Healthcare

January 2002

The race among pharmaceutical manufacturers is heating up to develop genomic drugs, new treatments developed using genetic information. Although many do not expect to commercialize genetic drugs until around 2010, drug makers are looking to secure related patents before their rivals do. President of Yamanouchi Pharmaceutical Co. said that if they will be all behind over the next couple of years, the drug maker would not be able to develop promising drugs. The Chairman of Takeda Chemical Industries Ltd. said that the firm is marshaling all of their R&D competitive resources, including those in biology, physics, chemistry and information engineering. Yamanouchi plans to invest 50 billion Yen in genetic drug development over five years starting fiscal 2001, while Sankyo Co. will spend 26 billion Yen over three years. Drug makers are also joining hands with competitors as their own research is unable to cover the more than 30,000 genes in the human genome. One example is the partnership between Sumitomo Chemical Co., Yamanouchi and Trans Genic Inc. Drug makers search for disease-related genes. By finding substances that affect the proteins expressed by these genes, they hope to develop new drugs effectively. Some efforts are already yielding results, and Takeda has discovered genes relating to the spread of cancer, asthma and other respiratory diseases. Sankyo is applying for patents on 80 genes, including applications still under preparation. But not all genetic findings lead to the development of new blockbuster drugs, according to Sankyo Vice President Tetsuo Hiraoka. As there are risks associated with making such large investments, analysts say increasing the likelihood that discoveries can be commercialized will be key in determining the future earnings of drug makers. (January 29, the Nihon Keizai Shimbun)

The Ministry of Health plans to halve the number of hospital beds nationwide to 500,000-600,000 by 2015. The government hopes to encourage more competition between hospitals to weed out the inferior ones, encourage hospitals to shift their focus to nursing care services and cut health care costs. Permitting each hospital to advertise its physician's qualifications, specialist certificates and other details would foster inter-hospital competition. Currently, they are permitted only to list the names of physicians and their operating hours. Independent institutions would also provide via the Internet objective data on the procedures, treatment, surgery and success rates of medical institutions, according to the ministry's plan. The nation's 9,000 hospitals (including mental hospitals) currently have about 1.6 million beds, including 1 million beds for general illnesses or injuries. This works out to nearly 8 beds per 1,000 people, versus European and U.S. hospitals, which have only about 4-5 beds per 1,000 people. Based on demographic projections for 2015, the ministry calculated it would need only 500,000-600,000 beds to bring its rate in line with the 4-5 per/thousand Western standard. The ministry also hopes to beef up measures to have hospitals that provide high-quality, expeditious care receive more insurance payments than those which do not. (January 29, the Nihon Keizai Shimbun)

The Ministry of Health, Labor and Welfare plans to reform the medical payment system, which sets prices for medical treatment, and to consider integrating the health insurance systems for self-employed workers and their salaried counterparts, as well as other changes in the national medical system. The ministry will release the reform plans in early February. It will form study or research groups for each topic, and hopes to reach a conclusion within a year. In addition to reviewing the medical payment system, the reform plans consist of three pillars: 1. Integrating about 5,000 insurers, including the national health insurance system and the health insurance system for wage earners. 2. Unifying the collection of premiums for social insurance systems, including medical, pension and employment insurance. 3. Selling off, abolishing or integrating social insurance hospitals, which require an annual injection of more than 30 billion Yen from a special account of the financially troubled government-administered health insurance system. The study groups, to be formed in February, will be under the jurisdiction of Minister Sakaguchi for Health, Labour and Welfare. As consultations with doctors are not as lucrative as medical examinations and prescriptions, medical institutions have come under fire for conducting 3-minute diagnoses, while carrying out excessive examinations and issuing too many prescriptions. The ministry will study the possibility of raising the payments for consultation services and preventive diagnoses for diseases such as diabetes. It will also look into factoring the costs of doctors and hospital management into medical payments. The integration of insurers and the unification of premium collections could reduce medical expenditures by improving clerical efficiency and reducing staff, but some health insurance unions are against integration. The ministry decided to carry out a drastic review of the medical structure for the approval of the medical reform bills during the current Diet session; the coalition parties are strongly opposed to raising the medical payments by salaried workers to 30%. The bills have been criticized as an attempt by the ministry to make the medical system's financial situation better. (January 29, the Daily Yomiuri)

The Health Ministry aims to increase the child hospital treatment fees paid to medical institutions under the public medial insurance system in fiscal 2002. The plan is part of a proposal presented by the ministry to the Central Social Insurance Medical Council, an advisory panel to the health minister. The planned hike is intended to ease financial strains at hospitals involved in pediatrics amid the nation's declining birthrate. In addition, the ministry hopes to raise fees for advising patients on lifestyle matters, as diabetes and other lifestyle diseases tend to lead to costly treatment and squeeze the finances of the medical insurance system. The government decided to cut overall treatment fees for fiscal 2002 by 1.3%. Budget allocations for individual treatment items will be decided by March following deliberations at the advisory panel. To curb national medical spending, the ministry intends to cut treatment fees for senior citizens who stay hospitalized for six months or longer despite having little need for treatment. Individual expenses will be increased for such hospitalizations. The ministry will also give incentives to medical institutions to make joint use of costly medical equipment, such as MRI (magnetic resonance imaging) devices. (January 24, the Nihon Keizai Shimbun)

