Pharmaceutical Pricing and Distribution in Japan
2012 update

Pharmaceutical Pricing and Distribution in Japan 2012 update

No serious pharmaceutical company can afford to ignore Japan, a $120 billion market, the second-largest in the world. Nevertheless, it remains a tough and highly competitive market to crack, with the environment for developing and marketing medicines dominated by price. No new brand can be introduced without a yakka (reimbursement price) set by the government. Innovative drugs receive price premiums while others are capped at the price of older entrants. Discounting to the trade is inescapable, but is punished by downward price revisions on a scale and frequency unseen elsewhere.  Big selling brands are repriced. Distribution is inherently linked to the pricing process and is particularly opaque to outsiders.

This latest, fully-updated and enlarged version of the critically-acclaimed best-seller includes all the essentials you need to optimise market access and life cycle management in Japan. 

• New drug pricing and price revision processes made completely clear, with all formulae used and numerous up-to-date examples (citing price comparators, premiums applied and use of the foreign price adjustment rule).
• Incorporates all pricing rule changes coming into effect from April 2012 with forecast of further reforms in fiscal 2014, including HTA.
• Greatly expanded section on the premium for offsetting price cuts in return for R&D commitments.
• Covers Rx brands, generics, biosimilars and OTCs.
• Written by an acknowledged expert on the Japanese market with 25 years’ experience.
• Fully researched through interviews conducted in Tokyo and Osaka with industry experts, government officials and local consultants.
• Lots of insight. Not just how the rules work, but how successful companies work the rules.
• Key role of wholesalers and how they are paid clarified.

Whether the challenge is entering the Japanese market for the first time, moving up the all-important ranking there by market share, or negotiating with a local in-licensing partner, this easy to navigate report is designed to help you quickly get a complete grasp of Japanese P&R.

Executive Summary

1. Market Overview
1.1 Healthcare System
1.2 Leading Companies, 2011
1.3 R&D
1.4 Sales and Marketing
1.5 Leading Products, 2011
1.6 Foreign Exchange Rates

2. Market Access
2.1 Compassionate Use
2.2. Launch Principles and Timings
2.3 Reimbursement Coverage
2.4 Formulary Listing
2.5 Outline of Introductory Pricing Procedures
2.6 Data Requirements
2.7 Summary of Approach Taken
2.8 Details of Methodology
2.8.1 Similar Efficacy Comparison Method I
2.8.2 Price Comparator
2.8.3 Price Premiums
2.8.4 Similar Efficacy Comparison Method II
2.8.5 Cost Calculation
2.9 Inter-specification Adjustment
2.10 Inter-formulation Adjustment
2.11 Fixed Dose Combinations
2.12 Single Enantiomer Drugs
2.13 Other Line Extensions
2.14 Foreign Price Adjustment
2.15 Minimum Prices
2.16 Pharmacoeconomics
2.17 Generics
2.17.1 Generic Uptake
2.17.2 Tariff Listing of Generics
2.17.3 Pricing of Generics
2.17.4 Fee Revisions for Generics
2.17.5 Generic Strategy
2.18 Biosimilars
2.19 Over-the-counter Medicines
2.20 Commercial Sources for NHI Price Information

3. Price Revision Processes
3.1 Drug Price Margin
3.2 Biennial Revision
3.2.1 Market Price Survey
3.2.2 Revision Timetable
3.2.3 Calculation of New Tariff Price
3.2.4 Impact on Industry
3.2.5 Impact on Generics
3.3 Repricing
3.3.1 Calculation Methods
3.3.2 Repricing History
3.4 Long-Listed Brands
3.5 Correction Premiums
3.6 Premium for Development of New Drugs/New Indications
3.6.1 Qualifying Criteria
3.6.2 Qualifying Products
3.6.3 Situation after Patent Expiry
3.6.4 Demands on Companies
3.6.5 Consequences
3.6.6 April 2012 Premium
3.7 Pharmaceutical Development Support Center

4. Provider Remuneration
4.1 Clinic Dialysis
4.2 Diagnosis Procedure Combinations
4.2.1 Impact on Drug Use
4.2.2 High-cost Drug Exclusions
4.3 Prescription Limitations

5. Patient Copayment

6. Pricing Down the Distribution Chain
6.1 Wholesaling
6.2 Paying Wholesalers
6.2.1 Traditional Practices
6.2.2 Wholesale Margin and Rebates
6.3 Pharmacies
6.4 Paying Pharmacies

7. Prospects for Change
7.1 Likely Changes in FY 2014
7.1.1.Premium for New Drugs/New Indications
7.1.2 Long-listed Brands
7.1.3 Health Technology Assessment
7.2 Possibility of Extraordinary Price Revision in 2015
7.3 Trans-Pacific Trade Partnership

Tables
1.1 Change in market breakdown by sales channel, 2005-2011
1.2 Growth in national medical care expenditure, 2000-2009
1.3 Top-10 sales rankings of Japanese-origin companies in Japan and world, 2011
1.4 Top-20 sales rankings in Japan at company level, 2011
1.5 Top-20 sales rankings in Japan at distributor level, 2011
1.6 Companies with highest promotional spend in Japan, 2011
1.7 Top-10 best selling brands in Japan, 2011
1.8 JPY per foreign currency unit, 2005-2012
2.1 Breakdown of NHI drug tariff
2.2 Frequency of application of pricing methodologies, 2006-2011
2.3 Number of premiums granted for therapeutic advances
2.4 Number new products awarded price premiums, 2006-2011
2.5 Comparators used and premiums awarded to newly listed drugs
2.6 Formulation categories for pricing purposes
2.7 Comparison of prices by cost comparison with average foreign prices
2.8 Generic penetration, 2002-2010
2.9 Numbers of listing of generics since 2007
2.10 First-listed generics, 2000-2011
2.11 Rx-to-OTC switch ingredients since 2000
3.1 Change in average drug price margin, 1989-2011
3.2 NHI drug price revisions, 1981-2012
3.3 Breakdown of drug price revisions by number of products affected
3.4 Examples of downwards repricing, 1982-2012
3.5 Additional price cuts for long-listed brands, 2002-2012
3.6 No. lines receiving premium for developing new drugs/indications
3.7 Examples of new drugs/new indications for Japanese development
3.8 NHI price evolution with Aricept
3.9 PDSA development projects
5.1 Specimen monthly bill for insured elderly outpatient
5.2 Diseases attracting a ceiling on patient copayment
6.1 Leading wholesalers, 2011
6.2 Evolution of wholesaler sales by customer group
6.3 Share of wholesaler sales taken by leading manufacturers
6.4 Share of price agreements concluded following price revisions
6.5 Decline in average wholesale margin
6.6 Top-15 chain pharmacies, 2010

List of Figures
2.1 NHI pricing process for new drugs
3.1 Diagrammatic representation of price impact of new drug development premium
6.1 Diagrammatic representation of wholesale margin & rebates

Glossary of Abbreviations and Acronyms