Pressures On Japanese Drug Pricing And Volume

Given Japan's unusual pharmaceutical pricing system, where the state, which is responsible for 30% of drug purchases, sets prices for all products, it is not surprising that Japanese drug company executives feel that the primary factor affecting drug prices is government health reforms. This was the finding of a recent study by Datamonitor on factors affecting price and volume in the industry.

Recent negotiations between the government and interested parties have led to a revamping of the structure, in an effort to reduce the periodic price cuts. The cuts have not been abolished altogether but, averaging 6.6% (Marketletters passim) across all therapeutic categories, the reductions in April 1994 were smaller than was previously the case. Nevertheless, the cyclical adjustment is considered to have damaging effects on the pharmaceutical industry in Japan.

The survey asked executives to rate various factors in order of importance in influencing pricing and volume on a scale of 1 (unimportant) to 5 (very important). The average for factors influencing pricing were as follows: