[Ip-health] Obama Administration role in the regulation of prices for medicine and medical devices in Japan

[James Love]

http://keionline.org/node/575

Obama Administration role in the regulation of prices for medicine and
medical devices in Japan

.......................
On July 6, 2009, a report of the the U.S.-Japan Regulatory Reform and
Competition Policy Initiative [1] was presented to President Obama and
Prime Minister Aso of Japan. The report provides an insight into the
degree that the U.S. government tries to influence prices for medicines
and medical devices in foreign markets. Here, as in other foreign
markets, the U.S. government seeks to raise prices, and to give industry
an even greater role in setting the prices for their products.

On July 8, 2009, PhRMA issued a press release, [2] which said in part:

....................
"PhRMA members appreciate the special focus the report places on
regulatory and market access issues related to pharmaceuticals. In
particular, we welcome steps taken by the Japanese Government to ensure
it establishes drug prices in a manner that recognizes the value of
innovation and the need for timely access to pharmaceuticals by the
people of Japan.

"We also applaud the U.S. Government for its strong statement in
opposition to a market-expansion repricing rule. The market-expansion
repricing mechanism has been inconsistent with Japan=E2=80=99s assurances t=
o
consider the value of innovation and ensure timely access to life-saving
medicines for Japanese patients. The U.S. Government should also be
commended for its strong statement urging the Japanese Government to
avoid implementing its annual price revisions.

"The report specifically notes that Japan will provide meaningful
opportunities for America=E2=80=99s pharmaceutical research and biotechnolo=
gy
companies to consult with the government on the government=E2=80=99s pricin=
g
rules, including frequency of reimbursement price revisions, and
regulatory procedures and will allow for more transparency in the
government price-setting process.
....................

The U.S.-Japan Regulatory Reform and Competition Policy Initiative is
one of several bilateral forums managed by the U.S. government which
promote the interests of various industry lobby groups. This one was
apparently formally created in the fall of 2008, after an exchange of
recommendations by both governments in October. It was started by the
Bush Administration, but has been largely implemented by the Obama
Administration.

It includes four working groups: Cross-sectoral, Medical Devices and
Pharmaceuticals, Telecommunications, and Information Technologies. These
working groups meet to address areas such as regulatory policy,
intellectual property, distribution and customs procedures, competition
policy, trade and investment-related measures, government procurement,
consular affairs, and privatization of public entities.

Just a few of the highlights on drug pricing and intellectual property
rights follow:

................
Regarding "appropriate assessment of innovative products in relation to
the pricing system. MHLW will continue to fully consider ideas that
industry, including U.S. industry, presents at Kanmin Taiwa."

c. Pricing Reform Proposals: In the drug pricing system revision of
2008, MHLW has further enhanced the evaluation of innovativeness of new
drugs by taking measures such as 1) increasing the range of premium
rates in the similar efficacy comparison method; and 2) revising the
cost accounting method to reflect the level of innovativeness as well as
efficacy and safety. The system proposed by industry, including U.S.
industry, includes measures to: 1) provide initial prices reflecting
levels of innovation; 2) maintain drug prices for reimbursement during
patent or reexamination periods; and 3) promote generics. These three
points are important parts of the current pricing reform discussion.
Industry=E2=80=99s proposals were discussed four times between July 2008 an=
d
March 2009 in the Drug Pricing Expert Subcommittee of Chuikyo and will
continue to be discussed, considering the views of those involved.

d. Annual Price Revisions: MHLW notes that the Government of the United
States urges the Government of Japan to avoid implementing a system by
which prices of pharmaceuticals and medical devices can be reduced
annually under Japan=E2=80=99s medical care insurance system. MHLW will con=
tinue
to provide industry with opportunities to discuss annual price
revisions.

e. Repricing Based on Market Expansion: MHLW notes that the government
of the United States continues to urge the Government of Japan to
abolish or avoid further expansion of Japan=E2=80=99s market-expansion repr=
icing
rule. MHLW will continue to discuss with industry, including U.S.
industry, the issue of repricing based on market expansion.

f. Foreign Price Adjustment (FPA) Rule: MHLW will continue to discuss
with industry, including U.S. industry, the issue of the FPA.

g. Drug Price Premiums: Drug price premiums are intended to recognize
the level of clinical innovation. MHLW will flexibly apply the range of
premium rates based on the applicability of new drugs to the premiums.

