JPMA's Proposal on the Drug Price System

"Price policies that reward the value of innovations" this is the goal that JPMA, the organization of research-based pharmaceutical companies, has long sought to realize.

As part of the ongoing discussions for the healthcare system reform in Japan, more efficient spending of medical expenditures and suppression of the increasing rate of the expenditure have been urged. On the other hand, a greater expectation has been placed on Japan's research-based pharmaceutical industry to play a central role as a leading industry of the 21st century in the creation of a nation of science and technology. The pharmaceutical industry will, therefore, be expected further contribution to the improvement of medical practice and the economic growth of the nation by developing valuable new drugs through continued investment to the R&D activities and innovation.

JPMA has organized an "Advisory Board for Discussion of the Drug Pricing System" under the supervision of the Board of Executive Directors since last year and has continued discussions on this issue. Recently meetings have been held by the Board of Standing Directors, the Board of Directors, and the seminar of member company representatives, and the following proposal, "Requested price consultation method (tentative title)," has been finalized as follows:

JPMA has determined to make an endeavor to realize the proposal by expressing opinions and requests at the meeting of the Special Committee on Drug Pricing System of the Central Social Insurance Medical Council ("Chuikyo") scheduled on July 27 and to reach out relevant people and organizations for their understanding and support.

1. Proposal on the new drug pricing system for new drugs (Requested price consultation method (tentative title))
   1. Pharmaceutical companies initiates a pricing proposal based on individual accountability, which consists the "requested price".
   2. A mechanism is set up allowing the company to explain and discuss the requested price with the Drug Pricing Organization (DPO).
   3. The DPO and the pharmaceutical industry shall hold fresh discussions on the parameters and criteria for drug pricing and assessment.
2. Proposals on the pricing of listed drugs
   1. Special price revision for original drugs will not be performed.
   2. Arbitrary or patterned reprising for market expansion will not be made.
   3. The practices and regulations of drug distribution will be improved to ensure proper functioning of the actual market price-based price revision system.
3. Proposal on the realization of appropriate overall medical expenditure

   The desired level of overall medical expenditure will be evaluated through a discussion between the government and the industry.

   In view of the current move toward containment of medical expenditures, the desired proportion of drug expenditure in the overall medical expenditure will be set at approx. 20% for the time being (approx. 5 years) to balance drug expenditure with public finances for medical insurance,

4. Proposal on the establishment of a forum for dialogue between the government and the industry

JPMA will endeavor to establish a forum for regular dialogue with the government, to harmonize public policy (public medical insurance policy) with industry policy, and to discuss various topics such as the environment required to improve development of new drugs.