Although overall healthcare costs in Japan are rising with the aging population, statistics show that total pharmaceutical market has been well under control with the various pricing systems introduced in the recent years.

Pharmaceutical market: Japan’s healthcare spending in fiscal year 2021 increased by 4.8% (2.07 trillion yen) to 45.0 trillion yen. Medical cost per capita is 358,800 yen which is an increase of 5.3% compared to the previous year. Although the pharmaceutical market size reported by Ministry of Health, Labour and Welfare has not been publicly available since 2017 data, it was reported to be 10.9 trillion yen, increase of 3.2% compared to the previous year, by IQVIA. However, after the drastic pricing system reform in 2018, price revision in relation to the consumption tax increase on October 2019 was conducted on all products as well as the first off-year price revision was conducted in fiscal year 2021. As such, drug price revision has technically been conducted every year since 2018. A reduction of 310 billion yen (healthcare cost basis) was made in the price revision of 2023. 

NHI pricing system reform: The series of NHI pricing system reforms implemented since the 2018 drastic reform have been heavily biased in favour of the former, out of the two originally intended to be compatible, ‘reducing the burden on the public’ and ‘promoting innovation’. The predictability of drug prices and the pharmaceutical business in Japan has been severely undermined and the attractiveness of the Japanese pharmaceutical market as an investment destination for the development of innovative new drugs has been greatly reduced. As a result, a situation known as ‘drug lag’ or ‘drug loss’ has emerged, where innovative drugs approved abroad are delayed or not introduced into the Japanese market.

Off-year price revision: In April 2021, the Off-year revision was implemented for the first time, but the items subject to the revision deviated significantly from the aims of the Basic Policy for Fundamental Reform of the NHI Drug Price System, discussions at the Chuikyo and the HONEBUTO 2020, and the scope of items was set at over 0.625 times of the average price deviation rate , which significantly damaged the predictability of the NHI drug price system. Although some consideration was given to PMP items in the Off-year revision of 2023, the same line was drawn as in 2021, and the revision still lacked balance from the perspective of both ‘reducing the burden on the public’ and ‘promoting innovation’. 

Introduction of CEA/HTA (Cost-Effectiveness Analysis/Health Technology Assessment): Health Technology Assessments (HTA) using cost-effectiveness analysis (CEA) were fully implemented in 2019; since then, numerous issues and implications have been addressed by various stakeholders based on five-year cumulative cases, including a lack of scientific validity as not fully reflecting clinical positioning and its value, and a lack of transparent information disclosure to enable post-evaluation of the results by third-parties. Reflecting upon the learnings from European countries, expanding the scope of CEA/HTA price adjustment and potentially being used as reimbursement decision-making may not only impede patient access to innovative medicine but may also lead to further drug-lag / losses as it undermines the predictability of prices. Additionally, all stakeholders, including academics, government and industries, are affected by significant operational burdens. The CEA/HTA must not become a system which leads to further drug price containment, as Japan already has several effective systems for controlling drug prices. The CEA/HTA should be maintained as it is since its principled position as complementary to the NHI system, as we can learn from the European lessons learnt of the significant challenges.

Other access barriers: For the first 12 months after a new drug is price listed, prescription is limited to a maximum of 14 days due to safety measures. On the other hand, safety measures for drugs have been enhanced compared to the past with the introduction of Early Post-marketing Phase Vigilance and Risk Management Plans, therefore this restriction lacks rationality. It is also a huge burden for patients who wish to balance daily life (e.g., Work or school) and treatment. In addition, especially for orphan drugs an extra investment to supply specific packaging to meet Japanese policy requirements of 14 day prescription is against the world wide sustainability direction and could be a contributing factor for drug lag/loss.
Furthermore, regarding the DPC system, we have identified cases with innovative and expensive drugs, especially orphan drugs, that fallout from the appropriate DPC coding process leading to an access restriction in hospital settings. Expensive drugs for which continuous administration is expected should be excluded from the DPC scheme, similarly to anti-HIV & Hemophilia drugs.
And for label expansion, the reimbursement approval for expensive drugs is limited to 4 times/year leading to a lag of few months before they can be used in inpatient settings. Expensive drug approval process should be revised to allow immediate patient access to drugs upon regulatory approval.
While the development of drugs in genomic medicine is advancing, regulatory and reimbursement regulations are creating access barriers that prevent therapeutic drugs from being promptly delivered to appropriate patients. It is considered necessary to improve the regulations for diagnostic agents and improve the medical service fees for comprehensive gene profiling testing.
Above mentioned access barriers should be removed immediately in order to prevent Japanese market to be de-prioritized for investments. 

Introduction of new regulatory system: “Sakigake designation system (name changed to Senkuteki Iyakuhin system)” and “Conditional early approval system”, which had been implemented on a notification base, became legislated with newly established “Specific use drugs”, and these amendments were implemented on Sep 1st, 2020. Recently, increasing the number of drugs that are not developed in Japan in spite that those drugs are approved in overseas, so called ‘Drug loss’, is becoming an issue in Japan, and MHLW panel kicked off to review regulations for drug development/approval for enhance introduction of medically necessary drugs, and also from the viewpoint of securing robust and efficient quality and stable supply of drugs, etc.  The scope of Mutual Recognition Agreement was extended to include the product such as active pharmaceutical ingredients, sterile formulation, and biological medicines in July 2018. In addition, each manufacturing site has been targeted for GMP (Good Manufacturing Practice) compliance inspection according to the Amended Pharmaceuticals and Medical Devices Act (promulgated on Dec. 4, 2019). The full implementation of the mutual recognition of GMP between Japan and Europe should be ensured and the adjustment for global harmonisation of GMP future inspection is required.

Key issues and recommendations


Mr. Takahiko Iwaya
(President and Representative Director, Sanofi K.K.)
EFPIA Office:
Tokyo Opera City Tower, 3-20-2
Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-1488
Phone: 03-6301-4094

EBC Medical Equipment and Diagnostics Committee Secretariat contact:


Alexion Pharma
Bayer Yakuhin
Chugai Pharmaceutical
CSL Behring
Ferring Pharmaceuticals
GE Healthcare Japan
Guerbet Japan
Idorsia Pharmaceuticals
Ipsen Pharma Japan
Janssen Pharmaceutical
LEO Pharma
Lundbeck Japan
Merck Biopharma
Nihon Servier
Nippon Boehringer Ingelheim
Novartis Pharma
Novo Nordisk Pharma
UCB Japan