Pharmaceutical Pricing and Reimbursement in Japan

Abstract

Abstract Japan is the world's largest price‐controlled market for prescription drugs. Under the National Health Insurance (NHI) system, the government strictly regualtes prescription drugs. Drug prices are set both according to standardized formulas and through negotiations between government officials and applicant companies on a product‐by‐product basis. With few exceptions, the Japanese Ministry of Health, Labor, and Welfare (MHLW) sets the reimbursement prices for all newly launched prescription drugs in Japan. To control the proportion of the country's total health care expenditures that is devoted to drugs, the government mandates revisions in the prices of all prescription drugs every other year. If pharmaceutical firms hope to survive—and thrive—in the Japanese pharmaceutical market, they must thoroughly understand the unique Japanese pricing sustem and catch up with the recent changes to it, including the modifications to the pricing and reimbursement system. This article provides a brief overview of the Japanese health care system, discusses the Japanese pricing and reimbursement of prescription drugs, reviews recent sales and prescribing trends in Japan, and assesses the outlook for the Japanese pharmaceutical market.