Regulatory Developments The pharmaceutical industry in Japan is undergoing structural change with a critical evaluation of the development, review and registration, and the funding system. The general drive for lowered costs in public health insurance seems to have reached an end with the realisation that cuts over the line cannot ensure sustainable healthcare. Drugs are not simply an expense, but a way of reducing social costs and boosting economic performance as the population is allowed to benefit from improved therapeutic and preventative healthcare. Cost-cutting and life-saving innovations should be treated as investments and rewarded accordingly. The price revisions in 2006 took the first cautious steps in that direction, but nothing less than a complete overhaul of the current system will be sufficient considering the strains that demographical changes will place on it in coming years. Due protection of intellectual property rights is also crucial if pharmaceutical companies are to be confident in continuously developing new products for the market. With Japan approaching European protection rules for data, progress is gradually being achieved. Japan is also addressing the development of new drugs and the long lead times in introducing new drugs to the Japanese public. Although there has not been any obvious improvement in the clinical trial environment, the government seems to realise that Japan can no longer afford to refrain from participating in international cooperation on the development of drugs and has announced an intention to improve the environment for clinical trials. The EBC takes an active part in the dialogue on improving clinical trials environment and hopes that this time, good intentions will be translated into real policy change. The government has also decided to boost the review and regulatory capacity of the PMDA with the goal of eliminating the drug-lag between Japan and other advanced countries. Prospects for EU Japan Economic Integration While the global pharmaceutical industry has consolidated and put most of its efforts into developing drugs on a global scale, the pharmaceutical industry in Japan has remained largely isolated. Good Clinical Practice (GCP) rules remain different from global standards, which makes clinical trials more expensive in Japan and participation by multinational companies troublesome. By having common GCP rules, the EU and Japan could boost cooperation in the development of drugs, cut introduction costs, and, by doing so, substantially strengthen the competitive strength of the domestic Industry. Registration and review remain problematic. The Pharmaceuticals and Medical Devices Agency (PMDA) has been struggling with capacity problems since its inception in 2004. The EBC welcomes new plans to expand capacity but invites the Government of Japan to consider taking advantage of the data and evaluations already undertaken by European Medicines Agency (EMEA) for drugs circulated on the European markets. Mutual acceptance of marketing authorisation for medicinal products between the EU and Japan would substantially cut costs, reduce introduction times and eliminate the drug-lag between the economies, to the benefit of everybody - patients, society and the industry. Finally, the EU and Japan should also work together to ensure that registration data and brand names are protected with the view of stimulating further innovation. Japan must create an environment in which innovation can thrive. Innovation leads to a better quality of life for patients, decreased social costs, and a strong industry. Working with Europe would be a very cost-efficient way to achieve all this. Priorities
Key Issues and Recommendations ■ Pharmaceutical pricing reform Yearly status report: limited progress. The 2006 revision of pricing rules improved the premium rate for new drugs and relaxed the requirements for usefulness price premiums. In pricing for new paediatric drugs, however, the requirement for price premiums remains extremely strict and the premium rate limited. For new products as a whole, discussions on relaxing varieties of scientific data or other evidence to be used for price premium claims have been inconclusive. Japan needs a new NHI drug pricing system taking into account the need to properly value each drug, reward innovation and respect intellectual property. Recommendation:
■ Improved environment for clinical studies Yearly status report: limited progress. Differences between Japanese Good Clinical Practice (GCP) and GCP established by the International Conference on Harmonisation (ICH-GCP) continue to make clinical trial costs more expensive and unnecessarily complicate participation in multinational clinical trials. The EBC is pleased to see that the Government of Japan during the past year has taken up this problem as a generic issue, beyond the borders of MHLW alone and EBC welcomes the conclusion made in the "New Pharmaceutical Industry Vision". Recommendation:
■ Regulatory review of pharmaceutical products Yearly status report: limited progress. PMDA has taken important steps to increase its capacity, and also proposed a number of measures to solve the drug-lag between Japan and other markets by 2011 (currently a 2.5-year delay compared with the USA). The number of consultations with PMDA is expected to increase further and the development of biotechnology-related drugs, cell therapies, vaccines, and international clinical trials are on the rise. It is, therefore, essential for the PMDA to increase the number of staff members and further develop their capacity. Recommendation:
■ Intellectual property protection Yearly status report: significant progress. MHLW issued a notification in April 2007 to the effect that the re-examination period for new drugs will be extended from six to eight years. The EBC welcomes this change as it is in line with EBC's request that the data protection period for new drugs be eight years, but regrets that the notification only applies to drugs containing a new chemical entity and not new combination drugs, drugs with a new indication, and drugs with a new administration route. The EBC is also concerned that the MHLW is changing its views on selection of the brand names for new drugs. Global companies have invested heavily in a given brand name and will be severely damaged if that brand name is not acknowledged in Japan as well. Recommendation:
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