Japan Reimbursement/HTA Scheme Change in April 2022

Published May 5, 2022

Yoko Ishiguro, Healthcare Economics and Government Affairs Manager, Medtronic North Asia (Korea and Japan), yoko.ishiguro@medtronic.com; Shoko Oyama, Healthcare Economics and Government Affairs Analyst, Medtronic North Asia (Korea and Japan), shoko.oyama@medtronic.com; Tomoko Matsumoto, Healthcare Economics and Government Affairs Analyst, Medtronic North Asia (Korea and Japan), tomoko.matsumoto @medtronic.com)

Japan has a biennial scheme change rule for reimbursement in medical technologies, in which health technology assessment (HTA) is included. It covers reimbursement price revision (medical technologies, hospitalization fees, procedure fees, and scheme modification, etc.)  Below is the summary from the MedTech industry perspective.

  1. Reimbursement

    The Ministry of Health, Labor, and Welfare (MHLW) has been placing strong pressure on healthcare spending and trying to balance with innovation as other developed countries. This year the reimbursement scheme modification also had these two aspects:

    • Healthcare Cost Containment

      In April routine reimbursement price cuts are made every 2 years. The main two schemes are: 1) Reasonable Zone reimbursement price cut system (R-Zone price cut), and 2) Foreign average price cut (FAP price cut). The concept of R-Zone is to make the reimbursement price closer to the sold price from distributors to hospitals, which should have been cheaper than the reimbursement price. FAP is the ceiling system for reimbursement price in Japan referring to the prices in 5 countries such as the US, UK, France, Germany, and Australia. The threshold had been 1.3 times of average list prices in 5 countries, but it was changed to 1.25 times. This is part of long-term declining trend (Table 1).

    • Promotion for Innovative Technologies

      (1)   Challenge Application

      “Challenge Application” was introduced in April 2018 as an original reimbursement scheme for medical technologies. This allows manufacturers to ask for “re-evaluation” after its product launch with newly generated evidence in the post market. In this revision, the scope of this application has been expanded. This scheme is a main promotion for innovative technologies in recent revisions but had been limited only to technologies grouped as “special treatment medical devices (STMs)”. Medical technologies could be classified as STMs which have reimbursement prices or non-STMs which have no reimbursement prices and inclusively paid in procedure fees. There is no clear classification rule between them, but non-single use devices (SUDs) tend to be categorized into non-STMs, like sutures, staples, MRI machines, robots, and so on. In April 2022, non-STMs became eligible for Challenge Application as like STMs.

      (2)   Software as Medical Device (SaMD)

      MHLW echoed again that patient clinical benefit is the key driver of reimbursement coverage for Software as medicals device (SaMD).

      (3)   New premium

      A new premium fee has been developed for pediatric use devices (Specific Use Medical Device premium) and products introduced firstly in Japan (Pioneer Medical Device (Sakigake) premium).

      Table 1: FAP rule change

      Modification year Ceiling
      2006 2.0 times of FAP
      2008 1.7 times of FAP
      2010 1.5 times of FAP
      2012 1.3 times of FAP
      2014 1.3 times of FAP
      2016 1.3 times of FAP
      2018 1.3 times of FAP
      2020 1.3 times of FAP
      2022 1.25 times of FAP

  2. Health Technology Assessment (HTA)

Japanese health technology assessment (HTA) scheme, also know as ‘cost effectiveness evaluation (CEE)’ was introduced in April 2019 as a new repricing methodology. It covers both drugs and medical technologies with common selection criteria, analysis guidelines and operation schemes. This scheme is currently for price adjustment after reimbursement determination for specific products – like expensive products or products which have a high impact on healthcare spending. Twentynine products from pharmaceuticals and medical technologies have been designated as CEE subjects and 13 products have been completed for the CEE process. In the future, the role of this scheme is expected to expand from price adjustment to reimbursement determination with an increase in the number of targeted products. During the discussion for the revision in April 2022, Central Social Insurance Medical Council (CSIMC, locally known as Chuikyo) didn’t change the long-term vision for CEE program and agreed not to change the objective or product selection criteria in the revision in 2022. The main issue was how to modify the operational scheme for smoother discussion. The background is that all products for CEE experienced delays in process. Although the expected timeline was to be 18 months from the product selection to price determination, the shortest case was 20.8 months, and the longest case was 23.3 months. The key changes for smoother operation introduced in April 2022 are as follows:

  • Operational Scheme Change

    To accomplish the process within the expected timeline, some rules for the “expert committee” were changed. The expert committee consists of academia and clinical experts and is involved in the discussions between manufacturers and the HTA agency known as C2H. The committee meetings are supposed to be held to 1) determine the analytical framework, 2) review the CEE analysis report submitted by manufacturers, and 3) appraise the review from the academic group. The second committee meeting was moved from the time the manufacturer submits the analysis report to the time after the academic group finishes reviewing the manufacturer’s report. Also, the third committee meeting will be canceled if there is no disagreement.

  • Punitive Price Cut in the Case of Delay

    To incentivize manufacturers to submit their CEE analysis report within the expected timeline, a new price adjustment rule was introduced. The worst-case scenario for price adjustment (the biggest price cut) is adopted to products under the following criteria:

    1. Delay in the submission of the CEE analysis report
    2. No acceptable rationale for delay
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