The government plans to price generic drugs at 50 percent of brand-name drugs, down from the current 60 percent, from next April to encourage wider use of cheaper drugs and curb swelling medical spending, officials said Wednesday.
The new proposal by the Ministry of Health, Labor and Welfare was broadly agreed on by an advisory body to the health minister, which is in charge of discussing changes to the medical payment system, with a final decision set to be made by the end of this month.
With an approval by the government, pharmaceutical companies can start selling a generic version of a brand-name drug after its patent has expired. Generics, with the same quality as proprietary drugs, can be offered cheaper due to less research and development costs.
Under the plan, when many generic versions of brand-name drugs are developed at the same time, they will be priced at 40 percent of the proprietary drugs.
Biotechnology-based generics, such as genetically modified drugs, will be initially priced at 70 percent.
Amid a rise in medical spending as Japan's population ages, the government aims to increase the ratio of generics usage based on volume from the current 50 percent to over 70 percent by mid-2017 and to over 80 percent by between April 2018 and March 2021.
Medical costs in Japan topped ¥40 trillion ($325 billion) in fiscal 2013 on the back of a graying population.
The pharmaceutical industry generally accepts the proposed price cuts in generics but has urged the ministry not to implement uniform cuts and instead decide on reductions by judging the extent of negative impacts on individual drugs.