Two years after Japan began employing a cost-effectiveness evaluation system to determine the efficiency and allocation of health resources, it is preparing for the first time to adjust prices of pharmaceuticals and medical devices based on such assessments.
Japan’s Central Social Insurance Medical Council (Chuikyo) is expected to discuss the potential price adjustments at a meeting in April. The first such adjustments are likely to be applied mainly to categories of drugs and medical devices that are innovative, but which have been costly. Only products already approved for sale in Japan will be subject to price adjustments.
Cost effectiveness divides the net cost of implementing a health measure by the change in health outcomes in a target patient population. Japan first announced it would be moving to implement a cost-effectiveness evaluation system in April 2019. While Japanese healthcare officials say the system will improve the allocation of healthcare, pharmaceuticals, and medical devices, industry leaders have warned it will disincentivize innovation and hamper patient access.
Under the process determined by the Ministry of Health, Labor, and Welfare (MHLW), manufacturers will have nine months to submit an analysis of the cost-effectiveness of a product. Then a public analysis group will have three months to conduct its analysis. After the government review of their analyses, proposed price adjustments will be submitted to the government’s Cost Effectiveness Assessments Organization, which decides how to price the product.