Risky medical deregulation

A deregulation panel for the Abe administration is calling for introducing so-called mixed medical treatment (kongo shinryo), in which drugs and medical technologies not covered by the nation’s public health insurance system will be used along with those covered by the system. The administration, which sees the medical industry as a potential growth sector, hopes to make mixed medical treatment one of the key features of the economic growth policy package that it will announce in June.

The administration should rethink this policy because it will likely not only expand the use of drugs and technologies whose safety and efficacy are uncertain but also introduce disparity between low- and high-income people concerning the quality of medical services they receive.

Under the public health insurance system, all drugs and medical technologies must undergo clinical tests to ensure their safety and efficacy before they can be covered by the insurance. Then the government sets prices for them. The aim of the public health insurance system is to ensure that everyone can afford medical services by setting the cost of drugs and treatments at reasonable levels.

The deregulation that the Abe administration is pursuing could run counter to the principle and spirit of the nation’s public health insurance system. The introduction of mixed medical treatment could tempt drug and medical equipment makers and hospitals to divert a large portion of their human and other resources away from medical services under the public health insurance system, thus undermining the foundation of the system.

To protect the health insurance system, the health and welfare ministry in principle prohibits the mixed use of drugs and medical technologies covered and not covered by the system. The ministry approves a limited scope of mixed remedies as an exception for some patients who are suffering from very serious diseases, such as cancer, and who want to try new drugs and technologies not yet covered by the health insurance system, even if doing so means they must shoulder a heavier financial burden.

Under the public health insurance system, patients need to pay only up to 30 percent of the cost of medical services they receive. If patients opt for mixed use of remedies, they are currently required to shoulder the full cost of even drugs and technologies already approved and covered by the health insurance system, in addition to paying the full cost of services not covered by the health insurance system. The Abe administration plans to abolish this full-payment principle for mixed medical treatment, and is thinking of limiting the requirement for full payments to drugs and medical technologies not yet covered by the health insurance system — a policy that will lead to the expansion of mixed medical treatment.

The new policy will cause serious problems if it is implemented. It is difficult to expect that patients who want to rely on mixed medical treatment have full knowledge about new drugs and medical technologies. In most cases, they would likely rely on the opinions of doctors, but the patients themselves would still have to decide whether they would accept drugs and treatments whose safety and efficacy have yet to be certified under the health insurance system. Since the government does not plan to set clear guidelines as to what kinds of new, uncertified drugs and technologies can be used for mixed medical treatment, the possibility cannot be ruled out that patients could end up paying high prices for treatments that could cause efficacy and safety problems.

The new policy could give incentives to pharmaceutical and medical equipment makers to shift their resources to new drugs and equipment still unapproved under the health insurance system because drugs and treatments not under the system’s price control will likely bring greater profits. This could prompt drug and medical equipment makers to launch PR efforts try to encourage doctors and patients to use new drugs and equipment. Drugs and technologies whose efficacy and safety have not been tested in Japan could eventually account for a large portion of the medical services provided here.

A likely byproduct of expanding mixed medical treatment is that more people may start subscribing to private health insurance policies that provide coverage for the use of costly drugs and medical services not covered by the public system. This would increase the nation’s total medical expenses.

Another downside of mixed medical treatment is that even if new drugs and medical technologies prove to be safe and effective, only high-income patients will likely be able to afford the new remedies, thereby undermining the principle of the public health insurance system ensuring equality in medical treatment. Makers of new drugs and medical equipment that bring in large profits outside the system may choose not to apply for public health insurance coverage of these items. This would deprive low-income people of the chance to receive advanced medical treatment under the public health insurance system.

The Abe administration is pushing for mixed medical treatment at a time when the government is holding talks for the Trans-Pacific Partnership free trade pact. It may be doing so in anticipation of other countries calling on Japan during the negotiations to fully introduce mixed medical treatment. If an agreement is reached in the TPP talks and the pact takes effect, foreign drug and medical equipment makers might sue Japan under the investor-state dispute settlement mechanism, complaining that prices for each drug and treatment method in Japan are set under the public health insurance system.

The introduction of mixed medical treatment could become the first step to operate Japan’s medical services under a market mechanism. It may increase the profits of drug makers and insurance companies, but there is no guarantee that it will contribute to protecting and enhancing people’s health at reasonable cost. The government should give up its attempt to introduce mixed medical treatment and instead speed up the process for approving coverage and use of new drugs and medical technologies under the public health insurance system —in particular those whose safety and efficacy have been objectively proven in clinical tests overseas.