Reimbursement pricing for new medical devices in Japan: Is the evaluation of innovation appropriate?

Abstract

Summary Objectives In Japan, strong reimbursement pricing control measures for existing medical device products have rendered new medical device reimbursement pricing critical for manufacturers. Few studies have been conducted on this aspect; therefore, this paper (1) clarifies whether evaluation of innovation is appropriate or not and (2), if not, investigates its background. Methods In this research, 319 C1/C2 government decisions for new medical devices in the 10 years from April 2008 to March 2018 were analyzed. Evaluation of innovation was considered in terms of the reimbursement price, as well as the foreign average price ratio. Results Considering the degree of evaluation of innovation, the average premium rate for the similar function category comparison method was 10.2% during 2008 to 2010 (this means the newly set reimbursement price was 10.2% higher than that of corresponded exiting categories); it declined consistently thereafter, to 3.2% during 2016 to 2018. Moreover, evaluation of innovation by the foreign average price (FAP) ratio was 1.04 in 2008 to 2010, consistently decreasing to 0.88 in 2016 to 2018. The period from product approval to the non‐Special Designated Treatment Material (non‐STM) (a part of technical fee) price listing is much longer than that of the STM (own reimbursement price) listing. Conclusion Several reasons were considered for the decline in innovation evaluation: (1) the lowering of the FAP upper limit ratio, (2) the possibility that there was not enough evidence at the time of price listing, (3) and the more rigorous standards to create a new separate functional category. However, some aspects were attributable to reimbursement system reform.

Coverage with Evidence Development Programs for Medical Technologies in Asia-Pacific Regions: A Case Study of Japan and South Korea

“…A premium price could be sought through post-market reevaluation after the development of robust local or international clinical evidence. Although the regulation for premium price determination currently exists, the ability to obtain a premium price for new and innovative medical technologies is currently very low (e.g., at best 3%-5% premium vs. listed conventional technologies), and this percentage has been decreasing since 2008 (37) . The CED programs in Japan and Korea substantially differ from those in the USA, particularly in how they recognize the value of new medical technologies and also the presence of a patient copayment burden that unfavorably impacts patient access to new medical technologies.…”

The reimbursement coverage decisions and pricing rules for medical devices in Taiwan

“…Japan’s NHI system was implemented in 1961 [ 21 ]. Reimbursement usually takes 6 to 9 months once a product is approved, although depending on the reimbursement category it can sometimes take more than one year [ 22 ].…”

“…The Japanese government announced the formal start of the HTA scheme (Cost Effectiveness Evaluation) in April 2019 for price adjustments (downward or upward) but not for reimbursement decisions [ 23 ], [ 24 ]. Japan introduced the Diagnosis Procedure Combination (DPC) system, which is similar to the DRG, but surgery-related costs (including medical devices) are still paid on a fee-for-service-based system [ 2 ], [ 21 ].…”

“…Special Designated Treatment Materials (STMs) are separate from the technical fee and include most of the high-cost, medium- to high-risk single-use devices that are disposable or implantable (e.g., pacemakers and artificial discs). Meanwhile, non-STMs include low-risk medical devices (classified by the US Food and Drug Administration as Class I and II), which could be low-priced, reusable, and durable diagnostic devices included in the technical fee but not eligible for an individual reimbursement price (e.g., magnetic resonance imaging or intraocular lenses) [ 2 ], [ 5 ], [ 21 ], [ 25 ].…”

“…In this system, functional category criteria are based on their structure, purpose of use, efficacy, and effectiveness/performance [ 5 ]. Therefore, STMs in the same category have a specific reimbursement price [ 21 ]. The manufacturer can submit the STM to the MHLW to categorize the new medical device into an existing functional category covered by reimbursement; however, if the new medical device and/or its corresponding technical fee does not meet the existing functional category, the manufacturer must apply to the MHLW to create a new functional category and new technical fee to acquire reimbursement for the device [ 5 ], [ 21 ].…”