Full Scale Introduction of Cost-EffectivenessEvaluations in Japan
Overview (2/20/2019)

Medical Economics Division, Health Insurance Bureau, Ministry of
Health, Labour and Welfare (MHLW)[Translated by Center for Outcomes Research and Economic Evaluation for Health(C2H), National Institute of Public Health (NIPH)]
Disclaimer: The English version is a translation of the original version in Japanese. The Japanese version ispreferentially applied in cases of discrepancy between the two versions.

History on the discussion of cost-effectiveness evaluations

 The Central Social Insurance Medical Council (CSIMC) set up a Special Committee on Cost-EffectivenessEvaluation in May 2012. Based on the experience gained with the trial implementation from FY 2016, the
CSIMC continues to consider applying new cost-effectiveness evaluation methods to the Japanese publichealthcare system.

Around 2010-

Discussions at the CSIMC on the implementation of cost-effectiveness evaluations

May 2012

Special Committee on Cost-Effectiveness Evaluation established under the
CSIMC

November 2013

Interim report published by the CSIMC

June 2015

In the “Basic Policies on Economic and Fiscal Management and Reform 2015,” it was
decided that cost-effectiveness evaluation would be implemented on a trial basis at the2016 Revision of Medical Fees.

April 2016~

Trial implementation of cost-effectiveness evaluations

June 2018

In the “Basic Policies on Economic and Fiscal Management and Reform 2018,” it was
decided that the full-scale implementation of cost-effectiveness evaluations continues tobe considered, and a conclusion should be reached within FY 2018.

2

Discussed issues on cost-effectiveness evaluation at CSIMC

 The following issues have been discussed by the Special Committee on Cost-Effectiveness Evaluation (andjoint committee meetings) based on experiences from the trial implementation, scientific reports by healtheconomists, and opinions from industry.

Date
2018
June 13Main issues discussed
Cost per QALY reference values (threshold) for price adjustments

August 22

Appraisal

October 17

Methods of utilizing results of cost-effectiveness evaluations, selection of target
products, handling of rare diseases, methods of price adjustments

November 7

Methods of price adjustments

November 21

Selection of target products, process of analysis, methods of price adjustments

December 5

Academic analysis for reviewing manufacturers’ submissions, members of Expert
Committee of Cost-Effectiveness Evaluations, methodological guidelines for costeffectiveness analysis, methods of price adjustments

December 19

Interviews with industry

2019
January 23

Draft report on full-scale implementation of cost-effectiveness evaluations

February 7

Interviews with industry

February 20

Final approval of full-scale implementation by CSIMC general assembly(*) August 22nd was the meeting of the Special Committee on Cost-Effectiveness Evaluation. Other dates were joint committee meetings
with the Special Committee on Cost-Effectiveness Evaluation, Drug Pricing, and Medical Device Pricing.

3

Main governmental policies on cost-effectiveness evaluations

Basic Policies on Economic and Fiscal Management and Reform 2015
(Cabinet Approval June 30, 2015)
In response to advances in healthcare, aim to promptly ensure full-scale implementation of the cost-effectivenessevaluation when determining reimbursement for pharmaceutical products and medical devices, after the trial
implementation at the FY 2016 Revision of Medical Fees

Regarding the Fundamental Reform of the Drug Pricing System
Essential Features (December 20, 2017) (Excerpt)
For cost-effectiveness evaluations, a system should be adopted where the cost-effectiveness of pharmaceuticalproducts/medical devices with a large market size is analyzed, and then drug/medical device prices are revised based on
the results.
Working towards this, price adjustments of the targeted 13 products should be made effective in April 2018 based on the
results of the trial evaluation. Technical issues that were revealed in the trial implementation will be summarized.
At the same time, the full-scale implementation should continue to be considered, reaching a conclusion within FY 2018.

Basic Policies on Economic and Fiscal Management and Reform 2018
(Cabinet Approval June 15, 2018) (Excerpt)
Based on the “Basic Policies for Fundamental Reform of the Drug Pricing System,” in addition to alleviating the publicburden and enhancing the quality of healthcare, convert the structure of the pharmaceutical industry into a structure witha high degree of drug discovery capabilities. (Omission) The full-scale implementation should continue to be considered,reaching a conclusion within FY 2018. (Omission)
For decision of reimbursement for new medicines and medical technologies, economic evaluations such as a costeffectiveness evaluation and financial impact should be considered, including the utilization of services covered and noncovered by insurance. Surveys, research, and considerations on health technology assessments should be promoted. To
achieve the goal, promotion of personnel development, Japanese data accumulation, and analyses of the data should be
required.

4

List of Issues on Cost-Effectiveness Evaluations(1) Utilization of the results of cost-effectivenessevaluations(2) Selection criteria for target products[1] Selection criteria for products targeted for costeffectiveness evaluations[2] Timing for selecting target products andprocedures for disclosure[3] Exclusion criteria(rare, pediatric, and severe diseases)(3) Analytical Process[1] Consultations prior to analysis (preliminary
consultation)[2] Consultations during manufacturers’ analysis[3] Role and members of the Special Committee of
Cost-Effectiveness Evaluations[4] Academic analysis for reviewing and re-analyzing
manufacturers’ submission[5] Time schedule of the evaluation process[6] Methodological guidelines for cost-effectivenessanalysis[7] Cases lacking enough data for analysis(4) Appraisal[1] Verification of analysis from a scientific perspective[2] Special consideration(rare, pediatric, and severe diseases)[3] Reporting and disclosing results of evaluations(5) Price adjustments[1] Targets of price adjustment by cost-effectivenessevaluation[2] Method of adjusting prices according to ICER
[3] Setting cost per QALY reference values (threshold)[4] Method of adjusting prices for products requiring
special consideration[5] Rate of price adjustments[6] Products evaluated as “dominant” or having a low
ICER value.
[7] Timelines and procedures for price adjustments(6) Building greater capacity for cost-effectivenessevaluations

5(1) Utilization of the results of cost-effectiveness evaluations

 The results of cost-effectiveness evaluations should not be used to determine
reimbursement conditions, but should be used to adjust prices after listing the medicine
and medical devices.
 Based on the results of full-scale implementation going forward, methods of utilization
will continue to be discussed after improving the capacity of cost-effectivenessevaluations.

6(2) [1] Selection criteria for products targeted for cost-effectiveness evaluations

 Considering the influence on public health insurance finances, innovative medicines and medical devices with alarge financial impact should be the main target of cost-effectiveness evaluations.
 The criteria shall be as follows, considering the limited capacity of the cost-effectiveness evaluation.

Classification

Similar Efficacy
Comparison
Method(Similar Function
Classification)

Cost Calculation
Method• Peak sales (estimate): JPY 10 billion or more

H1(i) NewlyListed Products:
after full-scale
implementation*1(ii) Previouslylisted Products:
before full-scale
implementation

Similar products

(*1)
(*2)
(*3)
(*4)

H2
H3

Selection Criteria

Products with apremium(*2)

Products with apremium(*2), ora disclosure rateof under 50%• Peak sales (estimate): JPY 5 billion or more, less than JPY
10 billion• Products identified by the CSIMC General Assembly, suchas products with a prominently high price(*3)

H4Products with a premium(*2)• Products with sales of JPY 100 billion or more
• Products identified by the CSIMC General Assembly, suchas products with a prominently high price(*3)

H5Products similar to those in the H1H4 Classification• Medicine for which the price is calculated in comparison
with target products(*4)• Medical devices for which price is calculated in comparison
with target products(*4), and that are categorized in thesame functional classification

Even if product does not meet the selection criteria in terms of the peak sales (estimate) at the time of listing, it will be selected if its annual market
size exceeds JPY 5 billion due to the expansion of the market size. In this case, it will be positioned as an H1 or H2 classification according to its
annual market size.
Products for which either an innovativeness premium, utility premium, or improvement premium (ハ) (medical devices) was calculated will be targeted
Products determined by the CSIMC General Assembly, such as products with a prominently high unit price, products for which new findings werediscovered after the completion of the evaluation that would have a major impact on the evaluation, and other products for which a re-evaluation was
required.
Products targeted for cost-effectiveness evaluations in the H1-H4 classification

7

(2) [2] Timing for selecting target products and procedures for disclosure Promptly select products to be targeted for cost-effectiveness evaluations.
 In order to ensure that evaluations advance smoothly, stagger the timing of selections rather than selecting many
products simultaneously.
 With regards to newly-listed products (H1 to H3 classifications) and similar products (H5 classification), the Expert
Committee on Drug/Medical Device Pricing will create a proposal as to whether they will meet the criteria, and the
CSIMC General Assembly will make the final approval.
 With regards to previously-listed products (H4 classification), upon listening to the opinions of the Expert Committee
on Drug/Medical Device Pricing, the MHLW will create a proposal as to whether they will meet the criteria, the CSIMC
General Assembly will make the final approval.

Timing for selecting products and disclosure
Classification

Timing of Product Selection

H1

Four times per year (selected
upon listing)After selection, promptly begin cost-effectivenessevaluation analyses.

