PHP90 - Health Economics of Orphan Drugs in Japan

Abstract

To understand the impact of policy on orphan drug pricing and health economics in Japan as compared to in the EU5. The study employed a pragmatic literature, industry, and policy review to determine nuanced pricing and reimbursement dynamics for orphan gene, stem cell, and PD-1/L1 therapies in Japan. While innovative and orphan drug pricing and access in the EU5 often relies on cost-effectiveness analyses and budget impact, pricing in Japan strictly follows either the cost-calculation or the comparison pricing pathway, as the country places a larger emphasis on innovation and unmet therapeutic need. Japan’s HTA allows new drugs to use innovation (first-in-class) premiums (70-120%) and marketability (orphan indication) premiums (5-20%). An additional 15-20% premium is available to drugs with Sakigake designation, given to domestically-developed therapies expected to have outstanding efficacy. Orphan gene therapy with no comparator, SPINRAZA, was quickly priced in Japan at ¥9,320,424 (€70,785). In Europe, SPINRAZA is only approved in Germany, which cited major improvement of therapeutic benefit to price the therapy at €89,600; other more cost-effectiveness-conscious countries have not yet chosen to reimburse the therapy. Although historically more lenient on budget impact than EU5 countries, since 2016, Japan has also necessitated re-pricing of “huge sellers,” or products with annual sales of ¥100-150 billion ($0.97-1.45 billion), such as SOVALDI, which received a 31.7% Japanese price-cut to the therapy. Still not as important an influence on reimbursement decisions in Japan as in Europe, budget impact of orphan and novel therapies is on Japan’s radar. Japan rewards drugs for innovation and unmet need fulfillment, as long as budget impact is not excessive; European HTA policies look at cost-effectiveness and therapeutic benefit to gauge pricing. Domestic manufacturers launching therapies in Japan are poised preferentially, and global manufacturers should emphasize the novel/orphan nature of products as opposed to their cost-effectiveness.