COVID-19 has undermined financing conditions and government policy priorities in Japan. Japan’s economy, already confronting headwinds before the COVID-19 outbreak, has proven brittle, and the healthcare sector, despite government stimulus, remains in a difficult financial situation. Previous government commitments to impose changes to social security will be delayed, and Prime Minister Suga will continue to attempt to balance short-term boosts to the economy with a desire to drive fiscal rectitude, which will compel aggressive pricing policies for the healthcare sector. Headwinds across the healthcare landscape in Japan are driving persistent uncertainty for pharmaceutical and medical device companies throughout the country.
We see three trends emerging in the healthcare landscape in Japan that businesses should watch. Read the trends below along with specific action items for your business to include in your 2021 strategic planning:
New Suga government confronts balancing healthcare system fortification with persistent fiscal challenges
The Suga administration will be hard-pressed to go easy on off-year drug repricing measures, given the prime minister’s fiscal hawkishness and limited prospects for social security reform in the short term. Companies should expect more pricing pressures arising from government policies despite countervailing economic conditions.
- Track the forthcoming budget proposals to assess potential signposts for aggressiveness of pricing measures.
- Expect pricing revisions in 2021 and revise portfolio strategies in line with annual price revisions and other price control measures.
Healthcare sector attempts to benefit from government prioritization of “stable supply”
Persistent shortage challenges coupled with growing fears of reliance on China for drug manufacturing have led the government to begin to move forward with a “stable supply” program, including a key medicines list. The key driver of uncertainty is whether the government will be able to move forward with pricing support, which may run counter to other government pricing policies.
- Closely monitor candidate development of “stable supply medicines” list, and assess what impact, if any, this may have on pricing and sales.
- Evaluate the extra costs, if any, that will be necessary to spend to align with government risk assessment initiatives.
Japan approves full rollout of Sakigake process
The Japanese government has moved ahead with the rollout of the Sakigake system to accelerate its adoption. This is an important signal that the government will attempt to balance the fiscal pressures that have only worsened under COVID-19 with supporting innovation, though an increase in the use of the Sakigake process remains to be seen.
- Re-examine product portfolio and consider applying for Sakigake designation for related products.
- Determine whether changes to the Sakigake system increase its relevance to future product launches.
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