplies.

In order to examine how these reforms are being perceived by individual pharmaceutical companies and what impact they are having on management, a joint survey was conducted by the Pharmaceutical Research and Manufacturers of America (PhRMA), the European Federation of Pharmaceutical Industries and Associations (EFPIA), and the Pharmaceutical Manufacturers' Association of Japan (PMAJ). The survey was conducted from late June to early July, several months after the NHI drug price reform was implemented, with PhRMA as the survey secretariat. A total of 30 companies (10 domestic and 20 foreign companies) that are members of one of the three organizations were surveyed, for a response rate of 100%.

According to the results, more than 90% of companies support the 2024 NHI drug price reform, indicating that a positive impact on new drug development in Japan can be expected. Regarding the impact on each company's actions, 8 companies responded that they have actually changed their development plans in Japan in a positive manner, and 16 companies responded that they are likely to change their development plans in the near future. The fact that development plans were changed in such a short period of time is surprising and indicates that the reform of the system has had an impact. In other words, it suggests that improving the attractiveness of the Japanese market will accelerate the development of new drugs originating overseas in Japan and the R&D of new drugs originating in Japan.

Regarding each company's evaluation of the review of the pharmaceutical affairs system, more than 90% of the companies responded "Positive evaluation. We were able to confirm that many companies evaluated the review of the need for Japanese data and the handling of pediatric and rare diseases. Based on these results, we believe that in addition to the NHI drug price system, a comprehensive improvement of the environment, including a review of the pharmaceutical affairs system, will lead to further improvement of the attractiveness of the Japanese market.

Toward Further Attractiveness of the Japanese Market

In order to attract new drug and innovation investment from overseas and to accelerate the R&D of new drugs originating in Japan, it is important to further promote this innovation evaluation process without stopping. In the pharmaceutical affairs system, it is important to further strengthen international collaboration and the examination system, and to promote real-world data, distributed clinical trials, and the clinical trial ecosystem. In the pharmaceuticals system, we believe it is important to further strengthen international collaboration and review systems, promote real-world data, distributed clinical trials, and clinical trial ecosystems. Factors that could act as a brake include the mid-year revision of the NHI drug price system and the expansion of cost-effectiveness evaluation. (Figure 3)

Figure 3: Toward Further Enhancing the Attractiveness of the Japanese Market

I would like to talk about the new value evaluation system, which was introduced earlier as a gas pedal to improve the attractiveness of the Japanese market. As you know, new drugs have diversified from conventional small molecules and antibody drugs to nucleic acid drugs, gene therapy, regenerative medicine, and other modalities, and the way they are used, the value they bring to patients, and the way they are created are changing dramatically, and this trend is expected to accelerate in the future. On the other hand, there are only two systems for evaluating the value of new drugs in terms of NHI prices: the conventional cost accounting method and the comparable drug price method. In the case of R&D that is conducted ahead of the competition in Japan, the cost accounting method is used because there are no overseas prices or comparable drugs or technologies that can be used as a reference. There is also the problem of not being able to calculate all costs in the face of widely different manufacturing methods. We strongly feel the need for a mechanism to evaluate new values such as new modalities.

In this light, it is increasingly important to consider exit measures appropriate for new innovations in order to further invigorate the entry point.

3. Importance of Connection in Entrance Policies - What kind of connection is required to create results?

Current Status of Japan's Drug Discovery Capability

I would like to change the topic a little and talk about the "connection" required for the creation and practical application of results. In order to strengthen Japan's drug discovery capabilities, it is necessary to implement effective and efficient measures based on a renewed awareness of the current situation and challenges.

