Editorials

Keep the price of new drugs sane

A new drug — that costs ¥33.49 million for a single dose — to treat leukemia and a certain type of lymphoma is now covered by the public health insurance system. While the drug, named Kymriah, carries the highest price tag of any single medication in Japan, most of its cost will be shouldered by the insurance program under a system that caps a patient’s burden in receiving expensive medical treatment. Innovative therapies thanks to progress in medical technology will give hope to patients who can’t be cured through existing anti-cancer agents. But the introduction of such expensive drugs gives rise to the dilemma that advances in medical treatment are putting further strain on the public health insurance system. Steps should be explored to curb the cost of these super-expensive therapies.

Kymriah was developed by Swiss pharmaceutical giant Novartis and approved for use in Japan earlier this year. In the therapy, chimeric antigen receptor T (CAR-T) cells, a type of immune system cell, are removed from a cancer patient, shipped to a Novartis lab in the United States to be genetically modified to attack cancer cells, and then put back in the patient through intravenous drip. Since the modified CAR-T cells multiply within the patient’s body, each dose is reportedly effective for an extended period.

The problem is its cost. In addition to the investments made in developing the therapy, the drug is effectively tailor-made for each patient in a complicated process that takes about two months. When it was first introduced in the United States in 2017, the price tag reportedly topped ¥50 million.

When the Central Social Insurance Medical Council, an advisory panel to the health, labor and welfare minister, approved the coverage of the new drug under the public health insurance system last month, it also decided to subject the therapy to a newly-introduced scheme in which the price of a drug will be reviewed in light of its cost versus its effectiveness as a cure. The public price of a drug is determined by such factors as its material cost, development expenses as well as its effectiveness. In the council’s latest meeting, criticism is said to have been voiced by some of its members that disclosure of the drug’s costs was insufficient.

A single dose of Kymriah carries a price tag of ¥33.49 million. But with the health insurance coverage and the system that caps the patient’s burden of expensive medical treatment in accordance with income, a person who earns between ¥3.7 million and ¥7.7 million annually will have to pay about ¥410,000 out of pocket. The system and the health insurance coverage provide access to advanced — and often expensive — medical treatment when necessary, irrespective of the patient’s income level. Since much of the cost of expensive drugs and treatments is covered by public health insurance, many people voice concerns about rising expenditures in this area, which account for roughly one-fifth of the nation’s total medical bill.

The maximum potential number of patients in Japan who need Kymriah is estimated at 200-plus annually, with total sales of the drug reaching ¥7.2 billion. That alone may not significantly affect the big picture. However, the number of super-expensive drugs like Kymriah is rising, with more expected to be introduced in coming years. When the anti-cancer agent Opdivo, which stimulates the body’s natural immune system to fight cancer, was first introduced in 2014, the bill — ¥35 million a year per patient — triggered discussions on how the prices of super-expensive drugs are set, paving the way for the government to explore various steps to lower the public cost of those medications.

Initially, the health insurance coverage of Opdivo was limited to treatment for a certain form of skin cancer. But as use of the drug under the insurance scheme was expanded to lung cancer, the number of patients using it increased significantly, fueling concern over straining the finances of the health insurance system. The government has changed the way it reviews drug prices — previously once every two years in principle — and has also significantly cut the price of Opdivo three times with special measures. The pharmaceutical industry has meanwhile cautioned that excessive curbs on drug prices could serve as a disincentive for drugmakers to develop innovative new drugs.

Under the newly introduced review system to which the Kympriah drug will be subject, the effectiveness of a new drug against its cost, as compared to existing therapies, will be screened over a period of some 15 months, and the review could result in reducing the price by up to 15 percent. Along with measures to ensure that new and effective medical treatments will be promptly made available to the patients who need them, a process needs to be in place to adequately set the price of the new drugs to keep the public health insurance system sustainable. Greater transparency in the costs of making the drugs will be one way forward.