The Japanese Drug Price System

In Japan, says the Japan Manufacturers' Association, only ethical drugs on the National Health Insurance Drug Price List are reimbursable, and this totalled 13,375 drugs as of the March 1994. The list, notes the JPMA, serves two purposes: it is a list of those drug items reimbursed under the insurance system, and it serves as a list of official prices. As a general rule, the NHI drug price listing is done according to each product's brand name.

When a medical institution purchases a drug, its price will be determined by free negotiation between buyer and seller. As business terms and conditions, such as the volume of purchase, differ from institution to institution, the price may vary accordingly. However, the amount of reimbursement paid for a drug by the health insurance societies concerned is based on the NHI list price.

In practice, says the JPMA, the institution usually purchases a drug at a price below the NHI drug price guide, resulting in a price gap. In order to minimize the price gap, to comply with the principle of the NHI Drug Price System, the Ministry of Health and Welfare carries out a regular review of the NHI drug prices to limit the distance between the reimbursement and market price.