Japan’s Ministry of Health, Labour and Welfare (MHLW) evaluates medical devices and in vitro diagnostics (IVDs) for National Health Insurance (NHI) coverage after they receive registration approval under the Pharmaceuticals and Medical Devices (PMD) Act. The regulatory review addresses safety and efficacy, while the reimbursement process determines insurance eligibility and pricing. Both product types pass through the Central Social Insurance Medical Council (Chuikyo) and its Specialized Organization for Insured Medical Materials (Hozaisen), and both systems follow a two-year pricing cycle. However, devices and IVDs use separate reimbursement category structures, pricing methods, and listing timelines.
Category Structure
The MHLW guidebook on Insurance Coverage for Medical Devices and In Vitro Diagnostics divides medical devices into categories A, B, C, R, and F. Categories A1, A2, and A3 cover devices whose cost is included in an existing technical procedure fee, so hospitals cannot bill for the device separately. Categories B1, B2, and B3 cover devices that receive reimbursement separately from technical fees, as they fit an existing functional category. Category C devices are innovative devices. Specifically, Category C1 applies to devices that require a new functional category. Category C2 applies to devices that require both a new functional category and a new technical fee. Category R covers remanufactured single-use devices, and Category F covers products that MHLW deems unsuitable for insurance coverage.
IVDs follow a separate E category system, which the MHLW outlined most recently in its February 2026 notice on IVD insurance coverage. E1 applies when both the measurement item and the measurement method already exist in the fee schedule. E2 applies when the measurement item exists, but the method is new, such as an automated or more precise assay. E3 applies to new measurement items, or to existing items with technical improvements that add clinical value or convenience. The 2026 notice classifies IVDs without clear proof of clinical usefulness as F and denies coverage. Grounds for an F decision include an unclear clinical role, performance that does not match the intended role, and test results that do not change treatment.
Pricing Methods
For devices in categories B and C, MHLW sets a price for each functional category. New functional categories receive prices through the comparative method, or through the cost calculation method when no similar category exists. Under the cost calculation method, the price is based on manufacturing or import costs, administrative expenses, operating profit, and distribution costs. Adjustment premiums for innovativeness, usefulness, improvement, and marketability may apply. The MHLW also adjusts prices downward when they exceed 1.25 times the average price in the US, UK, Germany, France, and Australia. Moreover, foreign reference pricing is not as popular as it once was in Japan. Getting higher pricing is most likely with strong clinical evidence.
C2 devices require both a new functional category and a new technical fee. Japan updates its medical fee schedule every two years, and the MHLW creates new technical fees only as part of this update. Therefore, a newly approved C2 device usually receives reimbursement under the technical fee of a comparable existing procedure until the next update introduces a fee specific to the device. A manufacturer whose application falls just after an update may wait up to two years for that fee.
Japan reimburses IVDs through the tests they perform. The medical fee schedule assigns each laboratory test item a fixed number of examination points, and each point equals 10 yen. When a hospital or laboratory runs a covered test, it bills public health insurance the points for that test item. An E1 product measures an item already listed in the schedule with an established method, so it receives the existing points for that item without a separate price review. An E2 or E3 product involves a new method or a new measurement item, so the manufacturer must propose a point value and justify it. During MHLW’s hearing, the manufacturer presents the measurement principle, comparisons with similar tests, clinical evidence, expected test volume, and the reasoning behind the requested points.
Required Documents
According to MHLW’s 2022 insurance application guideline, applications for categories A1, A2, B1, and E1 need only a coverage request. Applications for the other categories go through a draft review by MHLW before formal submission and include supporting forms.
For medical devices, the forms required depend on the category. They cover estimated patient numbers and sales, the selection of a similar functional category, and the grounds for any premium adjustment. Some devices also need forms on the related medical technology, cost calculation, price adjustment, and health economic value.
For IVDs, the application includes the requested insurance points and their basis, estimated patient numbers and test volume, the reagent price per test, an overview of the test, evidence of clinical usefulness or improved convenience, and the health economic benefits.
Listing timelines
Devices that fit existing categories reach the market quickly. According to the MHLW guidebook, most A1 products gain reimbursement coverage 20 days after the MHLW receives the application. A2 and B1 applications received by the 10th of a month take effect on the 1st of the following month. Devices in categories B3, C1, C2, and R require review by the Chuikyo. This review usually takes four to five months, which means these devices receive listings only in March, June, September, and December.
IVDs follow a similar pattern on a monthly schedule. Under the 2026 IVD notice, E1 coverage begins 20 days after MHLW receives the application. E2 and E3 reviews take up to five months, and coverage begins on the 1st of the month after MHLW makes its reimbursement decision.
As a result, new IVDs can reach the market in any month, while new C1 and C2 devices must wait for one of the four quarterly listing dates.
In both systems, manufacturers may file one objection to a proposed decision. MHLW may also refer complex C2 devices and IVDs to an additional review by the Medical Technology Evaluation Subcommittee, which can extend the reimbursement timeline.
2026 IVD Rule Revisions
The MHLW revised its IVD coverage rules in February 2026, and the changes took effect on June 1, 2026. The E1, E2, and E3 categories remain in place.
Under the revised rules, manufacturers may request a re-evaluation of a listed IVD’s points through a challenge application, using post-listing data from peer-reviewed publications. Tests for rare diseases and low-volume tests that determine drug eligibility receive higher points, with larger increases for lower test volumes.
The MHLW may also reduce the points for an IVD whose sales far exceed forecasts. Finally, manufacturers must keep covered products in stable supply, and the MHLW may put a manufacturer’s pending applications on hold if it fails to do so without good reason.
Planning Considerations
Manufacturers can request pre-consultation with MHLW on category selection for both devices and IVDs. The reimbursement application should be prepared in parallel with the PMDA review of the product registration application. In addition, clinical trial data on procedure time, staffing, materials, testing frequency, and time to result can support pricing applications.
Written by: Ames Gross – President and Founder, Pacific Bridge Medical (PBM)
Mr. Gross founded PBM in 1988 and has helped hundreds of medical companies with regulatory and business development issues in Asia. He is recognized nationally and internationally as a leader in the Asian medical markets. Mr. Gross has a BA degree, Phi Beta Kappa, from the University of Pennsylvania and an MBA from Columbia University.