Medical Device Pricing in Japan to Decrease in Early 2016

Ten years ago, Japan medical device pricing was very good. Companies that sold 10% of their products in Japan would receive high reimbursement that might lead to 20% of the company’s overall profitability coming from Japan. Nowadays, the Japanese government is increasingly cutting down on medical device pricing.

Reimbursement in Japan is determined in two ways. The first way uses the “reasonable zone” (R-Zone), referring to the difference between the actual purchasing price and the reimbursement price, which is fixed and controlled by the government. The second way uses the foreign average reference pricing (FRP) which is a comparison study on pricing with the USA, UK, Germany, and France. The FRP is revised every two years.

The last time device reimbursements were reduced in 2014, the FRP was reduced from 1.5 to 1.3 for existing products on the Japanese market, and new products remained at 1.5 times the reference pricing of the four reference countries listed above.

In early 2016, the Japanese government will also reduce the FRP for new devices from 1.5 to 1.3 and may even reduce products already on the market from 1.3 to slightly lower. Price negotiations are in progress and PBM will update you as we learn more.