Cost-effectiveness takes flight in Japan 

Whitepaper by Harold Smith-Franzen
May 2021

Executive summary

In April, Japan announced the first round of results from its new cost-effectiveness assessment (CEA) system launched in 2019. Reimbursement for Novartis’s Kymriah was cut by 4.3% and GSK’s Trelegy received a reduction of 0.5%. In comparison to the massive double-digit cuts made under other repricing mechanisms, these adjustments were relatively minor. However, the successful completion of these reviews is an important signal that Japan is serious about value-based pricing. Cost-effectiveness assessments are here to stay, and the pharmaceutical and medical device industries need to prepare.

Like other Healthcare Technology Assessment (HTA) systems, Japan aims to reward value by linking reimbursement levels to health economic outcomes. However, in its current form the Japanese system differs significantly from its European counterparts in that it is:

Japan is testing the waters and developing the capabilities needed for a more extensive roll-out. As the number of reviewers expands and confidence in the process increases, so will the pace and scope of assessments.

In preparation, pharmaceutical and medical device companies should act now to:

Incorporate health economics and outcomes research (HEOR) and market access considerations into establishing product development and launch priorities