Price cuts in Japan make the country 'less predictable,' BIO official says

Opdivo

Following the recent move by officials in Japan to chop in half the price of cancer fighter Opdivo, industry group BIO is voicing its displeasure with "ad hoc" price cut decisions. A top official with the organization said a sudden change of rules in the country will make Japan “less predictable and more risky for innovators” going forward.

Facing rising healthcare costs, officials in Japan last week cut in half the price of Bristol-Myers Squibb’s Opdivo more than a year ahead of the drug’s regularly scheduled price review. According to reports, health ministry officials originally planned a 25% cut, but came back with new figures to warrant a bigger chop after Prime Minister Shinzo Abe and others weighed in.

After adding distribution and other expenses to Opdivo’s annual sales, officials said yearly costs for the drug would run 151 billion yen ($1.4 billion), enough to warrant a 50% price cut under special review rules. If the costs were considered to be between 100 billion yen and 150 billion yen, as initially estimated, the drug would have been in line for a 25% price cut.

In a new statement, BIO’s SVP of International Affairs Joseph Damond said it’s “disappointing to learn of recent instances of ad hoc decisions to modify prices of innovative medicines” in the country. He added that the moves “undermine the predictable and relatively stable rules-based system in place.”

“With other relevant stakeholders in Japan, BIO stands ready to work with the Government of Japan to help establish policies that promote public health and access to innovative medicines, while advancing the progress of biopharmaceutical innovation in Japan,” Damond continued.

Through a commercial partnership, Ono Pharmaceuticals markets the blockbuster cancer fighter in the country. Ono said in a statement it’ll review the impacts on its budget in the wake of the price cut.

Before Opdivo’s price reduction, the drug ran twice its U.S. cost and five times its U.K. sticker in the Japanese market. That price was set when it was approved only in melanoma, but new approvals in non-small cell lung cancer and renal cell carcinoma have increased the number of eligible patients and put more and more pressure on the country’s already strained healthcare budget.

In the bigger picture, the price cut could signal trouble for the industry in a top drug market as Japan, with an aging population, seeks to rein in costs.