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.
Similar content being viewed by others
References
Danzon PM, Pauly MV. Health insurance and the growth in pharmaceutical expenditures. J Law Econ. 2002;45:587–613.
Morgan SG. Prescription drug expenditures and population demographics. Health Serv Res. 2006;41:411–428.
Kurosawa H, Tamura K. Japanese drug pricing system: how to balance innovation and the reimbursement system [in Japanese]. Nihon Yakurigaku Zasshi. 2012;139:260.
Ministry of Health, Labour and Welfare. Conceptual diagram of repricing for market expansion. http://www.mhlw.go.jp/stf/shingi/2r98520000020zbe-att/2r98520000020zy6.pdf. Published January 25, 2012. Accessed April 7, 2016.
Ministry of Health, Labour and Welfare. Requirements for repricing for market expansion. http://www.mhlw.go.jp/stf/shingi/2r9852000001tu6d-att/2r9852000001tupq.pdf. Published November 2, 2011. Accessed April 7, 2016.
Grabowski HG, Vernon JM. Returns to R&D on new drug introductions in the 1980s. J Health Econ. 1994;13:383–406.
Grabowski HG, Vernon JM. The determinants of pharmaceutical research and development expenditures. J Evol Econ. 2000;10:201–215.
Kyle MK. Pharmaceutical price controls and entry strategies. Rev Econ Stat. 2007;89:88–99.
Golec J, Hegde S, Vernon JA. Pharmaceutical R&D spending and threats of price regulation. J Financ Quant Anal. 2010;45:239–264.
Nakamura H. Toward construction of Japan’s new drug pricing system: aiming at financially improving Japan’s national health insurance system and at stimulating R&D activities of innovative drugs in Japan. Iryo To Shakai. 2005;15:97–109.
Takayama A, Narukawa M. Pharmaceutical pricing and reimbursement in Japan for faster, more complete access to new drugs. Ther Innov Regul Sci. 2016;50:361–367.
Shibata S, Uemura R, Suzuki T. Factors that affect the acquisition of reward premiums for promotion of innovative drug discovery in Japan. Ther Innov Regul Sci. 2016;50:56–65.
Shibata S, Uemura R, Suzuki T. Impact of premium rewards for the promotion of innovative drug discovery on the Japanese pharmaceutical market: an analysis by therapeutic area. Ther Innov Regul Sci. 2016;50:49–55.
Shibata S, Uemura R, Suzuki T. Comparative analysis between the top-selling Japanese pharmaceutical market and those of the United States, the United Kingdom, France and Germany. Ther Innov Regul Sci. 2016;50:221–227.
Newell RG, Jaffe AB, Stavins RN. The induced innovation hypothesis and energy-saving technological change. Q J Econ. 1999;114:907–940.
Acemoglu D, Linn J. Market size in innovation: theory and evidence from the pharmaceutical industry. Q J Econ. 2004;119:1049–1090.
Finkelstein A. Static and dynamic effects of health policy: Evidence from the vaccine industry. Q J Econ. 2004;119:527–564.
Ess SM, Schneeweiss S, Szucs TD. European healthcare policies for controlling drug expenditure. Pharmacoeconomics. 2003;21:89–103.
Muramatsu N, Akiyama H. Japan: super-aging society preparing for the future. Gerontologist. 2011;51:425–432.
Andersson K, Bergström G, Petzold MG, Carlsten A. Impact of a generic substitution reform on patients’ and society’s expenditure for pharmaceuticals. Health Policy. 2007;81:376–384.
Riku J. Current situation for generic drugs in Japan. J Generic Med. 2005;2:219–231.
Straus SE, Richardson WS, Glasziou P, Haynes RB. Evidence-Based Medicine: How to Practice and Teach EBM. London: Churchill Livingstone; 2000.
Ghosh AK. Evidence-based to value-based medicine. Ann Intern Med. 2005;142:952.
Soumerai SB, McLaughlin TJ, Ross-Degnan D, Casteris CS, Bollini P. Effects of a limit on Medicaid drug-reimbursement benefits on the use of psychotropic agents and acute mental health services by patients with schizophrenia. N Engl J Med. 1994;331:650–55.
Ikegami N, Ikeda S, Kawai H. Why medical care costs in Japan have increased despite declining prices for pharmaceuticals. Pharmacoeconomics. 1998;14:97–105.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Shibata, S., Uemura, R. & Suzuki, T. Evaluating the Effectiveness of Repricing for Market Expansion in the Japanese Drug Pricing System. Ther Innov Regul Sci 50, 751–758 (2016). https://doi.org/10.1177/2168479016652927
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1177/2168479016652927