XVII. MEDICAL DEVICES AND PHARMACEUTICALS

The Government of the United States and the Government of Japan have
discussed the Government of Japan=E2=80=99s recommendation regarding the
protection of undisclosed test or other data generated to obtain
marketing approval for pharmaceutical products.
................


Below are more complete excerpts from the sections of the report on
medical devices and pharmaceuticals:

III. MEDICAL DEVICES AND PHARMACEUTICALS
A. Input in Healthcare System Changes: When the Ministry of Health,
Labour and Welfare (MHLW) and its advisory bodies such as Chuikyo
consider and implement changes in Japan=E2=80=99s health care system, membe=
rs of
industry, including U.S. industry may express their views to MHLW, which
MHLW will take into consideration. MHLW has been taking measures to
enhance the global competitiveness of its healthcare industry as the
country positions the pharmaceutical and medical device industries to be
key drivers of Japan=E2=80=99s future industrial growth. The New Pharmaceut=
ical
Industry Vision is aimed at eliminating the drug lag, developing an
internationally competitive drug industry, and making Japan an
attractive investment destination. In addition, the Five-Year Strategy
for Development of Innovative Pharmaceuticals and Medical Devices
proposed measures such as properly evaluating innovative products.

B. Medical Device and Pharmaceutical Pricing Reform and Related Issues

1. Pharmaceuticals:

a. Kanmin Taiwa: In the Government-Private Sector Dialogue for Discovery
of Innovative Drugs and Medical Devices (Kanmin Taiwa) the "5
Year-Strategy on Innovative Drugs and Medical Devices=E2=80=9D includes eff=
orts
for the appropriate assessment of innovative products in relation to the
pricing system. MHLW will continue to fully consider ideas that
industry, including U.S. industry, presents at Kanmin Taiwa.

b. Chuikyo Expert Member: MHLW will continue to select suitable
candidates, irrespective of nationality, to serve as expert members of
the Drug Pricing Expert Subcommittee of Chuikyo.

c. Pricing Reform Proposals: In the drug pricing system revision of
2008, MHLW has further enhanced the evaluation of innovativeness of new
drugs by taking measures such as 1) increasing the range of premium
rates in the similar efficacy comparison method; and 2) revising the
cost accounting method to reflect the level of innovativeness as well as
efficacy and safety. The system proposed by industry, including U.S.
industry, includes measures to: 1) provide initial prices reflecting
levels of innovation; 2) maintain drug prices for reimbursement during
patent or reexamination periods; and 3) promote generics. These three
points are important parts of the current pricing reform discussion.
Industry=E2=80=99s proposals were discussed four times between July 2008 an=
d
March 2009 in the Drug Pricing Expert Subcommittee of Chuikyo and will
continue to be discussed, considering the views of those involved.

d. Annual Price Revisions: MHLW notes that the Government of the United
States urges the Government of Japan to avoid implementing a system by
which prices of pharmaceuticals and medical devices can be reduced
annually under Japan=E2=80=99s medical care insurance system. MHLW will con=
tinue
to provide industry with opportunities to discuss annual price
revisions.

e. Repricing Based on Market Expansion: MHLW notes that the government
of the United States continues to urge the Government of Japan to
abolish or avoid further expansion of Japan=E2=80=99s market-expansion repr=
icing
rule. MHLW will continue to discuss with industry, including U.S.
industry, the issue of repricing based on market expansion.

f. Foreign Price Adjustment (FPA) Rule: MHLW will continue to discuss
with industry, including U.S. industry, the issue of the FPA.

g. Drug Price Premiums: Drug price premiums are intended to recognize
the
level of clinical innovation. MHLW will flexibly apply the range of
premium rates based on the applicability of new drugs to the premiums.

h. Prescription Period for New Drugs: MHLW notes industry=E2=80=99s proposa=
ls
regarding the prescription period for new drugs and is open to discuss
those proposals.

i. Vaccines: MHLW will continue to discuss with industry, including U.S.
industry, the issue of vaccines in the medical care insurance system.

