Consumers slow to embrace generic drugs

In May, the health ministry announced that it would set a new target for the use of generic pharmaceuticals. In 2013, 46.9 percent of the prescription drugs dispensed in Japan were generics, and at first the ministry said it wanted to raise this portion to 60 percent by 2017, but the Council on Economic and Fiscal Policy, which advises the ministry on fiscal matters, insisted it speed up the process in order to curb runaway medical costs, and now the ministry says it will shoot for a target of 80 percent in line with the dispensing rate in Europe and the United States.

Generics — cheaper versions of drugs whose patent protection has expired — tend to be more expensive in Japan than they are in other countries when compared to patent drugs with the same active ingredients. Because of the national health insurance system, drug prices in Japan are determined by the government, and prices for generics tend to be about 60 percent of the price for patent drugs, whereas in the U.S. generic prices are about 20 percent that for patent drugs. Insured Japanese consumers only pay 30 percent of the drug price out of pocket — 10 percent if they’re elderly — so the difference isn’t acutely felt and the urge to request generics not as strong.

By pushing generics, the government hopes to save as much as ¥1.3 trillion a year, which is important since medical costs are continually rising, mainly due to drug costs. Overall medical expenses rose by 7 percent from 2009 to 2013. During that same period the money spent on drugs increased by more than 20 percent. As pointed out by journalist Mika Tsutsumi, who covers the U.S. health care situation, the Japanese government reviews drug prices every two years and the trend has been to reduce them, but Japanese physicians are prescribing more drugs. In addition, American companies have recently been successful in marketing drugs in Japan that have yet to be approved by the government and thus are very expensive.

Patients can ask pharmacists for generics unless the doctor’s prescription expressly says that only a patent drug can be dispensed. The reason many don’t is that they have been conditioned to think that “brand name” drugs are safer and more effective than generic drugs, even though the health ministry says there is no appreciable difference. Tsutsumi reports that U.S. drug and insurance companies want to exploit this preference and are working to undermine Japan’s national health insurance system. That’s why they are pushing for the Trans-Pacific Partnership to be ratified, since it would activate the ability to sue governments for erecting trade barriers, and they consider national health insurance a trade barrier.

Japanese doctors have also appeared in the media reinforcing this preference by claiming that generics are inferior to patents for various reasons, which may cause some people to think these doctors have a vested interest in the patent drugs they prescribe. The government addressed similar such concerns in the ’50s when it implemented the iyaku bungyo law in an attempt to “separate” pharmacies from medical institutions and by doing so stop doctors from buying prescription drugs in bulk at low prices and then selling them through their own clinics and hospitals. Since drug prices are set, it was thought these doctors were prescribing drugs unnecessarily and in large amounts in order to reap huge windfalls. The new law introduced incentives for pharmacists who set up businesses outside medical facilities. These monzen yakkyoku (literally, “outside-the-gate drug stores”) could charge more for dispensing drugs than in-house pharmacies could, and the scheme worked to a certain extent. By 2013, 67 percent of all the pharmacies in Japan were independent operations.

However, the added cost is considerable. The independent pharmacy receives ¥410 as a special “preparation fee” from the government for each prescription filled, and another ¥410 for “record keeping.” Sankei Shimbun estimates that these additional fees cost the government ¥80 billion a year just for one popular hay fever medication. According to the law, the pharmacist advises the patient in the proper dosage and, more significantly, keeps records of the efficacy of the drug and any side effects. These tasks justify the added value, but they don’t have any practical meaning. Very few pharmacists have the inclination or the opportunity to follow up a patient with regard to how the drug works, but they are nevertheless required to keep a record of every person to whom they dispense drugs. The suspicion that few really do was borne out earlier this year when two drug store chains, Kusuri no Fukutaro and CFS Corp., were cited by police for not having kept any records at all.

This isn’t to suggest that keeping records is a bad idea. It could prevent patients from mixing drugs that shouldn’t be mixed and avoiding overdoses, but there is no central system where this sort of data is made available to pharmacists and physicians. The record-keeping obligation is limited to each pharmacy, which is not compelled to share that information. Ideally, pharmacists are supposed to be in close contact with prescribing physicians, but that doesn’t happen either. As it stands, Japanese doctors typically do not release medical records to patients, because they don’t want them to be shared with other doctors.

A Cabinet survey of consumers found that almost no one thinks the separation system has any merit. Some find it inconvenient since it means going out of one’s way to pick up drugs, which could be difficult for the elderly and people with disabilities.

But as already pointed out, even if consumers think Japanese drug prices are abnormally high—which they are compared to prices in other countries—they seem reluctant to risk their health on generics. According to Tokyo Shimbun, one member of the Council on Economic and Fiscal Policy has a solution: If patients insist on using patent drugs when equivalent generics are available and their physicians don’t expressly prescribe patents, then those patients should pay 100 percent of the cost. The major pharmaceutical companies would protest vehemently if such a condition were codified, but it sure would make generics popular.

Yen for Living covers issues related to making, spending and saving money in Japan on the second and fourth Sundays of the month. For related online content, see

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