Today’s Managing Health Care Costs Number is 50%
Japan has been in an economic funk for well over a decade. Nonetheless, it’s the second largest market for the pharmaceutical industry, after only the US (and a bit ahead of China).
The Japanese government is looking to cut costs – and high cost pharmaceuticals are on the chopping block. The government sets drug prices, and reviewed an oncology drug (Opdivo) and cut the price from $300,000 to $150,000.
Bristol-Myers Squibb Co. markets Opdivo in the U.S., while Osaka-based Ono Pharmaceutical Co., which was involved in developing the drug in its early stages, markets it in Japan. In the half-year ending in September, Ono said it recorded ¥53.3 billion ($468 million) in Opdivo sales.
An Ono spokesman said the company accepted the Japanese government’s decision to reduce the price of Opdivo. “We see the importance of maintaining the public health insurance system for the whole nation,” the spokesman said.
The US response was a note from the Commerce Secretary Penny Pritzker, which
… describes how the U.S. is “disappointed” by the Japanese plan to reduce drug prices. Tokyo’s policies “raise serious concerns about the incentive structure for health-care products, as well as about the market’s predictability and transparency”
The US is the only high income country that does not regulate drug prices. We struggle with how to lower drug costs. Pharmaceutical companies often raise prices multiple times each year. Japan is moving to review (and decrease) prices annually instead of biannually, and has a straightforward way to lower prices: by edict.
Reported in the Wall Street Journal last week
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