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Shifts to generic drugs likely cut medical costs ¥1.3 trillion in ’17: ministry

JIJI

Japan’s switch to generic drugs from brand-name drugs is expected to have reduced medical costs by ¥1.3 trillion in fiscal 2017, the health ministry said Monday.

The reduction, the biggest on record, would be about 40 percent larger than estimated for fiscal 2015.

The government aims to raise the share of generic drugs in use to at least 80 percent by September 2020 based on a projection showing that ¥1.3 trillion in medical costs could be saved per year if the target is met.

But the estimate for fiscal 2017 ending this month shows the government is already close to achieving its goal. As of the end of September, the share of generic drugs in use stood at 65.8 percent.

The ministry also said the premiums added for keeping prices of new drugs high for certain periods will drop to ¥81 billion in its price revisions for fiscal 2018, down ¥25 billion. The number of drugs subject to the measure will also plunge, to 560 from 823.

The premium system has conventionally been applied to almost all new drugs. From fiscal 2018, however, the ministry plans to strictly limit the range of new drugs that can demand a premium to certain types, including those with innovative features, in the hope of reducing medical expenses.

Also on Monday, the ministry announced the government-set price for cancer drug Opdivo will be cut by over 23 percent in fiscal 2018. According to an official gazette from the ministry, Opdivo’s price will drop 23.8 percent to about ¥278,000 per 100 milligrams instead of ¥365,000.

Opdivo was registered as a skin cancer medication when it joined the list of drugs covered by public health insurance in 2014. At that time, it cost a sky high ¥730,000.

Drug prices are reviewed as part of biennial revisions to medical expenses covered by public health insurance. In fiscal 2018, prices overall in Japan are set to decline by 1.36 percent.

Opdivo is designed to activate the immune system to fight cancer cells. Use of the drug has surged since the insurance system began covering its use in treating lung cancer.

In February 2017, the government halved Opdivo’s price in an exceptional move because its use was expected to cost patients ¥35 million per year, placing an excessive burden on the insurance system.

The planned reduction is also a result of reforms taken to reflect the assessed cost-effectiveness of drugs on their prices.

Separately, the price of Keytruda, which is similar to Opdivo but developed by U.S. drugmaker Merck & Co., will fall 11.2 percent to about ¥365,000 per 100 milligrams.