Reform of Japan's health care system to prevent impending bankruptcyhas moved another step forward, with agreement by a panel on health insurance made up of politicians from the Liberal Democratic Party, the Social Democratic Party and the New Party Sakigake, partners in the ruling coalition. The panel had opposed a reform plan announced August 7 by the Ministry of Health and Welfare, but the basic elements of that plan seem to have been retained, with certain modifications.
One key element attracting interest from the pharmaceutical sector is a consensus on abolishing the government-mandated reimbursement system and replacing it with one allowing drugmakers and wholesalers to set their own prices. Under the agreed reform, the government will set reference prices for reimbursement, which will be made against the drug's invoiced price up to the level of the reference price. Any amount above the reference price would be covered by the patient. In effect, ceiling prices would be established and reimbursement against invoices would leave no room for doctor or hospital margins, which are estimated to run at 1,300 billion yen ($8.67 billion) annually.
A modification of the earlier plan by the panel will introduce an open bidding system to set new prices as a way to reduce overall spending on prescription drugs. Drug expenditures now account for about 30% of medical bills in Japan, which on average is about twice as much as in other industrialized countries. The panel's plan will also include mechanisms to require doctors to choose less expensive methods of treatment, including drugs.
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