2. Medical Devices:

a. Foreign Average Price (FAP) Rule for Medical Devices: The FAP rule
has reduced price differences of 126 functional categories since it was
implemented in 2002. In the medical device pricing revision of 2008,
MHLW reduced the functional categories affected, used only
industry-supplied data on the four comparator countries, maintained a
maximum price cut of 25 percent, and decided to phase in the cuts.
Considering public interest in foreign price differences, MHLW will
continue to provide industry, including U.S. industry, with
opportunities to express its view on the FAP rule, including the impact
of foreign exchange fluctuation, and will consider those views as
necessary.

b. R-zone: MHLW recognizes the unique nature of medical devices and the
importance of innovation in the medical technology sector. Issues
related to the R-Zone will be discussed at Chuikyo (Subcommittee) with
opportunity for industry, including U.S. industry, to express its views.

c. Evaluation of Innovation: In the medical device pricing revision of
2008, MHLW made several revisions, such as raising the reimbursement
price adjustment premiums of new and revised medical materials, and
establishing a new improvement premium by integrating the effective
premiums in order to strengthen the incentives for their development and
practical application. In furtherance of this progress, MHLW will also
provide U.S. industry opportunities to express its view on the cost of
doing business in Japan. Considering the differences in the basic
function between drugs and medical materials, MHLW will continue
discussions on premiums towards the next medical device pricing
revision.

d. Speedier Introduction of C1/C2 Products: As for the prompt
introduction of reimbursement for medical devices, the listing of
products in the C2 category has been made quarterly since the medical
device pricing revision of 2006. In 2008, with regard to medical devices
classified in the C1 category, MHLW substantially shortened the waiting
time for the listing of products. MHLW will continue to discuss
proposals from industry, including U.S. industry, on the prompt
introduction of reimbursement for medical devices, which will help to
reduce the device lag.

e. Reimbursement Pricing Process: MHLW has held hearings with industry,
including U.S. industry, regarding pricing new devices after the medical
device pricing revision of 2008. In March 2009, MHLW held a hearing
where medical device companies could make a case for why their Special
Treatment Materials or capital equipment should receive a higher
reimbursement price. In addition, in the medical device pricing revision
of 2008, MHLW revised the rule so that reimbursement prices can be
increased for medical devices determined to be in extremely short
supply. MHLW will continue to consult with industry on the reimbursement
pricing process, including that for C2 applications.

f. Functional Categories: In the medical device pricing revision of
2008, MHLW revised the functional categories, such as subdividing the
functional categories of clips used for operation of malformed brain
vessels and medical materials for home medical care. In addition,
between April 2006 and April 2008, MHLW established 15 new functional
categories for new devices. MHLW will continue to consider the addition
and revision of functional categories for new devices that have certain
improved functions over existing products, as necessary.

g. Diagnostic Imaging Techniques: In the medical device pricing revision
of 2008, MHLW conducted hearings with industry, including U.S. industry.
In the revision, based on the evaluation of the Technical Evaluation
Subcommittee of Chuikyo, MHLW established new premiums for coronary
artery CT and for heart MRI, which academic associations had requested.
MHLW will continue to hear industries=E2=80=99 views regarding pricing refo=
rms,
including those of diagnostic imaging, at Chuikyo=E2=80=99s Special Treatme=
nt
Materials Subcommittee.

h. In-Vitro Diagnostics (IVDs): In March 2009, MHLW held the second IVD
study meeting (benkyokai) of the year. The meetings have provided
industry with valuable opportunities to explain their IVD reimbursement
issues to MHLW. MHLW will continue to take part in such meetings. In the
2008 reimbursement revision, MHLW raised the reimbursement fee for
"quick testing=E2=80=9D in hospitals and other testing fees by considering
valuation of such testing. MHLW will continue to provide industry,
including U.S. industry, with opportunities to express its views on the
IVD issue.

3. Blood Products: MHLW will continue to be open for discussions with
industry, including U.S. industry, about pricing issues related to blood
products.

C. Medical Device and Pharmaceutical Regulatory Reform and Related
Issues: The Government of Japan is continuing to strive to eliminate the
lag in the introduction in Japan of innovative medical devices and
pharmaceuticals. The Government of Japan will improve its regulatory
system by taking the following actions in FY2009.

