Japan seeks hefty cut to blockbuster Opdivo price as officials pull back the reins on health spending

Japanese yen

Pressure is building in Japan to slash the price of Ono Pharmaceutical's cancer drug Opdivo, a year before the price of the immuno-oncology drug is scheduled for review.

A committee set up by the Ministry of Health, Labor and Welfare (MHLW) met last week to discuss the size of the reduction, which could come into effect in April 2017. Japan Today reports that one member of the panel called for a 50% cut in Opdivo's price, although a reduction of 25% is thought to be more likely.

Under current policy, a drug's price can be reduced by up to 25% under a special "special exemption," if it generates annual sales of 100-150 billion yen and if those sales exceed the selling company's projection by 50% or more. 

Treatment with Opdivo (nivolumab) costs around 35 million yen ($342,000) a year for a typical patient, a price set when it was approved only to treat the skin cancer melanoma in Japan. Since then, however, it has picked up additional approvals for non-small cell lung cancer (NSCLC) and renal cell carcinoma (RCC)--dramatically increasing the number of patients eligible for treatment and the cost to Japan's healthcare system.

Committee members also expressed indignation at the cost of Opdivo in Japan relative to other world markets. The National Health Insurance (NHI) list price for Opdivo is 730,000 yen per 100mg, more than double the amount charged in the U.S. and almost five times its price in the UK.

An forced price cut in the world's third-largest pharmaceuticals market would be a further blow to Ono after new data on Opdivo in first-line NSCLC treatment was reported last week. In a study presented at the ESMO cancer conference, the drug failed to hit its goals, calling into question the drug's long-term prospects. Also last week, the U.K. government decided not to back routine prescribing in second-line NSCLC. 

That could translate to lower royalties on ex-Japanese sales from partner Bristol-Myers Squibb ($BMY), and Ono needs Opdivo to fire on all cylinders as it tries to recover from the loss of patent protection and generic competition for its top brands.

Additional price controls are a worrying signal for the wider pharmaceutical industry as well. Drugmakers have fiercely resisted changes to the current pricing system and maintain that efforts to control healthcare spending should focus on making sure drugs are prescribed appropriately and reducing waste. 

Traditionally the NHI has set a two-year period between pricing revisions, but the MHLW has already broken that mold by forcing an early price cut for Gilead Sciences' hepatitis C therapy Sovaldi (sofosbuvir). It has also been making noises about a reduction for Amgen's ($AMGN) cholesterol-lowering antibody Repatha (evolocumab).

A wholesale move towards price tweaks every year rather than biannually sits alongside other measures--including greater prescribing of generics--as the MHLW grapples with escalating spending on medicines. Japan's healthcare bill rose more than 9% to $77 billion last year, thanks to an ageing population and accompanying social security costs.

A final decision on Opdivo's pricing is expected to be made next month.

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