Japan weighs further clampdown on drug pricing, with Opdivo and Repatha in its sights

Japan is urgently looking for ways to alleviate the strain that rising drug prices place on its healthcare budget. And with forced price cuts for brands such as Gilead Sciences' ($GILD) hep C med Sovaldi already under its belt, the government is reportedly weighing annual price revisions--with cuts to Bristol-Myers Squibb's ($BMY) Opdivo and Amgen's ($AMGN) cholesterol med Repatha on tap for 2017.

Pharma industry groups are fighting back, however, saying that limiting sales potential could dampen drugmakers' interest in the market and reverse recent advances in the availability of new meds.

Just-released figures from the Ministry of Health, Labor and Welfare (MHLW) show that overall spending on medicines rose 9.4% to approximately $77 billion in fiscal 2015-16, driven by a 250% increase in spending on antiviral therapies to around $4 billion. Hepatitis C virus treatments such as Gilead's Sovaldi and Harvoni were key drivers of that spending increase, says the Nikkei Asian Review.

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Faced with an aging population and high levels of government debt, the Japanese government has already tried to tackle higher spending on medicines with enforced pricing cuts for branded medicines--including Sovaldi--as well as incentives for prescribing generics.  

On the use of generics the government's plans seem to be on track. The latest MHLW figures showed 63% penetration at the end of fiscal 2015, a climb of almost 5% in one year, as it moves towards an objective of 80% generics use by the end of the decade. 

The so-called "special exemption" price cuts imposed earlier this year make it clear Japan does not feel encouraging generics alone will be sufficient, and additional action is in the cards. The proposed price cuts for Opdivo and Repatha have been mooted for April 2017.

The Japanese clampdown comes amid ever-more-heated debate over drug prices in the U.S., where drugmakers have traditionally enjoyed more pricing power than in other countries. Japan is one market that top drugmakers have tabbed for growth, for some of the same reasons that its government worries about rising spending, including the aging population.

Now, the MHLW has said it is considering further changes to the drug pricing system, setting up a committee to look into possible courses of action. Those might include more frequent reviews of prices, which pharma industry groups are fiercely resisting.

Currently, after a product is approved in Japan, a reimbursement application is filed with the MHLW, which then determines a price after a hearing with the drug manufacturer. Once the MHLW publishes the price, the drug is added to the National Health Insurance (NHI) drug list, with revisions every two years. Some suggest that the revisions now take place on an annual basis.

At a hearing convened by the Central Social Insurance Medical Council (Chuikyo) special committee on drug prices last week, the Japanese Pharmaceutical Manufacturers Association (JPMA) argued that shortening the gap between price revisions is "unacceptable." Efforts to control spending should focus on making sure drugs are prescribed appropriately and reducing waste, it added.

The trade group also took issue with the special exemption measures, saying these have been hastily implemented, without proper consultation and reduce confidence in the transparency of Japan's pricing system.

That sentiment was echoed by the JPMA's counterparts in the U.S. and Europe--PhRMA and EFPIA-- which pointed out that increased investment in R&D in Japan has delivered clear benefits, including wiping out the lag between new drug approvals in the West and Japan. Access to new drugs could be threatened if the financial stability of drugmakers operating in Japan is threatened, they warned. 

Earlier this year Patrik Jonsson, the head of the PhRMA's Japan-based executive committee, said the Japanese pharma market would shrink by a third over the next decade if the government continues its price control policy.

Related Articles:
BMS' Opdivo, Amgen's Repatha first on Japan's list for new price restrictions
Drug price cuts in Japan sink in though details sparse
Japan's push on innovative drugs gets a budget boost
Japan faces surge in healthcare costs as assessment system challenges loom

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