From here, I would like to share my perception of the current status of drug discovery in Japan using a few slides. Looking at Japan's drug discovery capabilities in terms of the number of top 100 drugs in terms of global sales, Japan was ranked second in the world in 2008, but by 2022, it will be in sixth place. This is particularly true for synthetic chemical pharmaceuticals, which is No. 2, and biopharmaceuticals, which is No. 6. On the other hand, when looking at the "number of new drugs approved globally," Japan ranks second with 33.5 new drugs approved, following the U.S., which is No. 1 in the world (Note: When multiple organizations are listed as applicants, the number is equally divided by nationality). In terms of how new drugs are created, Japan still maintains a high level of strength in creating new drugs. Therefore, we believe that Japan needs to further strengthen its drug discovery capabilities while it still has the strength to do so.

It is said that the reason why Japan has lagged behind in the creation of large-scale products is because of its late start in biopharmaceuticals. Recently, however, biopharmaceuticals with global impact are being created from Japan. A look at the R&D pipelines of various companies shows that in addition to biopharmaceuticals, projects in new modalities are also increasing, and Japanese companies can be expected to make a comeback in the future. (Figure 4)

Figure 4: Japan's Drug Discovery Capability

Three "Connections" Necessary for Entrance Measures

Various measures are still being taken to strengthen Japan's drug discovery capabilities, but there is still room for improvement when looking at the overall picture. In order to enhance the effectiveness of these measures, three "linkages" are necessary: spatial, temporal, and policy.

The first is "spatial connectivity" in the drug discovery ecosystem. In an environment where drug targets are becoming more complex and modalities are diversifying, it is increasingly necessary for multiple players, i.e., academia, start-ups, and pharmaceutical companies, to collaborate in drug discovery research from the early stages of drug discovery research. In order to promote collaboration, it is important to strengthen Japan's drug discovery ecosystem by connecting people, products, capital, and information (knowledge) within and among bioclusters, and how well each player is connected. The most famous drug discovery ecosystem is in Boston, USA. In Boston, a large number of players are concentrated in a limited area, and strong connections are formed spontaneously. In the U.K., the government is taking the lead in forming artificial connections, although they are spread across three locations (London, Oxford, and Cambridge). On the other hand, in Japan, bioclusters have been formed throughout the country, from Hokkaido in the north to Okinawa in the south, with the Greater Tokyo Biocommunity (GTB) in the Tokyo metropolitan area and Kansai region in particular. ^₁ and Biocommunity Kansai (Biock) ² 2), there are many players in the Tokyo metropolitan area and Kansai region that have a certain degree of concentration, but the connections among these centers are not necessarily sufficient. In the future, in addition to activities that make the most of the unique characteristics of each cluster, it may be necessary to create a mechanism for further collaboration among bioclusters in other regions. By forming Japan's own drug discovery ecosystem and actively communicating it both domestically and internationally, we can strengthen the linkage with overseas ecosystems, in other words, "connectivity".

The second is the "temporal link" from basic research to practical application research. In recent drug discovery research, basic research and discovery in academia are important. Beyond that, the practical application research that links the results of basic research to practical use is also naturally important. Since the nature of basic research differs from that of practical application research, it is necessary to distinguish between the two in terms of management style, funding, etc., and to consider measures for both. Another important issue is how to select "good candidates" for basic research and how to "link" them to practical application research. However, the current situation is that we have not yet reached the stage of practical application. In order to achieve a balance between the promotion of "basic research" based on science-based and flexible operations and "practical application research" aiming for pharmaceutical approval, it is important to understand that practical application research for social implementation is not an extension of basic research, and to develop resources that can be used to support such research. We need to accelerate this process by concentrating our resources on the understanding that practical research for social application is not an extension of basic research.

The third is the "policy link" between the various policies and budgets of the Japanese government aimed at strengthening Japan's drug discovery capabilities. I am very grateful that various policies have been planned, budgeted, and implemented. However, we have found that some of these policies have not always been effectively implemented and managed in terms of generating results. In particular, AMED has been implementing a variety of projects tied to the budget, but I believe that it is necessary to carefully examine whether these projects are effectively linked to each other and whether they are connected, and to make improvements.

