Japan to cut premium for new drug development to 80% and long-listed brand prices 2.2%

Japanese health and finance ministers have accepted a proposal by the Korosho, the Council for Promoting Drug Industry Policies of the Ministry of Health, Labor and Welfare, to reduce the premium for the development of new, and the elimination of off-label use, of drugs to 80% and increase the across-the-board reduction rate for all long-listed drugs to 2.2% so as to mitigate the financial burden of the premium.

Based on the initial Korosho proposals, as a result of the premium, Japan's total expenditure on drugs had been expected to increase to by 83 billion yen ($893 million), while the 2.2% cut was forecast to result in savings of 53 billion yen, resulting in a surplus of 30 billion yen, reports Pharma Japan. Based on the final agreement between the Korosho and the Ministry of Finance, drug expenditure will now be reduced by 70 billion yen while savings will increase to 60 billion yen, leaving a surplus of 10 billion yen.

In the context of Japan's $60 billion pharmaceutical market, this does not look too much, but it is another frustration for the drug industry, which is faced with biennial price reductions. The market has frustrated the major drugmakers as it is growing at a significantly lower rate of growth than the average of the global pharmaceutical markets.