Reimbursement for medical devices in Japan is determined by functional pricing and foreign reference pricing.
Every 2 years the Japanese government issues new medical device pricing in April. This year, the reimbursement for their foreign reference pricing formula will be reduced as follows.
Foreign reference pricing takes the average price of 5 foreign countries – the US, France, Germany, England, and Australia. Still in effect, if the foreign price in any one of these countries is 2.5 times higher than the prices in the lowest priced country, the highest price country is discarded, and the average is only based on the remaining prices in the 4 countries. Then, if there are 3 or 4 countries left, and the highest price exceeds 1.8 times the arithmetic mean of the other prices, the maximum price is set at 1.8 times. However, with this 2022 revision, the highest price is now to be equivalent to 1.6 times (not 1.8 times) the arithmetic mean of the other prices.
Also, in the past, the upper limit of the reimbursement price was (1) 1.25 times the foreign average price for newly listed products, and (2) 1.3 times for existing products. But with this 2022 price revision, the upper limit of existing products for re-evaluation is reduced to 1.25 times.
In short, Japanese device pricing reimbursement is now generally more reflective of EU pricing than US pricing.