In terms of entrance policies, spatial, temporal, and policy linkages are important. It is necessary to be fully aware of these three "connections" and implement them in an integrated manner with consistency and continuity. The Pharmaceutical Manufacturers Association of Japan (PMAJ) would like to cooperate in the creation of a framework for this "linkage". (Figure 5)

Fig. 5 Importance of connections in entrance policies

4. Efforts of the Pharmaceutical Manufacturers Association and Expectations for the New Administration

Examples of efforts by the Pharmaceutical Manufacturers Association of Japan (PMAJ)

Finally, I would like to introduce the efforts of the Pharmaceutical Manufacturers Association of Japan (PMAJ) and talk about our expectations for the new administration. First, I will give an example of the efforts of the Pharmaceutical Manufacturers Association of Japan (PMAJ) to strengthen Japan's drug discovery capabilities. The Pharmaceutical Manufacturers Association of Japan (PMAJ) has identified issues that are difficult for individual companies to address, or issues in non-competitive areas, and is working to solve them by pooling resources among the companies.

In terms of industry-academia-government collaboration, we are working to introduce industry's perspective to academic research from an early stage by setting up research consortiums and cooperating with the Academia Medicinal Seeds Development Promotion Council (AMED-FLuX). Pharmaceutical company members serve as advisors, evaluation committee members, and in various other ways to propagate the knowledge and experience of the pharmaceutical industry.

In the area of human resource development, the Pharmaceutical Manufacturers Association of Japan (PMAJ) is actively contributing to the Biologics Center for Research and Training (BCRET), an organization that develops human resources with expertise in biomanufacturing, by dispatching lecturers and providing on-the-job training.

Through these efforts, the Pharmaceutical Manufacturers Association of Japan (PMAJ) hopes to strengthen its ties with related players and contribute to the enhancement of Japan's drug discovery capabilities.

Expectations of the new administration

In closing, I would like to reiterate my two expectations for the new Ishiba administration.

First, I would like to ask you to continue the good trend and steadily implement policies. Under the previous Kishida administration, the pharmaceutical industry was positioned as a growth industry and a key industry for Japan, and it was declared both domestically and internationally that the government would make a concerted effort to promote the industry. I hope that the new administration will continue to work on the various measures that were put in place to solve various problems in the pharmaceutical industry.

Second, I would like you to strongly promote future policies for the pharmaceutical industry based on the bird's eye view and the "linkage" perspective that I mentioned today. I hope that you will take a bird's eye view of the pharmaceutical industry as a whole, be aware of the linkage between entrance measures, exit measures and entrance measures, and implement them in a consistent, continuous and integrated manner. (Figure 6)

Figure 6: Expectations for the New Administration

Today, seizing this opportunity of the inauguration of the new administration, I spoke mainly about the importance of connections. Based on this concept, we plan to compile concrete proposals as the Pharmaceutical Manufacturers Association of Japan (PMAJ) in the form of "Policy Proposal 2025. In addition, we will consider actions to be taken by the Pharmaceutical Manufacturers Association of Japan (PMAJ) in conjunction with the policy recommendations, which we hope to announce in early 2025.

We, the Pharmaceutical Manufacturers Association of Japan (PMAJ), will continue to make efforts in cooperation with stakeholders to ensure that the pharmaceutical industry, as a key industry in Japan, contributes to the health of people around the world.

