Evaluating the Effectiveness of Repricing for Market Expansion in the Japanese Drug Pricing System

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6 Citations (Scopus)

Abstract

Background: In 1994, the “Repricing for Market Expansion” system (the repricing system) was introduced to the pharmaceutical market in Japan to improve the financial performance of the national health insurance system. In 2010, the “Reward Premiums for the Promotion of Innovative Drug Discovery and the Resolution of Off-Label Use Issue, Etc.” system (the reward system) was introduced to promote the development of new drugs. This study evaluates the effectiveness of these systems from an empirical perspective. Method: The data set used in this study was created using publicly available information from the Ministry of Health, Labour and Welfare (MHLW) website and a market database maintained by IMS Japan Pharmaceutical Market Sales. Results: Anticancer or immunomodulating drugs were the most frequently affected by the repricing system. The sales of similar drugs did not exceed double the sales forecast, and to begin with, the repricing system was not applied to these drugs, unintentionally reducing the profitability of pharmaceutical companies. In addition, we found that pharmaceutical expenditures have been steadily and significantly increasing, although this aspect is just one of the circumstances surrounding the Japanese pharmaceutical market. Conclusions: On the basis of these results, we propose that the current repricing system be replaced with one using a market mechanism that can evaluate the value of drugs from an economic perspective and help improving the financial performance of the national health insurance system. We also suggest that the number of generic medications on the market in Japan be increased to a ratio equivalent to those of the US and EU. We hope that the perspectives on Japan’s unique drug pricing system obtained from this article are utilized by pharmaceutical companies in developing their businesses in Japan.

Original languageEnglish
Pages (from-to)751-758
Number of pages8
JournalTherapeutic Innovation and Regulatory Science
Volume50
Issue number6
DOIs
Publication statusPublished - 2016 Nov 1

Fingerprint

Costs and Cost Analysis
Pharmaceutical Preparations
Japan
National Health Programs
Reward
Off-Label Use
Drug Discovery
Health Expenditures
Economics
Databases
Health

Keywords

  • drug development
  • generic drugs
  • health care cost
  • Japan
  • pharmaceutical regulation

ASJC Scopus subject areas

  • Pharmacology, Toxicology and Pharmaceutics (miscellaneous)
  • Public Health, Environmental and Occupational Health
  • Pharmacology (medical)

Cite this

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title = "Evaluating the Effectiveness of Repricing for Market Expansion in the Japanese Drug Pricing System",
abstract = "Background: In 1994, the “Repricing for Market Expansion” system (the repricing system) was introduced to the pharmaceutical market in Japan to improve the financial performance of the national health insurance system. In 2010, the “Reward Premiums for the Promotion of Innovative Drug Discovery and the Resolution of Off-Label Use Issue, Etc.” system (the reward system) was introduced to promote the development of new drugs. This study evaluates the effectiveness of these systems from an empirical perspective. Method: The data set used in this study was created using publicly available information from the Ministry of Health, Labour and Welfare (MHLW) website and a market database maintained by IMS Japan Pharmaceutical Market Sales. Results: Anticancer or immunomodulating drugs were the most frequently affected by the repricing system. The sales of similar drugs did not exceed double the sales forecast, and to begin with, the repricing system was not applied to these drugs, unintentionally reducing the profitability of pharmaceutical companies. In addition, we found that pharmaceutical expenditures have been steadily and significantly increasing, although this aspect is just one of the circumstances surrounding the Japanese pharmaceutical market. Conclusions: On the basis of these results, we propose that the current repricing system be replaced with one using a market mechanism that can evaluate the value of drugs from an economic perspective and help improving the financial performance of the national health insurance system. We also suggest that the number of generic medications on the market in Japan be increased to a ratio equivalent to those of the US and EU. We hope that the perspectives on Japan’s unique drug pricing system obtained from this article are utilized by pharmaceutical companies in developing their businesses in Japan.",
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