Balancing Act: Japan’s Healthcare System
Japan’s drug pricing reforms have become a focal point in the country’s healthcare policy discussions, especially as policymakers weigh whether abolishing off-year revisions could restore market stability. Like many other nations, Japan faces the challenge of balancing fiscal responsibility with fostering innovation and ensuring timely access to new medicines. Notably, this is not just a Japanese dilemma, but part of a global effort to optimize healthcare delivery while protecting patient access.
Over the past decade, Japan’s approach to pharmaceutical pricing reform has shown both dynamism and internal tensions. While some policies have aimed to incentivize innovation, these efforts have often been contradictory to cost-containment tools, including:
- Annual price revisions, including for patented drugs;
- Post-marketing cost-effectiveness assessments leading to price adjustments after launch.
These have contributed to two persistent access challenges:
- “Drug lag” – delays in the availability of new medicines compared to other major markets.
- “Drug loss” – innovative therapies that are not launched in Japan or are withdrawn due to unfavourable pricing conditions.
Reform in Motion
In response to mounting concerns over drug lag and drug loss, Japan introduced the FY2024 drug pricing reform, which included several pro-innovation measures widely welcomed by the pharmaceutical industry. As explored in our earlier analysis – Review on the Effectiveness of Japan’s FY2024 Reform on NHI Price Listing – the reform package included:
- Upward price revisions for essential, low-margin products;
- Enhanced Price Maintenance Premiums (PMPs) to reward innovation;
- A policy tone signalling stability and encouragement for R&D investment.
These reforms boosted industry optimism, with companies like BMS committing ¥10 billion in new investments, citing the improved pharmaceutical pricing environment. However, this momentum has since been tested. In May, the FY2025 pricing reform officially continued the off-year price revisions, a mechanism historically used to adjust National Health Insurance (NHI)-listed prices between scheduled biennial updates.
Here’s how the two reforms compare:
Table 1. Comparison of FY2024 and FY2025 Japan’s drug pricing reforms
While the government positioned these revisions as selective and category-based, the decision has drawn criticism from both domestic and international stakeholders, arguing it undermines Japan’s stated commitment to innovation and faster patient access. Ahead of the FY2025 revisions, the Democratic Party for the People (DPP) submitted a formal request to the Ministry of Finance calling for the abolition of the “off-year” pricing mechanism. The DPP maintained that removing the practice would help resolve drug supply concerns and rebuild a more stable, innovation-friendly infrastructure. In coordination with the DPP, the Constitutional Democratic Party (CDP) submitted a bill to support this initiative.
The Political Chessboard: Gridlock in the Japanese Diet (Parliament)
Despite growing policy fatigue among stakeholders such as the DPP, legislative change faces two key obstacles.
1. Lower House Politics: Coalition Tensions
On April 4th 2025, deliberations for the bill to repeal the off-year repricing scheme began in Japan’s Diet (Parliament). To pass the bill through the Lower House, the DPP requires support from the Japan Innovation Party (Nippon Ishin). However, Nippon Ishin support of the bill could jeopardise its standing in ongoing tripartite talks with the ruling LDP-Komeito coalition on broader social security reform – placing the party in a politically sensitive position.
2. Upper House Dynamics: The Gatekeepers
The more structural challenge lies in the Upper House, where the LDP-Komeito coalition holds a majority. Although the FY2025 budget softened its language, it indicated off-year revisions would differ from FY2021 and FY2023 by not adhering to their customary rules. This shift considers significant environmental changes since the 2016 “basic policy for drastic drug pricing reform,” Nevertheless, Cabinet Ministers stopped short of endorsing a clear departure from practice.
Even if the bill clears the Lower House, it is likely to be rejected by the Upper House. In that case:
- The bill would be returned for re-deliberation in the Lower House;
- It would then require a two-thirds supermajority, a threshold the opposition cannot meet alone.
That said, some Upper House LDP members with healthcare expertise have expressed scepticism about off-year revisions in the past. Their vote – balancing personal convictions, party lines, and constituency expectations – could still prove pivotal in this tightrope reform debate.
Market Access in Jeopardy: Risks to Innovation and Patients
Policy ambiguity and mid-cycle repricing reforms pose direct threats to market access, both in the short and long term.
Short Term Impact
- Manufacturers face deep uncertainty, making it harder to justify Japan-specific launches or investments.
