Legal & Regulatory > Japan > Regulatory, Pricing and Reimbursement

An intro to the legal situation for regulatory, pricing and reimbursement in Japan. Prepared in association with Nishimura & Asahi, a leading law firm in Japan, this is an extract from The Pharma Legal Handbook: Japan, available to purchase here for USD 99.

1. What are the regulatory authorities with jurisdiction over drugs, biologicals, and medical devices in your country?

Ministry of Health, Labour and Welfare (MHLW) and Pharmaceuticals and Medical Devices Agency (PMDA)

2. What is the regulatory framework for the authorization, pricing, and reimbursement of drugs, biologicals, and medical devices?

Authorization is governed by the Pharmaceuticals and Medical Devices Law.

Pricing of drugs and biologicals are governed by the NHI (national health insurance) Drug Pricing Standard which is noticed by MHLW under the Health Insurance Act. Calculation method of drug pricing and the price of each drug is announced by MHLW after consultation with Central Social Insurance Medical Council.

Pricing of medical devices is included in the Medical Fee, which is also noticed by MHLW under the Health Insurance Act, and calculation method and the price is announced by MHLW after consultation with Central Social Insurance Medical Council.

Reimbursement is governed by the Health Insurance Act.

3. What are the steps to obtain authorization to develop, test, and market a product?

To develop and test a product, it is necessary to obtain a manufacturing/marketing business license depending on the type of business.

To market a product, in addition to the above, the license holder must obtain marketing authorization for each product.

4. What are the approximate fees for each authorization?

Fee for a manufacturing/marketing license varies depending on the type of license, but approximately from 100,000 yen to 150,000 yen.

5. For how long are marketing authorizations/registrations valid? How are marketing authorizations/registrations renewed?

Marketing authorization is valid unless it is withdrawn by the government for appropriate reason or pruned by the authorization holder, both of which rarely happen.

6. How does the authorization process differ between brand-name products and generic products? Are there differences for local manufacturers versus foreign-owned manufacturers?

To obtain authorization for brand-name products, clinical trial data is required. Normally, originators spend more than 10 years from basic research to obtain authorization. For generic products, instead of clinical trial, only stability test and bioequivalence test are required. Thus, generic products can obtain authorization in short term, normally 2 years from start of tests. Currently, generic product authorization applications are only accepted twice a year, February and August.

7. How are combination products (drug + drug, drug + biologic, drug + device, biologic + device, drug + biologic + device) regulated?

Basically, the same rules apply to combination products. To ensure the safety of combination products, other than some special combination products (such as HIV drugs), single drugs used for combination product must be in the market for one year or more.

8. How is compliance with regulation monitored and evaluated? Is the regulatory regime comparable with the U.S. Food and Drug Administration or the European Medicines Agency expectations and requirements?

Compliance with regulation is monitored and evaluated by the PMDA and local government of each prefecture. Basically, compliance with regulation is harmonized with the FDA and EMA.

9. What is the potential range of penalties for noncompliance?

Potential penalties can be suspension of all or a part of business, cancellation of authorization, or up to 3 years imprisonment or up to 3 million yen fine or both, depending on the type of noncompliance/misconduct.

10. Is there a national healthcare system? If so, how is it administered and funded?

There is a national healthcare system. Japan started a universal insurance system under the Health Insurance Act in 1961. This system ensures that all public healthcare costs are covered by public insurance and people have free access to all healthcare providers. People have to pay insurance fees to the health insurance society he/she joins, then when he/she goes to a healthcare provider, such cost is covered by national health insurance other than a portion an individual patient must pay. Such a portion is 10% to 30% depending on the age, and if payment of one person exceeds a certain amount, decided depending on the income, the residual amount is covered by national health insurance.

People have an obligation to join a health insurance society. Company employees join a health insurance society which his/her employer join. Most other people join national health insurance societies, and there are several special insurance societies such as public employee union society.

The national healthcare system is basically funded by the insurance fee paid by the society members. For example, a company employee has an obligation to pay half of his/her insurance fee of the insurance society, and another half is paid by the employer. However, current healthcare costs are far beyond the total insurance fee. Thus, public expense is incurred. Most recently, approximately one half of the total healthcare cost was incurred by insurance fee, approximately 40% was incurred by public expense, and approximately 10% was covered by individual payment by the patients.

11. How does the government (or public) healthcare system function with private sector healthcare?

Most hospitals in Japan belong to the private sector (approximately 80%).

The basic function is the same between the private sector and public sector, but the public sector has missions such as to provide healthcare in remote places where no other hospitals exist, assist patients as a safety net, and provide advanced healthcare based on advanced research and study.

12. Are prices of drugs and devices regulated and, if so, how?

The Prices of drugs and devices are regulated under the Health Insurance Act.

The pricing of drugs and biologicals is governed by the NHI (national health insurance) Drug Pricing Standard which is noticed by MHLW under the Health Insurance Act. The calculation method of drug pricing and the price of each drug is announced by MHLW after consultation with the Central Social Insurance Medical Council.

The pricing of medical devices is included in the Medical Fee, which is also noticed by MHLW under the Health Insurance Act, and the calculation method and the price is announced by MHLW after consultation with Central Social Insurance Medical Council.

13. How are drugs and devices used by patients paid for? What roles do public and private payers play?

Drugs and devices prescribed by doctors and used by patients are covered by national health insurance, other than the portion individual patients must pay, under the Health Insurance Act.

14. Who dispenses drugs and devices to patients and how are those dispensers compensated?

Doctors prescribe the drugs and pharmacies dispense the drugs to patients. When a pharmacy dispenses the prescribed drug, the patient has to pay a portion of the total cost, and the other portion is reimbursed to the pharmacy by the national health insurance payer.

Devices used by the doctors for the patients are reimbursed by the national health insurance payer. Patients only pay a portion of whole doctor fee, including service fees, to the hospital.

15. What are the professional and legal responsibilities of those who dispense drugs and devices? What role do they play in providing patient care, information, and safety?

Under the Health Insurance Act, a doctor must register as an insurance doctor. Only such insurance doctors can prescribe drugs and dispense devices covered under the national insurance system.

Also, only a pharmacy which is designated under the Health Insurance Act as an insurance pharmacy can dispense drugs.

Insurance doctors and insurance pharmacies have obligations under the Health Insurance Act, and non-compliance may end up in the cancellation of such license.