As the world’s third largest pharmaceutical market, Japan accounted for approximately 6% of the $1.5tn in global pharmaceutical sales in 2022. While this makes it an attractive market for all pharmaceutical companies, Japan is also an important reference country in the Asia-Pacific region, especially for pricing and reimbursement, with government agencies in other countries considering the price of a medicinal product in Japan to inform the cost in their own countries.
However, the path to market access in Japan is complex and is about more than just pricing and reimbursement. The expectation from the Pharmaceuticals and Medical Devices Agency (PDMA), Japan’s regulatory authority, to review dedicated Japanese patient-level data is understood by all and should be considered a critical part of clinical development if commercialisation in Japan is envisioned. If a dedicated Japanese study is not possible, recruiting sufficient Japanese patients into a global study is encouraged, to ensure the overall global results can be confidently applied to the Japanese setting. That may secure regulatory approval but not market access.
Balancing clinical benefit and cost to control healthcare spending
Total spending on healthcare in Japan, calculated as a percentage of gross domestic product (GDP), has risen from 6.2% in 1980 to 11% in 2020. Faced with this rapidly rising healthcare expenditure – due, in part, to emerging health technologies and an ageing population – Japanese authorities needed to consider ways to control this spending.
Using the application of health technology assessment (HTA) in Europe as a model, Japanese authorities created a cost-effectiveness evaluation (CEE) process in 2019. Designed as a mechanism to control healthcare spending, this process reflects the methodology of HTA, which assesses the clinical benefit of a new healthcare technology and balances this against the willingness of a society to pay for the added value.
Due to the fast pace of regulatory listing of new health technologies under public health insurance, the CEE is a complementary means to potentially adjust prices after initial reimbursement. This offers an incentive to pharmaceutical companies, as commercial sales are not delayed due to a lengthy HTA process, as is the case in many European countries.
C2H (or Center for Outcomes Research and Economic Evaluation for Health), a department of the National Institute of Public Health (NIPH), is the public organisation that conducts cost-effectiveness evaluations (CEEs) in Japan. Not all technologies are subject to CEEs and clear criteria govern the selection of technologies for evaluation, essentially based on the potential risk for significant financial impact – with exceptions being made for rare diseases and paediatric indications to avoid disincentives to research.
To keep a balance between cost and outcomes, and to harmonise the Japanese pricing system with CEEs, C2H is highly transparent, providing clear guidance on the CEE process to biopharma companies. Yet, CEEs are also a lengthy process, largely due to a shortage of local health technology assessment (HTA) expertise. For example, only two out of the 13 assessments started in 2022 were completed by the end of 2023.
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