New system eyed to cut prices of costly drugs

November 22, 2017

Tokyo- The Japanese government plans to introduce a new system to cut the prices of expensive drugs in order to prevent deterioration in financial conditions of public health insurance programs, it was learned on Wednesday.

The envisioned system will allow the prices of drugs to be cut up to four times a year, with each cut up to 25 percent, if their respective annual sales top 35 billion yen.

Subject to the system, planned to be put into effect in fiscal 2018, will be drugs whose additional effects are recognized after they begin to be covered by health insurance programs.

The health ministry presented a draft of drastic reforms for the country's public drug-pricing system, including the introduction of the new system, to the day's meeting of a working group of the Central Social Insurance Medical Council, which advises the health minister.

The move follows the release of Opdivo, a cancer drug, which costs a patient as much as 35 million yen a year.

Opdivo was a medication for skin cancer when it started to be covered by health insurance programs in 2014.

The use of the drug was allowed later for other types of cancer as well, including lung cancer, for which there are a relatively large number of patients, leading to rapid growth in its sales.

In the face of the surging use of the costly drug, the health ministry cut its public price by half as an extraordinary case in February this year.

The ministry came up with the new price-cutting system to prepare for similar cases involving other drugs.

The draft reform plan also calls for tightening requirements for the prices of new drugs to stay high for a certain period under the existing surcharge system for new drug development.

The prices of off-patent drugs will be reduced in stages to those of their generic drugs. Jiji Press