Japan faces surge in healthcare costs as assessment system challenges loom

Japan can expect the cost of its medical care to increase by more than $33 billion over the next five years, a group of the nation's legislators said, calling it a threat to the government's budget-deficit plans.

The administration formed a reform panel of legislators to study the nation's public debt and ways of reining in a deficit that continues to increase. The new calculation could determine where the government looks in its attempt to rein in the expansion.

Much of the growing cost of health care stems from an explosion in Japan's aging population and along with them, the cost of the drugs and treatments they receive under the nation's national health-care coverage.

Japan's debt burden is considered the heaviest in the developed world, its debt more than double its $5 trillion economy, according to a report by Reuters.

Separately, Japan's health regulators are in the midst of deciding how to conduct cost-effective assessments for drugs and medical devices with under the Central Social Insurance Medical Council, better known as Chuikyo.

Japanese Prime Minister Shinzo Abe

The Government of Prime Minister Shinzo Abe adopted a plan last year that stipulates the trial rollout of cost-effective assessments in FY2016.

But industry officials are wary of the potential costs and worried the assessments will become highly complicated, especially as more novel therapies hit the market and are used in combinations for diseases like cancer.

Some experts say that if assessments become the main criteria for setting drug prices, innovation will suffer and that instead they should be used as one tool.

While Japan's Ministry of Labour, Health and Welfare, or MHLW, plans to incorporate cost-effective assessments into the reimbursement framework, it is unclear how exactly it will do so--whether it will use the results of evaluations to make a go or no-go decision on reimbursements or it will use them to set NHI prices.

- here's the story from Reuters