Challenges introduced by Japan's drug pricing policy

Drug shortages are becoming more severe around the world.¹ The causes of worsening drug shortages in Japan include the impact of a large-scale campaign to switch from brand name to generic drugs and a series of scandals involving manufacturers and distributors with inadequate development and manufacturing controls. Since drug shortages affect access to essential treatments, pharmaceutical companies are expected to make efforts to improve their situation; however, it may also be necessary to review drug pricing policies, which were among the factors that drove pharmaceutical companies into this corner.

In Japan, making healthcare cost control has become a key policy issue, hence the government has continued to reduce the prices of drugs covered by universal health insurance. Although product differences exist, the overall drug costs have been reduced for approximately 20 consecutive years.² This decline in drug prices forced Japanese pharmaceutical companies to cut costs, leading to inadequate development and manufacturing management, and several scandals. With regard to this excessive trimming of drug prices, the government enacted a system of exceptional price reviews for unprofitable products in 2023 and 2024. However, the difficult situation for pharmaceutical companies has not improved.³ For example, according to a document submitted to the government council on August 7, 2024, 29.6%–100% of the pharmaceutical products of member organizations of the Federation of Pharmaceutical Manufacturers' Associations of JAPAN are expected to become unprofitable by type, and the government is being asked to make improvements.³ A large number of unprofitable items risks weakening pharmaceutical companies, leading to improper production practices or complete withdrawal from production.

Furthermore, low drug prices in Japan can lead to drug losses. Low drug prices and high clinical trial costs have prevented foreign pharmaceutical companies from entering the Japanese market or including Japan in international joint clinical trials, resulting in fewer new foreign drugs being available domestically.⁴ There are many other approaches to reducing healthcare costs in Japan besides devaluing NHI drug prices, such as reviewing patient co-payment ratios and reducing nonessential medical care demands.⁵ In addition, the government may be possible to reduce government-paid medical costs without devaluing the prices of covered drugs by switching some of the covered drugs to OTC, which is less than in other countries. To ensure that essential medical care is not disrupted, we believe it is time to review the policy of controlling medical costs by reducing drug prices.

Contributors

Shotaro Kinoshita: Conceptualization, Writing—original draft.

Taishiro Kishimoto: Writing—review & editing.

Declaration of interests

TK has received grants from Sumitomo Pharma and Otsuka Pharma; royalties or licences from Sumitomo Pharma and FRONTEO; consulting fees from TechDoctor and FRONTEO; speaker's honoraria from Sumitomo Pharma, Boehringer Ingelheim, Takeda, Astellas, Meiji Seika, and Janssen; and stock from i2medical and TechDoctor. SK, declare no competing interests.