Japan mulls changing drug reimbursement policy on sales tax review

SINGAPORE--Japan reportedly is considering a change in its drug-pricing policy, setting price caps that would last for three fiscal years instead of the current two. The excuse for the change is said to be a 2% increase in the consumption tax to 10% set for 2017.

The change, if carried out, would begin with FY2016 and carry through FY2018 instead of the current schedule of the end of FY2017, the Japan News reported, citing an unnamed source. Current policy requires updates for drug price caps every even-numbered year. Today's prices, good through the next fiscal year ending March 31, 2016, went into effect at the beginning of April last year.

The intent of the government was described as a desire to lower drug prices as much as possible even though that move would have an impact on the increase in the consumption tax, now 8%.

The Japan price-setting system relies on wholesale prices of drug products, which have been declining annually in recent years because of increased competition over generics.

The health ministry estimates that with each 1% lowering of the official price of drugs it can reduce its spending in that category by $3.37 billion.

- read the Japan News story here