5. Main questions and answers

A1: I sense from new Prime Minister Ishiba's statement that he will "carry on the policies of the previous Kishida administration" that he is committed to protecting the policies of the nation. I believe that he will show understanding of our industrial policy from the perspective of "protecting the country." I am also positive that both Finance Minister Kato and Health Minister Fukuoka have a deep understanding not only of the pharmaceutical industry but also of healthcare as a whole, and that they understand our challenges.
A3 The AMED project itself is in line with our thinking in terms of how to translate basic research in academia into practical applications. However, there is still room for improvement in its content. We are considering how we can contribute to the environment by including the experience of industry and human resources. The infrastructure that the government should promote includes the development of databases, the state of clinical trials, and facilities for the manufacture of investigational drugs. In our policy proposal, we would like to present the actions of the Pharmaceutical Manufacturers Association of Japan (PMAJ).
A3 I do not believe that "Japan is a shell of a shell. There are domestic companies that have research bases overseas, but I believe that many of them are maintaining their domestic bases. It is not for me to speak for individual companies, but I believe that the idea is to combine overseas innovation and domestic research to nurture seeds originating in Japan. Of course, conversely, there may be cases where foreign companies introduce seeds from Japanese academia and turn them into new drugs originating overseas, but that would be a way to raise the level of Japanese academia and startups. I believe that there may be cases of both.
A4 Regarding the linkage between companies: Simply bringing companies together is one way to connect, but it is possible to connect through collaboration without integrating management. I also believe that innovation is not a matter of scale. Therefore, many new innovations are born from venture companies. From this perspective, I do not think that the large number of new drug makers in Japan is an issue.
A5 The company's management budget is set on an annual basis, so the development plan usually does not change in less than half a year. Therefore, we view the fact that decisions were made in six months as an impact of the system reform. Of course, it is necessary to gain the understanding of the doctors of the Chuikyo, and it is important to foster the way we present ourselves and our attitude to gain their understanding. While the reform of the system has been positively evaluated by overseas megapharmaceutical companies, they also say that it is only the first step. In order to further promote the reform, we would like to respond to the opinions of the committee members through statements of opinion and other means, in order to deepen understanding at the Chuikyo.
A6 We will continue to conduct monitoring and surveys such as this one on a regular basis in order to gain an understanding of the facts about changes in behavior. From what I have seen in the industry press about the movement of individual companies, I have heard that further development in Japan is underway, and I expect that the number of developments will increase as a result of the surveys in the future.
A7-1 We are also planning to conduct a survey of overseas startups that do not have a base in Japan. We will also work with the government to communicate the detailed contents of the system reform and the efforts of the Pharmaceuticals and Medical Devices Agency (PMDA) with regard to pharmaceutical regulations.
A7-2 (Executive Director Kazuhiko Mori): PMDA's Washington D.C. office in the U.S. will be established in the near future. An office in Bangkok, Thailand was recently established. We are now preparing to establish a system to communicate Japan's pharmaceutical affairs system to start-ups and bio ventures in an easy-to-understand manner through these overseas offices, not only through the efforts of PMDA, but also through the cooperation of local staff of pharmaceutical association member companies in preparation for establishment and expansion of networks. The PMDA is also preparing to establish a system to facilitate cooperation among local staff of member companies.
A8 : We are moving forward to include them in our policy recommendations. We would like to consider what methodologies can be used to evaluate new modalities firmly while taking into account the diversity of new modalities. For example, the current drug price calculation is based on comparison with existing drugs, but we believe there are several ways to evaluate from several perspectives, such as comparing with treatment methods when there is a treatment method without existing drugs.
A9(Chairman Kenshi Kinoshita): Basically, in the current reform of the NHI drug price system, whether it is the mid-term annual revision or the main revision every two years, revisions are made based on the NHI price differential. However, if prices are taken into account in the price revisions, there is a possibility that the number of unprofitable items will increase. I understand that this means how to take this into account, since unprofitable items will increase as prices and wages rise. If the system is to be incorporated, we understand that the general idea is to respond to cost increases by, for example, not making negative revisions.
A10 The survey was conducted in July, and the results were as follows: In my opinion, the definition of a key industry is one that can both "contribute to the extension of healthy life expectancy of the people of Japan and the world by ensuring the delivery of necessary medicines" and "contribute to the Japanese economy by growing as an industry. Considering the first point, the number of new drugs created is currently insufficient, and the second point, while I think the industry is contributing to the economy to a certain extent, given the fact that there is an excess of imports, it needs to strengthen its capabilities a little more.

Q&A session

Above Q1 Q4 Q7

(Koji Tamura, Nobuyuki Kobayashi, Akiko Fujiwara, Industrial Policy Committee)

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