President Donald Trump has pledged to reverse what he describes as “astronomical” drug prices in the United States. Thousands of kilometers away, Japan, long a profit sanctuary for multinational pharmaceutical companies, is taking a similar tack.

Somewhere in the ballpark of ¥10 trillion is spent annually on medications in Japan, and the government plays a key role in prices because it covers about 40 percent of the country’s health spending via the national insurance scheme.

In December, officials announced plans to review drug prices more frequently: annually for all therapies and quarterly for the newest and most expensive ones that are used widely.

Over recent months, the price of Opdivo, a blockbuster cancer drug from Bristol-Myers Squibb Co. and Japan’s Ono Pharmaceutical Co., was halved in Japan following a 32 percent cut in April for Gilead Sciences Inc.’s hepatitis cure Sovaldi.

The industry fears that could just be the beginning. With the annual price review in place, the sector’s sales in Japan, the world’s third-largest drug market, are estimated to fall by 30 percent to about $62 billion through 2025, according to a study by Pharmaceutical Research and Manufacturers of America (PhRMA), a U.S. lobbying group.

Japan runs the risk of multinational companies redirecting their investment in drug development elsewhere, said Amy Jackson, Japan representative of PhRMA.

“There will be huge disincentives to invest, to do clinical trials here,” Jackson said. If that happens, Japanese patients may have to endure longer waits for access to new medicines and treatments, she said.

Japan is the world’s most indebted nation, and curbing the outlay on pharmaceuticals is a part of Prime Minister Shinzo Abe’s strategy to halt increases in health care spending.

“We think it’s important to strike a balance between the continuity of a universal health insurance system and innovation as we pursue the reform,” said Yoshiro Meguro, an official at the health insurance bureau of the Health, Labor and Welfare Ministry. “The new system has to provide benefit to people in terms of cost and quality.”

For domestic and international companies, which have long seen Japan as a source of steady profits, the new price cuts are a blow. They come at a time when Trump is promising to seek better bargains for government health programs in the U.S., the world’s biggest pharmaceutical market. U.S. lawmakers like Bernie Sanders have also been critical of high drug prices and other countries like China are scrutinizing the cost of treatments.

More medicines were developed and introduced to Japan after it promised in 2010 to keep prices of new drugs at levels initially set by the government, Jackson said.

The government has said in recent months that it will overhaul the 2010 rule and introduce a new pricing system that evaluates innovation and how cost effective drugs are. Some pharmaceutical companies are already seeing the hit to their profits.

In November, the government unexpectedly decided to slash the price of Opdivo in half to ¥75,100 for 20-mg bottles after an oncologist estimated that it could cost the national health system $15 billion annually. That forced Ono, the company that co-developed the drug with Bristol-Myers and sells it in Japan, to lower its profit outlook for the current fiscal year by 25 percent.

Bristol-Myers directed requests for comment to Ono. The Japanese company said that based on existing regulations it had thought the price of Opdivo could be cut as much as 50 percent by April 2018, but it hadn’t planned for the reduction to come 14 months ahead of schedule.

The pricing system wasn’t designed to respond to products whose sales grow so quickly, Ono spokesman Yukio Tani said. “Based on the consideration of the continuity of the universal health insurance system and the fact that the use of Opdivo was curtailed due to the discussion of high drug prices and wasn’t reaching patients who needed it, we had no choice but to agree to the emergency response.”

A Merck & Co. cancer therapy called Keytruda has since been priced at levels that matched Opdivo’s reduced price. Pharmaceutical companies argue that recent pricing doesn’t always factor in the vital innovation they are bringing in.

“Keytruda became the first drug to replace chemotherapy in Japan,” said Nao Kitamura, a Tokyo-based spokeswoman at MSD K.K., a unit of Merck. “It was unfortunate that value wasn’t reflected in the pricing.”

“The reality of pricing these days seems unclear after recent incidents,” said Keiji Kono, vice president in charge of external affairs at Chugai Pharmaceutical Co., which sells Roche Holding AG drugs in Japan.

He says his company wants the government to acknowledge the added value its new therapies bring.

Despite the protests, the pressure is nowhere near done for pharmaceuticals. The government is already preparing to assess the price levels of seven drugs for the next round next year. Gilead’s Sovaldi and Ono and Bristol-Myers’ Opdivo are among the drugs selected for another round of reviews and could potentially face even more reductions. Gilead declined to comment.

The government will push for tighter cost control going forward, said Atsushi Seki, a Tokyo-based pharma analyst at UBS Group AG. “It will also put more pressure on drug prices as drugmakers seek combination therapies of expensive medicines.”

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