Regulatory Developments Some 45 years after its introduction, the Public Health Insurance Scheme is coming under extreme pressure from demographic changes and a resulting 3-4% increase every year in healthcare costs (equivalent to approximately one trillion yen). The unstable performance of the overall economy does not provide for a similar sustained increase in contributions to the scheme. The growing gap between contributions and costs led the Government to cut total healthcare reimbursements by 2.7% in 2002 and by a further 3.16% in 2006. These cuts were justified by referring to lower prices in foreign markets, even though these markets are structurally different from Japan: the retail structure in Japan and the way the Japanese Government determines medical-related reimbursements through the public insurance scheme are unique and render any straight comparison between prices here and in other countries meaningless. The EBC has long called for a reduction in the time and costs associated with introducing innovative new treatments to the Japanese healthcare system. Despite the original intent of using the revision to facilitate procedures and bring Japanese rules in line with global standards, the revised Pharmaceutical Affairs Law (PAL) resulted in the introduction of unique Japanese requirements, longer approval times, and less consistency with international practices. Much hope was pinned on new opportunities for third party testing of low-risk products and for sub-contracted manufacturing, introduced under the revised Pharmaceutical Affairs Law in 2005. However, expectations that this Law might shorten product approval times and streamline application processes have been dashed - the level of bureaucracy and cost has in fact risen. Meanwhile, efforts by the Japanese Government to improve efficiency have been solely focused on reducing prices paid out under the insurance reimbursement system. Cuts have been made across the board, ignoring the long-term economic and clinical benefit of individual treatments, equipment running costs and the need to recover initial investments in research and development. The EBC believes that a fundamental overhaul of the Government's healthcare strategy and regulatory approach is needed to ensure that Japanese healthcare provision can, in the future, keep pace with technical innovation, public expectation and demand. Prospects for EU-Japan Economic Integration Healthcare in Japan is in general of high standard as suggested by the average life expectancy and lowest infant mortality rates in the world. However, inefficiencies in the system, such as the structural over-consumption of certain services and unparalleled long stays in hospital, need to be addressed urgently. The financing of the healthcare system will continue through the Public Health Insurance Scheme and demographic changes are leading to lower contributions and higher consumption. Consumers expect higher quality medical services, which will come under increasing strain in the years ahead. Efficient medical equipment should in this context be seen as an investment that not only offers the individual patient a substantially higher quality of life, but also can offer reductions in total expenditure on medical care over time. However, the current regulatory structure and reimbursement regime constitute an obstacle to introducing such equipment to the Japanese market and deprive Japanese consumers of access to products available in other industrialised countries, including China and South Korea. An Economic Integration Agreement between the EU and Japan should ensure that products certified in one market be automatically accepted in the other market. Such a measure would lower costs and in the long-term, eliminate the device-gap between Japan and other industrialised countries as virtually all devices on the world market today are certified according to EN standards. Priorities
Key Issues and Recommendations ■ Mutual recognition and acceptance of EN standards Yearly status report: no progress. One major reason for revising PAL in 2005 was to facilitate the entry of medical equipment onto the Japanese market by aligning domestic rules to international standards, as recommended by the "Global Harmonisation Task Force." However, the addition of Japan-specific requirements on top of international standards, together with the lack of clarity about how these requirements are applied, has resulted in even greater differences than before. One example is the mandatory, product-category-based pre-examination of manufacturing facilities, introduced into PAL as part of the QMS - an evaluation which is in direct contradiction to ISO 13485.The Ministry of Health, Labour and Welfare (MHLW) and the Pharmaceuticals and Medical Devices Agency (PMDA) is again considering new measures to counter the "device-lag", this time together with the medical device industrial associations. Recommendation:
■ Reimbursement prices Yearly status report: no progress. The 2006 revision of prices paid out under the reimbursement scheme resulted in price reductions for medical material equivalent to 60 billion yen in total. Reimbursement prices were reduced by more than 25% in the case of more than 34 product categories. The purported reason for this largest ever cut was to correct price differences between Japan and foreign markets, although the merits of directly comparing final price levels are clearly limited. The government is considering introducing regular price revisions every year and using prices in other Asian markets as points of reference in its blind pursuit of further reductions. In the long run, this will only undermine the interest of foreign manufacturers in the Japanese market. Reimbursement setting is now decided after the safety and review process prescribed within PAL which exacerbates the "device-lag" between Japan and other industrialised countries. Recommendation:
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