- Smaller innovators struggle most, lacking the margin to absorb price shocks or unpredictable access hurdles.
Japan’s pricing volatility has already contributed to a decline in the number of global product launches reaching its market. As a result, without reforms that promote predictability, this trend will likely accelerate.
In February 2025, the US Chamber of Commerce and other industry associations raised formal objections to Japan’s FY2025 pricing changes in a letter to the Embassy of Japan in Washington, D.C. Their criticism was twofold:
- The reintroduced off-year revisions directly contradict Japan’s drug pricing reform commitments made in FY2024 to reward innovation.
- The process lacked transparency, with “no meaningful opportunities for stakeholder input or consultation.”
Importantly, the international backlash signals mounting concerns with Japan’s access environment and highlights deeper questions about its long-term attractiveness as a strategic launch market.
Long Term Impact
- Patients are the ultimate losers, as access to advanced therapies is delayed, restricted, or abandoned altogether.
In May 2025, a council under the Ministry of Health, Labour and Welfare (MHLW) reported that 14 out of 78 products investigated in a survey were identified as high medical-need therapies that remain unavailable in Japan. These so-called “loss” products are approved in the US or Europe but have not been developed domestically.
These therapies span a range of critical areas, including rare diseases, oncology, antibiotics, maternal mental health, and diagnostic agents (Figure 1).
Figure 1. Therapeutic Areas of High-Need “Loss” Products Unavailable in Japan (2025)
This data underscores the human impact of Japan’s current access landscape: patients are missing out on proven, high-need treatments due to systemic barriers in the pricing and reimbursement environment.
What’s next?
As of August 2025, the move to repeal off-year revisions remains under deliberation, now folded into the broader FY2026 pricing reform discussions. With Chuikyo launching consultations on June 25, and draft guidelines expected by December 2025, Stakeholders have a narrow window to influence Japan’s drug pricing reforms. Therefore, proactive engagement is critical.
The DPP has renewed its push to abolish off-year price cuts, citing their detrimental effect on market stability and patient access. Whether these calls will translate into policy change remains uncertain, but the opportunity for input is now.
How Pharma Can Navigate Japan’s Access Landscape
Speaking about the future of off-year repricing, Koshin Kiyohara, Pharmaceutical Management Director at the MHLW, urged greater industry engagement:
“We would like to ask for your sincere efforts in delivering the necessary drugs. We would also like to hear various opinions so that we can offer as much support as possible in terms of pricing.”
This statement reflects a subtle but important signal: while pricing reforms are ongoing, the MHLW is open to input and collaboration. Indeed, in this high-stakes environment, where regulatory direction is uncertain and policy timelines are tightening, pharmaceutical companies must move from reactive compliance to proactive access policy shaping.
Key focus areas include:
1. Build Local Stakeholder Engagement Strategies
- Map key influencers across the MHLW, Chuikyo, MoF, and legislative committees.
- Identify shared priorities – such as supply stability, equitable access, and local innovation.
- Participate in forums and public dialogue to align innovation with broader health system goals.
2. Interpret Policy Through a Political Lens
- Track Diet-level negotiations, party dynamics, and electoral timelines.
- Understand how political constraints shape the reform window and policymaker positioning.
- Adapt communications to reflect both formal policy and informal political signals.
3. Align Global and Local Access Governance
- Empower local teams to make responsive, context-aware access decisions.
- Integrate policy risk into internal forecasting and portfolio planning.
How Inbeeo Helps Pharma Lead Through Uncertainty
At Inbeeo, we understand that market access doesn’t happen in a vacuum – it’s shaped by policy, politics, and perception. Our work across highly regulated and reform-heavy markets equips us to help clients navigate even the most complex access environments.
Under our Navigating Access Policies pillar, we offer:
- Policy Intelligence: Real-time tracking and interpretation of evolving policy signals to guide informed decision-making.
- Internal Positioning: Support in aligning internal messaging between global and affiliate teams to ensure that this is actionable and impactful given local political and policy context.
- Stakeholder Facilitation: Expertly designed engagement platforms that bring regulators, payers, and innovators into collaborative dialogue.
- Access Policy Strategy: Tailored reimbursement and pricing approaches grounded in both health policy and payer reality.
As Japan’s health system stands at a policy crossroads, Inbeeo can support your company to co-shape changes in the access environment and ensure readiness for new access policies and regulations.