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Japan: Protect innovation to protect patients

After a year-long debate, the Japanese government is on the cusp of announcing their final decision on the reform of its drug pricing system. The announcement is predicted to fundamentally change the pharmaceutical industry environment in Japan, impacting the conditions under which innovative drugs come to market, and potentially restricting treatment options for patients.

Curtailing innovation

Healthcare spending in Japan continues to increase alongside the country’s aging population – a trend that many other countries worldwide are facing. In an attempt to curb current spending levels, Japan’s government has proposed new pricing regulations that largely target innovative medicines. However, a recent EFPIA study shows that spending for new drugs has remained steady in recent years, suggesting higher potential for savings in the rising costs of other healthcare areas such as in generic and long-listed products.

The main issue open for a final governmental decision is the price maintenance premium (PMP) for innovative pharmaceuticals. The PMP is central for research-driven pharma companies as it protects new products from periodic price cuts for the duration of the patent. The PMP has been fundamental to the post-2010 innovation environment in Japan and has helped provide security for high-risk research and development of pharmaceutical companies who spend billions on developing new drugs. If the Japanese government implements the proposed cuts to the price maintenance premium, the future of innovative drugs in Japan could suffer.

A threefold detrimental effect

A lack of innovation in the pharmaceutical sector in Japan could have a threefold detrimental effect. Firstly, the reform could endanger early patient access to new and innovative medicines and treatments. Secondly, the future of investments into research and development of innovative medicines and treatments hangs in the balance, potentially tarnishing Japan’s reputation as a country famed for fostering innovation in pharmaceuticals.  Finally, the proposed reforms may have the potential to adversely affect Japan’s economic growth.

Bayer strongly supports policies that incentivize pharmaceutical innovation and urges the Japanese government to reconsider these fundamental reforms that will significantly change the landscape of the pharmaceutical industry in the country.

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