OBJECTIVES

: To understand the impact of policy on orphan drug pricing and health economics in Japan as compared to in the EU5.

METHODS

: The study employed a pragmatic literature, industry, and policy review to determine nuanced pricing and reimbursement dynamics for orphan gene, stem cell, and PD-1/L1 therapies in Japan.

RESULTS

: While innovative and orphan drug pricing and access in the EU5 often relies on cost-effectiveness analyses and budget impact, pricing in Japan strictly follows either the cost-calculation or the comparison pricing pathway, as the country places a larger emphasis on innovation and unmet therapeutic need. Japan’s HTA allows new drugs to use innovation (first-in-class) premiums (70-120%) and marketability (orphan indication) premiums (5-20%). An additional 15-20% premium is available to drugs with Sakigake designation, given to domestically-developed therapies expected to have outstanding efficacy. Orphan gene therapy with no comparator, SPINRAZA, was quickly priced in Japan at ¥9,320,424 (€70,785). In Europe, SPINRAZA is only approved in Germany, which cited major improvement of therapeutic benefit to price the therapy at €89,600; other more cost-effectiveness-conscious countries have not yet chosen to reimburse the therapy. Although historically more lenient on budget impact than EU5 countries, since 2016, Japan has also necessitated re-pricing of “huge sellers,” or products with annual sales of ¥100-150 billion ($0.97-1.45 billion), such as SOVALDI, which received a 31.7% Japanese price-cut to the therapy. Still not as important an influence on reimbursement decisions in Japan as in Europe, budget impact of orphan and novel therapies is on Japan’s radar.

CONCLUSIONS

: Japan rewards drugs for innovation and unmet need fulfillment, as long as budget impact is not excessive; European HTA policies look at cost-effectiveness and therapeutic benefit to gauge pricing. Domestic manufacturers launching therapies in Japan are poised preferentially, and global manufacturers should emphasize the novel/orphan nature of products as opposed to their cost-effectiveness.