Abstract
AbstractVarious trade practices exist in the Japanese pharmaceutical distribution market, such as rebates and allowances between pharmaceutical companies and wholesalers, lump-sum bulk purchases, and unsettled provisional delivery between wholesalers and medical institutions. The Ministry of Health, Labour and Welfare has sought to reduce opaque trade practices to increase the reliability of the National Health Insurance (NHI) Drug Pricing System listing the distribution prices. In this chapter, I estimate the long-term impact of policies aiming to improve trade practices involving distribution prices, NHI prices and the profit structure of distribution players through modelling and a simulation analysis of distribution transactions with trade practices. The results suggest the impact of policies on the distribution market and NHI prices can be considerably reduced by simultaneously improving the upstream and downstream trade practices equitably. This may improve the negative primary sales margins of wholesalers, which is a policy objective, without significantly affecting the profits of other distribution players.KeywordsNHI drug pricing systemTrade practiceDistribution transactionPharmaceutical marketsModel simulation
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