The government plans to adopt new rules, when revising medical care fees next fiscal year, that will lower the prices of popular drugs that far outsold expectations and posted annual sales exceeding ¥100 billion (S$1.2 billion).
The new rules will apply to medicine covered by public health insurance programs, in a bid to keep medical costs down. However, the plans have faced an intense backlash from the pharmaceutical industry, which claims that the development of new medicines will be hindered.
Under the new rules, drugs that post annual sales exceeding ¥150 billion and top their manufacturer's expected sales by at least 30 per cent will have their official prices under the public health insurance scheme lowered by up to 50 per cent in next year's review of medical treatment fees.
Such reviews are conducted every two years. Drugs that have annual sales from more than ¥100 billion to ¥150 billion, and at least 50 per cent higher than expected, will see their prices lowered by up to 25 per cent.
The Health, Labor and Welfare Ministry ultimately decides on the prices of new drugs through examinations conducted by one of its expert panels, based on price assessments submitted by pharmaceutical companies that take into account the size of the nation's market as well as development and material costs.
Clamping down on social security expenses is an urgent issue, so the health ministry has judged that it will be difficult to have public insurance schemes continue to cover the costs of drugs that are posting substantial sales far exceeding initial expectations. According to research company IMS Japan K.K., drugs that sold at least ¥100 billion annually in recent years include the antithrombocyte drug Plavix, the anticancer drug Avastin, the antihypertensive drug Blopress and the dementia treatment drugs Diovan and Aricept. These drugs were introduced from 2012 to 2014.
In addition to these medications, Sovaldi, a revolutionary drug for hepatitis C that costs about ¥60,000 per pill, and Harvoni, another drug used to treat hepatitis C that costs about ¥80,000 per pill, were both developed in the United States and introduced this year. The costs of these drugs are expected to climb because of the large number of patients suffering from hepatitis C in Japan.
According to IMS Japan, annual Sovaldi sales are certain to exceed ¥100 billion. The drug was introduced to the market in May this year, and posted sales of ¥43.3 billion in the July-September period.
The health ministry plans to make a final decision after consulting an expert advisory body sometime within the year. Japanese and overseas pharmaceutical companies are calling for the ministry to scrap the move.
An official from the Pharmaceutical Research and Manufacturers of America said the plan was nothing but a penalty for revolutionary and successful new medicines.
"It's unreasonable to force marketable medicine to be subject to price cuts, and it's also problematic in terms of the predictability of management," a spokesman for the Federation of Pharmaceutical Manufacturers' Associations of Japan said.