Japan's Fiscal System Council Recommends New Measures to Promote Generics

According to Pharma Japan, the Fiscal System Council's (FSC) recommendation was a reaffirmation of the government's FY 2006/07 Basic Policy, which seeks to make savings in the social security budget of ¥1.1 trillion (US$10.2 billion) in the five years from 2007-11. The FSC also recommended that the Ministry of Health, Labour and Welfare (MHLW) make specific savings of ¥220 billion in the FY 2009/10 budget, which would be exactly in line with this year's savings (see Japan: 31 August 2007: MHLW Asked to Reduce Japan's Social Security Spend by US$1.9 bil. in FY 2008/09).

In making its recommendation, the FSC alluded to the fact that medical fees were increased in the FY 2008/09 medical fee revision in order to reduce the burden on hospital doctors. The FSC also noted that government expenditure on healthcare benefits will continue to rise. Against this backdrop, the FSC urged savings to be made in other areas, particularly in the area of generics. On a general level, the FSC called on the government to examine the measures employed by other countries in order to encourage uptake of generics, and noted that Japan was one of the few major countries where the usage of generics has not increased in recent years. The FSC also called on the government to consider three specific measures:

• Reimburse off-patent original drugs at the same level as the generic equivalent, and make patients pay the difference in price between the two products.
• Exclude products that could be sold over-the-counter (OTC) from health insurance coverage.
• Introduce an insurance deductible system.

Japan Medical Association Still Has Reservations over Generics

A cornerstone of the MHLW's attempts to encourage the use of generics is the introduction in April of new generics-friendly prescription and new incentives to encourage pharmacists to dispense generics (see Japan: 15 April 2008: New Generic Substitution Rules Initiated in Japan). However, although the doctor's group Japan Medical Association (JMA) has softened its previous opposition to these generics-friendly measures, it has yet to acquiesce entirely. During a recent meeting of the six prefectural medical associations, the JMA identified a number of specific reservations over generics, as follows:

• The lack of clinical trials to confirm generics' safety.
• The lack of clarity over who is responsible for adverse reactions caused by generics.
• The big variety in price between generics.
• The use of the new prescription forms for children under the age of 6.

Outlook and Implications

The FSC's recommendation that the MHLW makes savings of ¥220 billion in the FY 2009/10 was predictable, given that it mirrors its recommendations for FY 2008/09 and ties in with longer-term saving plans that had previously been announced. However, the specific measures proposed by the FSC to increase generic uptake are somewhat more controversial, and are likely to meet strong resistance from patient groups. This is particularly true in the case of any attempt to subject patients to a higher financial burden.

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