Analysis of Factors Behind Differences Between Official Drug Pricing and Cost-Effectiveness Evaluation in Japan and Policy Implications
Author(s)
Mariko Hara, MBA, Hiroshi Nakamura, PhD.
Keio University, Tokyo, Japan.
Keio University, Tokyo, Japan.
OBJECTIVES: In Japan, the government sets drug prices based on efficacy and safety achieving board and prompt reimbursement by public insurance followed by cost-effectiveness assessments based on ICER-QALY. This study aims to investigate whether there are differences in judgments between official drug pricing and cost-effectiveness evaluation. Moreover, the study categorizes the factors that caused the differences and derives policy implications.
METHODS: Thirty-two products have been evaluated in Japan from 2019 to May 2025.We then focused on twenty-four products whose official prices are reduced by cost-effectiveness evaluations.Public reports on drug pricing and cost-effectiveness evaluations are referenced.
RESULTS: We find differences in judgment between official drug pricing and cost-effectiveness evaluation in all twenty-four products, leading to lower official prices. Even in cases in which an existing drug was used as a comparator in both drug pricing and cost-effectiveness evaluations, a different existing drug was used in about 80% of the cases. We categorized five factors that caused the differences.1. Evaluation of innovation that is not directly reflected in the cost-effectiveness evaluation 2. Evaluation of innovation when effectiveness is observed only in a subset of patient population 3. Selected comparators: whether to limit a comparator to an existing drug/device or not 4. Selected comparators and evaluation of innovation: whether to use an older drug/device as a comparator or not 5. Selected comparators when no data exists at the time of evaluation. A significant number of products were found to be affected by factors 1 and 4.
CONCLUSIONS: Several differences between official drug pricing and cost-effectiveness evaluation have been identified. Therefore, consistent implementation is required between drug pricing and cost-effect evaluation and reducing these differences can improve the predictability of official pricing for companies that are interested in developing or launching their products in Japan and other countries where official prices in Japan are referred.
METHODS: Thirty-two products have been evaluated in Japan from 2019 to May 2025.We then focused on twenty-four products whose official prices are reduced by cost-effectiveness evaluations.Public reports on drug pricing and cost-effectiveness evaluations are referenced.
RESULTS: We find differences in judgment between official drug pricing and cost-effectiveness evaluation in all twenty-four products, leading to lower official prices. Even in cases in which an existing drug was used as a comparator in both drug pricing and cost-effectiveness evaluations, a different existing drug was used in about 80% of the cases. We categorized five factors that caused the differences.1. Evaluation of innovation that is not directly reflected in the cost-effectiveness evaluation 2. Evaluation of innovation when effectiveness is observed only in a subset of patient population 3. Selected comparators: whether to limit a comparator to an existing drug/device or not 4. Selected comparators and evaluation of innovation: whether to use an older drug/device as a comparator or not 5. Selected comparators when no data exists at the time of evaluation. A significant number of products were found to be affected by factors 1 and 4.
CONCLUSIONS: Several differences between official drug pricing and cost-effectiveness evaluation have been identified. Therefore, consistent implementation is required between drug pricing and cost-effect evaluation and reducing these differences can improve the predictability of official pricing for companies that are interested in developing or launching their products in Japan and other countries where official prices in Japan are referred.
Conference/Value in Health Info
2025-11, ISPOR Europe 2025, Glasgow, Scotland
Value in Health, Volume 28, Issue S2
Code
EPH15
Topic
Epidemiology & Public Health, Health Technology Assessment
Disease
No Additional Disease & Conditions/Specialized Treatment Areas