Market Report Source

Overview

Introduction

The government has relied on simple P&R tools to contain rising healthcare costs and provide a reasonable level of healthcare. However, factors such as a healthier elderly population are masking healthcare system inefficiencies, boosting healthcare costs and increasing the focus on cost containment. Although the rise in drug spending is slowing down, it remains a visible cost containment target.

Scope

*Overview of the Japanese healthcare system, detailing trends shaping healthcare provision including how P&R fits in *In-depth analysis of the Japanese P&R infrastructure, examining how P&R tools are used to contain costs *Examination of macro trends shaping healthcare provision and the P&R environment *Identification of future trends shaping P&R tool use and healthcare evolution in Japan

Highlights

Over the last decade, biennial drug price cuts and increasing patient co-payment levels have been the key tools used to contain pharmaceutical expenditure.

In the future, a range of factors will impact the P&R environment, including greater generic uptake, the wider adoption of a prospective payment reimbursement system, and determining a solution to providing the elderly with adequate yet cost effective healthcare provision.

A range of macro trends are also impacting drug prescription and P&R, including: rising healthcare costs as a result of system inefficiencies, the fact that innovation is neither well-cultivated by Japanese drug developers nor well-rewarded by the Japanese government, and lastly the effects of an ageing population combined with a stagnant economy.

Reasons to Purchase

*Gain a clear understanding of the healthcare market dynamics and factors influencing healthcare provision in Japan *Understand the role of different P&R tools in healthcare cost containment in Japan *Gain insight into how P&R and more global macro trends are set to shape healthcare provision in the future

Table of Contents

CHAPTER 1 EXECUTIVE SUMMARY

Scope of the report

Key findings

CHAPTER 2 OVERVIEW OF THE JAPANESE HEALTHCARE AND P&R SYSTEM

An introduction to the Japanese healthcare system

The government must improve efficiency and reduce costs in healthcare provision

High drug spending is a visible cost containment target in the Japanese healthcare system

An overview of the Japanese healthcare system

Public healthcare insurance schemes provide the majority of Japanese healthcare

Hospitals remain the first port-of-call for patients seeking healthcare in Japan

There are a number of key stakeholders that impact healthcare provision in Japan

Governmental stakeholders are unified under the Ministry for Health, Labor and Welfare

Healthcare worker and industry stakeholders

Gaining a price and reimbursement level in Japan: the process and the key stakeholders that affect it

The process of gaining a price and reimbursement level

Drugs qualify for fairly generous premiums if they are innovative enough

A wide range of premiums are available for innovative drugs, and it is slowly getting easier to meet these criteria

A number of healthcare stakeholders impact government P&R strategy and healthcare provision

The DPO and Chuikyo are the key governmental stakeholders shaping P&R

The influence of healthcare stakeholders in shaping healthcare reform and P&R implementation is varied

CHAPTER 3 THE PRICING AND REIMBURSEMENT ENVIRONMENT IN JAPAN

Key reforms impacting the P&R environment

Biennial price cuts and patient co-payment have been the dominant P&R cost-containment tools in Japan

Biennial price cuts have historically had the greatest impact in restricting pharmaceutical expenditure

Over the past decade, the R zone has fallen, making price cuts more punitive

In addition to standard price cuts, extraordinary price cuts and long-listed drug price cuts also impact drugs

Patient co-payment is one of the most effective ways to control patient spending in Japan

PE analysis also plays a role in P&R in Japan, but on a more informal basis than in European markets like the UK

Increased DTC, the greater adoption of a prospective payment system, and increased generic uptake are all set to impact drug price following launch

Pharmaceutical companies exploit loopholes in advertising restrictions to capitalize on DTC and physician promotion

The adoption of the DRG-like diagnosis procedure combination (DPC) reimbursement system has met strong opposition but it may help to cut costs and reduce ALOS

There is a strong drive to increase generic uptake in Japan to help contain costs

Generic prescription in Japan is driven primarily on price

Despite cost savings available with generics, a range of factors have restricted generic uptake in Japan

Increased patient and physician awareness of generic drugs, greater patient participation in health management, and increased generic substitution are all helping to counteract the significant restrictors to generic uptake

The future is bright for generic uptake in Japan although there is still significant patient and physician resistance to overcome

Government use of an OTC switching category to transfer cost to patients is not effective in Japan because of the risk-averse nature of healthcare provision

Japanese drugs companies do not have to contend with parallel importation

CHAPTER 4 KEY MACRO TRENDS INDIRECTLY IMPACTING P&R IN JAPAN

Healthcare costs are being driven up by a range of factors, even though drug prices appear to be falling

Long patient hospital stays are a significant problem in Japan and is becoming an increasingly visible focus for cost containment

The failure of healthcare providers to price services differentially together with financial incentives to provide outpatient care exacerbates patient selection of in-patient care as the first port of call

Patients have historically had little incentive to be cost-conscious

Physicians are under attack and have little incentive to prescribe cost-consciously

The wide variety of health insurance schemes has done little to help contain costs

Historically high drug prices have been falling in the Japanese market

Innovation is required for a high level of reimbursement, yet there are problems capturing and adequately rewarding innovation

The level of innovation required for premiums is difficult to attain

There has historically been relatively low R&D investment in Japan

Innovative drugs may bypass the lengthy approval and P&R processes which have historically slowed down access to the Japanese market

Restructuring R&D strategy and capitalizing on governmental financial incentives will boost innovation

R&D restructuring may help to capture greater innovation

The Japanese government needs to provide greater financial incentives for R&D and make clinical trial progression, approval and P&R assessment easier to encourage foreign investment

Characteristics of Japanese society impact the healthcare service

The stagnant Japanese economy impacts on Japanese healthcare provision

CHAPTER 5 THE FUTURE OF P&R IN JAPAN

There are a range of factors that directly impact P&R tool use and effectiveness

The government should aim at making it easier for drugs companies to demonstrate innovation

The price cut system is set to evolve

Generic uptake is set to be strongly boosted

The number of drug types receiving high reimbursement levels is set to change

Reference pricing is set to become more restrictive

A range of factors that shape healthcare provision will also indirectly impact P&R

CHAPTER 6 BIBLIOGRAPHY

Publications and online articles

Datamonitor resources

CHAPTER 7 GLOSSARY

Glossary of terms

List of Tables

Table 1: There are a range of premiums for new drugs which help boost drug price and reward innovation

List of Figures

Figure 1: A range of factors will shape the Japanese healthcare system in the future

Figure 2: Healthcare spending as a proportion of GDP is below the seven major market average in Japan

Figure 3: Japan has historically spent a high percentage of healthcare spending on pharmaceuticals, 1980-2000

Figure 4: Japan’s total healthcare expenditure as a percentage of GDP is not rising strongly, 1980-2003

Figure 5: A wide range of bodies and groups impact healthcare provision in Japan

Figure 6: From a healthcare and P&R perspective, there are five key bureaus in the MHLW

Figure 7: Reforms since 1997 have focused on a range of factors, most significantly drug prices, co-payment and medical fees

Figure 8: Higher biennial price cuts and a reduced R Zone percentage are increasingly punitive for drugs companies, 1992-2006

Figure 9: There are more disincentives than incentives for generic prescription in Japan

Figure 10: There are a number of factors increasing the cost of Japanese healthcare provision

Figure 11: There are a range of different healthcare schemes, depending on the characteristics of the person being covered

Figure 12: The top-13 Japanese pharma/biotech companies have had a lower R&D investment as a percentage of revenues compared to the top-38 Western pharma/biotech companies, 1999-2005