An advisory panel of the Health Ministry approved plans to reduce the standard prices of proprietary prescription drugs developed by major drug makers by an additional 4-6%, on top of an average 4.6% cut, which has been already decided during fiscal 2002. The prices of proprietary prescription drugs are nearly double those of copycat drugs made by other companies using the same ingredients. The Ministry has been planning to reduce the prices of proprietary drugs for slashing medical costs under the national health insurance program. The government and ruling coalition parties decided at the end of last year to reduce medical treatment fees and drug prices by a combined 2.7% from fiscal 2002. (January 19, the Nihon Keizai Shimbun)

The government will allow health insurance societies to directly check members' hospital bills and to sign contracts with medical institutions for additional services. Although the Health Insurance Law allows operators of public health insurance schemes to check medical bills and pay their portion of the bills to hospitals, a 1948 government order prohibited individual operators from doing so, and delegated the tasks to the social Insurance Medical Fee Payment Fund, a public corporation. The recent decision is an attempt to strengthen the rights of operators of public health insurance schemes, such as health insurance societies. The measure will allow societies and other operators to check hospital bills incurred by their members at their own discretion and to clear the bills directly from their coffers. The government hopes the measures will correct the current situation, in which control of medical information and diagnoses are concentrated in administrative and medical organizations. The government plans to include the measures in its 3-year program to promote deregulation, which is to be reviewed in March, and to implement the measures in the following fiscal year. (January 8, the Daily Yomiuri, the Yomiuri Shimbun)

Major Japanese pharmaceuticals companies plan to strengthen R&D operations in the U.S. and Europe, which together account for some 70% of the world drug market. The firms aim to offset an expected shrinkage in the domestic market, as the government is set to lower official prices of prescription drugs under the public health insurance program in fiscal 2002. By year-end, Sankyo will increase staff to 120, up from 70, at U.S. subsidiary Sankyo Pharma Inc., which is conducting clinical tests on medicines for hyperlipemia and diabetes. It will also increase its staff to 30, up from 20, at Sankyo Europe GmbH. All new workers will be hired locally. Taisho will enhance its in-house system to develop new drugs, since it scrapped a plan to integrate operations with Tanabe Seiyaku Co., which is strong in prescription medication. Taisho will begin clinical tests in the U.S. next month to work on drugs in four areas, including cerebral circulation and dementia/mental disorders, at its R&D arm established last summer in the state of New Jersey. Local staff will be increased to 20, up from four, within five years. Eisai Co. by March will begin the second phase of clinical testing in Europe and the U.S. on its new anti-cancer drug code-named E7070. Fujisawa Pharmaceutical Co. plans to gradually increase the number of staff at its U.S. R&D subsidiary, which currently employs 110 workers. Takeda Chemical Industries Ltd., the top drugmaker, already has more than 200 researchers working at two of its U.S. subsidiaries, including a joint venture with Abbott Laboratories. Other major domestic drugmakers have begun to follow Takeda's lead. (January 7, the Nihon Keizai Shimbun)

Japanese pharmaceutical companies are accelerating research & development of cancer treatments with biotechnology. As cancer is a leading cause of death in Japan and other industrialized nations, the drugmakers see great business potential in this field. Eisai Co. aims to jointly develop a new drug with the National Cancer Institute in the U.S.. Using the result of research on toxins extracted from marine sponges, Eisai has developed various chemical compounds. The product, E7389, is believed to halt the propagation of cancer cells by attacking proteins that comprise the cells. A U.S. subsidiary of Eisai aiming to commercialize the drug will enter phase I clinical testing by March to determine what type of cancer the drug is effective for treating. Kyowa Hakko Kogyo Co. will shortly conduct phase II testing of its proprietary cancer drug, KW-2170, which attaches itself to the double-helix structure of cancer cell DNA and kills the cell by inhibiting the function of enzymes, for which a cancer cell needs to propagate and spread. The company aims to test the drug on five different types of cancer, including lung, prostate and colon cancer. It is preparing for clinical testing in Australia, Taiwan and other locations, as well as the U.S. After phase II testing is completed in foreign countries, the firm will test the drug in Japan and seek Health Ministry approval as early as 2006. Daiichi Pharmaceutical Co. is clinically testing four types of new cancer drugs in Japan, the U.S. and Europe. Kirin Brewery Co. is developing a new treatment method using cell functions to treat multiple myeloma, and plans to start clinical testing in Japan soon. (January 3, the Nihon Keizai Shimbun)