Radical Reform Plan For Health Care In Japan

If the new reform plan announced by Japan's Ministry of Health & Welfareon August 7 is approved by the government, a major change in drug pricing will take place in that country.

The government now sets fixed reimbursement prices for drugs under the present health insurance system which encourages hospitals and doctors to negotiate a lower price from suppliers to generate a margin for themselves. In short, the current practice encourages hospitals and doctors to provide more service and drugs to their patients because this results in more reimbursement by the health insurance system, thus contributing to Japan's rising health insurance deficit.

German-Style Reference Price System Proposed The proposed reform will abolish the present reimbursement system. Instead, drug manufacturers and wholesalers will be allowed to freely set their own prices. However, in return, the government will set reference prices for reimbursement, rather along the lines of the German system, according to a Ministry official.