1. Pharmaceuticals:

a. Development of Pharmaceuticals Including Simultaneous Global
Development (SGD): In considering development plans and data
requirements, MHLW and the Pharmaceuticals and Medical Devices Agency
(PMDA) will continue to make science-based decisions based on the
characteristics of individual products.

The Government of Japan supports simultaneous global development of
pharmaceuticals as a means to promote the efficient development of
pharmaceuticals in Japan. The Government of Japan has been implementing
the "New 5-Year Clinical Trial Activation Plan=E2=80=9D since 2007, promoti=
ng
global clinical trials by taking measures such as: 1) improving the
environment in hospitals for clinical trials, including global clinical
trials; 2) supporting the efficient implementation of clinical trials to
reduce the burden on companies; and 3) publishing guidelines called the
"Basic Principles on Global Clinical Trials.=E2=80=9D It is anticipated tha=
t SGD
trials will help to reduce the drug lag. Through various dialogues such
as the "Dialogue between the Public and Private Sectors for Innovative
Pharmaceuticals and Medical Devices,=E2=80=9D MHLW and PMDA will continue t=
o
exchange opinions with relevant parties, including U.S. industry.

b. Waiting Times for Drug Clinical Trial Consultations: MHLW and PMDA
have made substantial progress in reducing waiting times for drug
clinical trial consultations. PMDA abolished the system of arranging
appointments on the basis of points, and rearranged the system to
respond to all consultations in a timely manner in FY2008. MHLW will
continue to support PMDA to meet the demand for clinical trial
consultations in a
timely manner.

c. Drug Review Times: MHLW will ensure that PMDA implements its plan to
increase by 236 the number of drug reviewers by the end of FY2009, and
that PMDA redoubles efforts to improve systems for evaluating
pharmaceuticals and conducting clinical trial consultations. There were
346 reviewers in PMDA as of April 2009. PMDA is also making efforts in
facilitating reviews by conducting organizational reforms, such as the
establishment of a new division specializing in anti-cancer drugs. In
terms of improving the quality of reviews, PMDA is making efforts to
ensure consistency by taking various measures, such as: 1) developing
and circulating to new drug reviewers in April 2008 a document that
summarizes points to be considered during the actual evaluation process
of drugs; and 2) deploying experienced reviewers among each review team.
MHLW and PMDA will continue to exchange views with industry, including
U.S. industry, to look at process improvements for both consultations
and reviews such as introducing a two-track system and improving the
efficiency of the question-and-answer component of the review process.

d. Acceptance of Foreign Clinical Data: PMDA will continue to accept
foreign clinical data in accordance with the ICH E5 guideline.

e. New Drug Application Approval Processing Times: MHLW will continue to
exchange views with industry, including U.S. industry, on reducing the
processing time for new drug applications before issuing final
approvals.

f. Post-Approval Partial Changes: MHLW issued a notification on review
time of post-approval partial change applications and expressed their
intention to make efforts to reduce review times, including setting
targets such as six month and twelve month total approval times (in
median) depending on characteristics of partial change applications by
the end of CY2009 and FY2009, respectively.

g. Vaccines: MHLW is developing guidelines on vaccines in a study group,
where industry, including U.S. industry, has participated. The
Government of Japan will continue to discuss with industry, including
U.S. industry, to improve regulatory reviews of vaccines.

2. Medical Devices:

a. Performance Goals and User Fees: MHLW devised the "Action Program for
Acceleration of Medical Device Review=E2=80=9D in December 2008 following
discussion with industry, including U.S. industry. In accordance with
the Action Program, PMDA will measure review times for the approval
cohort median, and for reference PMDA will also measure review times for
the submission cohort in median. PMDA will continue to publish this
information, enabling industry to evaluate the performance of PMDA. PMDA
will work to collect sufficient data that will promote meaningful
discussions at semi-annual meetings of regulators and industry to
measure progress of the Action Program.

b. Medical Device Review Staff: PMDA increased its staff in the Office
of Medical Devices to 47 as of April 2009 on the basis of the Action
Program and will continue such increases in accordance with the program
goals. To ensure knowledgeable and skillful reviewers, PMDA will create
training programs by: 1) promoting personnel exchanges among domestic
and foreign universities and research institutions; and 2) referring to
U.S. Food and Drug Administration training programs. The progress of the
Action Program will be reviewed twice a year in meetings of regulators
and industry, including U.S. industry.

