Key facts
- Japan's drug pricing reform, effective April 1, 2026, aims to generate ¥105 billion in savings.
- The reform includes a new mechanism, SPA-SSS, which can lead to price cuts of up to 66.7% for high-selling drugs.
- The international reference pricing basket has been updated to include only post-AMNOG negotiated prices from Germany.
- Pharmaceutical companies argue that Japan's pricing system discourages innovation and limits patient access to new medicines.
- The changes could make Japan a less attractive destination for global pharmaceutical investment and influence international pricing strategies.
Japan's pharmaceutical pricing system, historically a local matter, is now under global scrutiny due to recent reforms that could influence international drug pricing strategies and investment. The annual revisions, including the latest implemented in April 2026, aim to control healthcare costs by reducing drug reimbursement prices. This year's reform reduced aggregate NHI drug prices by approximately 4%, contributing to a ¥105 billion savings target.
Key changes include the transformation of the 'huge seller repricing' mechanism into the Special Price Adjustment for Sustainable Health System and Sales Scale (SPA-SSS). Under SPA-SSS, if a drug's sales exceed ¥300 billion and are more than ten times the original forecast, prices can be cut by up to 66.7%. This is seen by some as a disincentive to honest forecasting and a powerful argument for conservative demand projections in Japanese submissions.
Furthermore, the international reference pricing basket has been updated. Now, only post-AMNOG negotiated prices in Germany are used as reference points, a shift from the previous inclusion of pre-AMNOG free-pricing launch prices. This technical adjustment has significant commercial implications.
Pharmaceutical manufacturers, including Eli Lilly, argue that Japan's pricing system penalizes innovative medicines for their effectiveness, limits patient access to treatments, and makes the country a less attractive destination for global investment. The Federation of Pharmaceutical Manufacturers’ Associations of Japan (FPMAJ) has called for easing foreign price adjustment rules for new drugs. The decline in Japan's share of global new medicine invention and R&D investment, from nearly 29% in the early 1980s to 7% in the 2010s, is cited as evidence of the system's negative impact. The average drug lag in Japan is 17 months, and approximately 44% of medicines approved in the U.S. between 2005 and 2022 never reached Japan at all, creating a patient access crisis.