Drug price revisions will be implemented once a year, and research on the market prices of all drugs will be conducted annually. The government’s basic policy on drug price system reform will be reported to the Council on Economic and Fiscal Policy (chaired by Prime Minister Abe) on Dec. 21.

Under the new system, an across-the-board survey and a limited survey of major corporations will be conducted in alternate years. In years that only involve major corporations, drug prices will be adjusted downward only if the drug’s market price has significantly diverged from the official price. The degree of divergence to qualify for price adjustment will be determined by the end of 2017. It is expected the new method will affect prices of generic drugs, among others. The new method will be implemented from FY2018.

Regarding “the premium for new drug development” that is designed to maintain high prices for innovative, new drugs, the price premium will be adjusted based on the drug’s cost effectiveness. If sales of a drug increase due to an additional indication, such as seen in the case of the extremely expensive cancer treatment drug Opdivo, its price will be adjusted downward four times a year, at the same time as the evaluation of new drugs for inclusion in the NHI drug price list.

Other points suggested for future consideration are (1) correcting differences in drug prices according to the average of prices in the U.S., the U.K., Germany, and France (2) improving transparency of drug-pricing rules, and (3) improving the way wholesalers and medical institutions negotiate drug prices. (Abridged)