c. Review Criteria and Class II Devices Eligible for Third Party Review:
In accordance with the Action Program, MHLW continues to work with
industry, including U.S. industry, to clarify review criteria and ensure
that all Class II devices will be eligible for third-party review by
FY2011 as a matter of principle.

d. Partial Change Approvals: MHLW, PMDA and industry, including U.S.
industry, formed a working-level task force to discuss issues related to
reviews and approvals. Following discussion in the task force, MHLW
issued two notifications about the procedure for partial changes
regarding medical devices. The task force will continue to work on a
flow chart which helps to clarify the required regulatory procedure for
a partial change. Under the pilot program for the real time review
process for "special designated changes=E2=80=9D mentioned in MHLW=E2=80=99=
s November
2008 notification, MHLW and PMDA will endeavor to achieve the two month
target indicated in the notification.

e. Accelerated Stability Test Data: In September 2008, MHLW issued a
notification clarifying accelerated testing as the basis for approval
where scientific evidence validates the testing methods. MHLW will
continue to work on a question-and-answer notification to increase the
understanding of when accelerated stability test data can be used as a
basis for approval. Issues related to accelerated stability testing will
be discussed at a task-force meeting upon request.

f. Bundling of Device Applications: MHLW and industry, including U.S.
industry, agreed to discuss the issue of bundling of device
applications, and a new working group was formed under the working-level
task force to handle the issue in May 2009. MHLW will continue to work
with industry, including U.S. industry, to specify the scope of "one
product=E2=80=9D and to develop guidelines for bundling of device applicati=
ons
where scientific and regulatory issues can be addressed most efficiently
in one review.

g. Raw Material Data Requirements: In order to expedite device reviews,
MHLW will streamline the requirements for raw material data in
submissions, taking into consideration the nature of medical devices and
that certain medical devices present greater risks than others. In
addition, MHLW will continue to ensure that Japan=E2=80=99s requirements fo=
r
biocompatibility testing are fully consistent with ISO 10993. MHLW will
continue to work with industry, including U.S. industry, to further
streamline the raw material requirements.

h. Accreditation of Foreign Manufacturer: MHLW and PMDA have published
instructions for industry on applications for the Accreditation of
Foreign Manufacturers both in Japanese and English to encourage industry
to make valid applications for prompt processing. MHLW will discuss at
the task force meeting with industry, including U.S. industry, their
proposals on further streamlining procedures to obtain the Accreditation
of Foreign Manufacturers.

i. Factory Inspection Program: MHLW has been utilizing several fora for
discussion with third-party certification bodies, industry, local
governments and PMDA to create streamlined QMS conformity assessments.
MHLW will continue to discuss this issue with these groups.

j. In-Vitro Diagnostic (IVD) Approvals: MHLW plans to issue a
notification about stability testing and the effective period of IVDs
based on the discussion in the working level task force. MHLW will
discuss with industry, including U.S. industry, such as on issues
related to pre-approval evaluation by the National Institute of
Infectious Diseases. MHLW is open to discussing with industry its
proposals regarding IVD regulations including the continuation of
clinical performance testing after regulatory application.

XVII. MEDICAL DEVICES AND PHARMACEUTICALS

The Government of the United States and the Government of Japan have
discussed the Government of Japan=E2=80=99s recommendation regarding the
protection of undisclosed test or other data generated to obtain
marketing approval for pharmaceutical products.

Source URL: http://keionline.org/node/575
Links:
[1] http://www.ustr.gov/webfm_send/1186
[2]
http://www.phrma.org/news_room/press_releases/phrma_applauds_innovation_and=
_access_policies_in_us-japan_report/


--
James Love, Director, Knowledge Ecology International
http://www.keionline.org | mailto:james.love at keionline.org
Wk: +1.202.332.2671 | US Mobile +1.202.361.3040 | Geneva Mobile
+41.76.413.6584
--
James Love, Director, Knowledge Ecology International
http://www.keionline.org | mailto:james.love at keionline.org
Wk: +1.202.332.2671 | US Mobile +1.202.361.3040 | Geneva Mobile +41.76.413.=
6584