Japan MOF Calls for Cuts in Official Drug Prices

October 10, 2018

Tokyo- Japan's Ministry of Finance on Tuesday called for government-set drug prices to be cut when an extraordinary price revision is carried out in fiscal 2019 that starts next April.

"It is necessary to reflect market prices in government-set drug prices," the ministry said in a set of proposals presented to a subcommittee of the Fiscal System Council on the day.

The MOF requested the Health, Labor and Welfare Ministry to study ways to lower drug prices to appropriate levels so that people will not feel too much pain from the planned consumption tax rate hike to 10 pct from the current 8 pct in October next year.

Price revisions are aimed at correcting the differences between the government-administered prices, or the prices of drugs charged to patients by hospitals and others, and market prices, at which the medical institutions purchase the drugs from wholesalers.

In the fiscal 2019 special revision, the government plans to add the consumption tax increase to drug prices. But overall prices are expected to go down because price declines resulting from fierce competition will also be taken into consideration.

The MOF hopes to put the revised drug prices into effect ahead of the tax hike, raising eyebrows in the pharmaceutical industry.

In the package, the MOF also said the government should not rely on preventive health care, a pillar of Prime Minister Shinzo Abe's initiative to create a social security system benefiting all generations, as a means to curb social security costs.

"It is unclear whether preventive health care can reduce medical costs, while some argue that it would work to increase the costs," the ministry said, stressing the need to carry out social security reforms that will inevitably add to the burden on the public.

In addition, the ministry's proposals included a request for elderly people with financial assets exceeding a certain level to pay more for medical and nursing care services they receive and a hike in the share of costs people aged 75 or over pay out of pocket at medical institutions to 20 pct from the current 10 pct.

Moreover, the ministry proposed that a study should be made on making expensive new drugs whose cost effectiveness is believed to be insufficient ineligible for public health insurance programs, noting that high-priced new drugs, such as the Opdivo cancer drug, are helping push up medical costs.

The Fiscal System Council will compile recommendations as early as in late November after discussions on key budgetary matters. Jiji Press