As medical costs mount, Japan to weigh cost-effectiveness in setting drug prices

ONO PHARMACEUTICAL

18/02/2019 23:00

* New policy set to take effect in April
    * Drugmakers warn they will avoid Japan if price cuts
excessive
    * Patients fear policy could lead to denying care based on
price

    By Takashi Umekawa
    TOKYO, Feb 19 (Reuters) - Japanese doctor Yasushi Goto
remembers prescribing the cancer drug Opdivo to an octogenarian
and wondering whether taxpayers might object to helping fund
treatment, which at the time cost hundreds of thousands of
dollars, for patients in their twilight years. 
    Japanese have easy access to new medicines, whose prices are
decided by the government and subsidised by the country's public
health insurance system.
    But that may change. Japan, confronted with the ballooning
cost of caring for an ageing population, is introducing a
cost-effectiveness test for drugs as a means of capping prices.
    There are no plans to deny care for patients of any age. But
limiting the prices of innovative but costly treatments might
chase new drugs out of the $86 billion Japanese market,
drugmakers say.
    "If you ask whether it's worth prescribing an 85-year-old
patient Opdivo, a lot of people will say no. But patients and
family members are going to say yes," said Goto, who works at
the National Cancer Centre Hospital.
    Patients also fear more drastic changes, such as denying
access to new medicines; Prime Minister Shinzo Abe's economic
council in December proposed considering cost in determining
whether to approve treatments.        
    "For cancer patients like us, it's not acceptable if the
government applies a cost-effective analysis in determining
whether to approve treatments," said Yoshiyuki Majima, a
director of patient advocacy group Rare Cancers Japan.   
       
    SUSTAINABILITY OR ACCESS
    The Japanese government estimates that public medical
spending could surge 75 percent to 68.5 trillion yen ($624
billion) by 2040. 
    "It is obvious that Japan will face difficulties in
providing social security service," said a government official
involved in the discussions, declining to be named because he is
not authorised to speak to media. "The cost-effectiveness
analysis is a means to secure sustainability." 
    The system that will be adopted in April, according to a
draft published on the health ministry's website, compares the
cost to the effectiveness of new treatments using an
"incremental cost-effectiveness ratio," or ICER.
    ICER, already used in countries such as Britain, considers
how much it costs to give a patient one additional year of
healthy life compared with existing alternatives. If that
exceeds 5 million yen, for example, the government may insist on
a lower price, according the policy draft. 
    There has been little public discussion; weekly meetings so
far have involved mostly Health Ministry officials, doctors,
academics and drugmaker executives.     
    "If I have rheumatoid arthritis and I can't write or type,
but then I get a treatment that enables me to go back to work,
pay taxes, and take care of my family, that benefit is not going
to be captured by the ICER," said Kevin Haninger, a vice
president of Pharmaceutical Research and Manufacturers of
America, a lobbying group. 
    In an interview with Reuters, he insisted Japan should
carefully consider an impact on the industry when introducing
such analysis to reduce drug prices.        
    "If Japan is going to cut prices so much, I think Japan will
really run a risk of losing its current position," he said. 
    
    LUCRATIVE MARKET NO MORE?
    Drugmakers have been complaining about price cuts since
2017, when the government decided to review costs more
frequently. 
    Japan has slashed the price of Opdivo, developed by Ono
Pharmaceutical Co Ltd  4528.T  and Bristol-Myers Squibb  BMY.N ,
by more than 75 percent in the last two years. It has also
lowered Gilead Science's  GILD.O  hepatitis C drug Sovaldi by 32
percent since 2016. 
    But while drugmakers threaten to pull back from Japan, the
government is prepared to call the industry's bluff, saying
Japan is too lucrative a market for companies to ignore,
according to two government officials, who declined to be named
because they are not authorised to speak to the media. 
    Unlike the United States, where insurers may deny claims, or
the UK, where patients can be denied costly drugs, Japan is seen
as a relatively predictable market because of its social
insurance system.
    For example, Novartis' Kymriah, a type of therapy in which a
patient's T-cells are modified to attack cancer cells, is
expected to be approved in Japan this year.
    The price for paediatric leukaemia patients, to be set by a
government panel after approval, is expected to start at about
$475,000, similar to U.S. prices. With an estimated 250 Japanese
eligible for treatment with Kymriah, sales in Japan are a
potentially lucrative addition to Novartis' bottom line.
    Novartis declined to comment on potential effects of a new
pricing policy. 
    Goto said the government should focus on reducing 
prescriptions for illnesses that are not serious, rather than
costly but possibly life-saving treatments for a small number of
patients.
    "Flu medicines, for example, can be seen to have very low
cost-effectiveness because they don't save people's lives,
except those of infants or pregnant women, compared with cancer
drugs that are critical for some patients," he said. 

($1 = 109.6800 yen)

 (Reporting by Takashi Umekawa; Editing by Ritsuko Ando and
Gerry Doyle)
 ((※　takashi.umekawa@thomsonreuters.com; 03-6441-1859; Reuters
Messaging: takashi.umekawa.reuters.com＠reuters.net))