Four times per year
(Select as “candidate products
for evaluation” upon listing)

Position as “candidate products for evaluation.”
Based on the selection status of the H1, H3, and H4classifications, select (2 times per year) medicinesand medical devices in order from products with thehighest peak sales (estimate), considering theannual upper limit for the number of products thatcan be evaluated, and begin analyses.

H2

Disclosure

Disclose at
the CSIMC
GeneralAssembly at
the time of
selection.

Handling After Selection

H3

Four times per year (selected
upon listing)After selection, promptly begin cost-effectivenessevaluation.

H4

Four times per year
(Selection using new listingsas an opportunity)

After selection, promptly begin cost-effectivenessevaluation.

H5

Four times per year (selected
upon listing)Do not conduct a cost-effectiveness evaluation, but
adjust prices according to the representative
products.

8

(2) [3] Exclusion criteria (rare, pediatric, and severe diseases) (Part 1)(i) Principals
 If the results of cost-effectiveness evaluations are used to determine reimbursement, patient
access may become a major issue. But if price adjustments are made after listing, it will beless of a concern.
 Meanwhile, even if the results are used only for price adjustments, it may be a disincentive for
R&D. Restricted access cannot be denied for the following products. For these products, a
special consideration will be needed.
[1] Products for which the unit price (drug/medical device price) is high because they have asmall number of patients.
[2] Products for which the value cannot be fully assessed by ICER (QALY).
 To ensure the transparency of the system, specific criteria are required for determining whatkinds of the products need special consideration.
(ii) Excluded products
 The following products will be excluded from target for cost-effectiveness evaluations.
• Products having at least one indication for rare diseases (i.e., designated intractablediseases, hemophilia, and HIV infections) for which there are insufficient treatment,• Products having at least one indication for children (i.e., pediatric dosage and administration
is approved in Japan)
 If the products has a large market size (JPY 35 billion or more) or has a prominently high unit
price, it may be targeted for a cost-effectiveness evaluation upon the decision of the CSIMC
General Assembly. (Even if the product falls under the above)9

(2) [3] Exclusion criteria (rare, pediatric, and severe diseases) (Part 2)

Products special consideration is required

Products[1] Products for which the unit price (drug/medical
device price) is high because they have a small
number of patients[2]

Products for which the value
cannot be fully assessed by
ICER (QALY)

Targetproduct• Products only used forrare diseases(*1) withinsufficient treatment• Products only used forchildren(*2)• If some of the indications
include rare diseases(*1)
with insufficient
treatment and pediatricdiseases(*2)

Specialconsideration

The products are
excluded from targets of
cost-effectivenessevaluations(*4)

They will be targets for evaluation, but will be given special
consideration in the appraisal process and price adjustments(*5)• Anti-cancer drugs(*3)

(*1)
(*2)
(*3)
(*4)

Designated intractable diseases, hemophilia, and HIV infections.
Pediatric dosage and administration is approved in Japan.
Special consideration is required if cancer is one of the approved indications.
However, if the products has a large market size (JPY 35 billion or more) or has a high unit price, it may be targeted for a costeffectiveness evaluation upon the decision of the CSIMC General Assembly.
(*5) Analyses including “public long-term care costs and productivity loss” can be also submitted only if they were conducted based on
findings in Japan. Although they will not be used for price adjustments, the submitted results of analyses will be disclosed, and used foraccumulating experiences.

10

(3) [1]-[5] Process for cost-effectiveness evaluations
9 months (manufacturer’s analysis)*1
Standard
timeline

3 to 6 months*1

3 to 6 months*1(determine analytical framework)

3 months or 6 months(academic analysis)(manufacturer’s analysis based on thedetermined analytical framework)

3 months

Manufacturers (medicines, medical devices)

Consultations,
if needed

Ministry of Health, Labour and Welfare, National Institute of Public Health (Center for
Outcomes Research and Economic Evaluation for Health: C2H)

Clinical specialists(2)⑥

Academic analysis group*1 The total timefrom the “preliminary
consultation” to“completion of
manufacturer
submission” shall not
exceed 9 months.

Actual price adjustments• Verification of
manufacturer
analysis(review)• Re-analysis

CSIMC <Approval of evaluation / New price determination>

Consultations,
if needed

Academic
Analysis

Expert Committee (iii) <Appraisal>

Manufacturer
conducts analysis
based on theanalyticalframework

Expert Committee (ii) <Confirms manufacturer analysis>

CSIMC <Target Selection>

Listing• Manufacturer
submits proposal for
analytical framework• Consultation basedon the proposed
framework,summary of main
issues• Content of theconsultation
recordedExpert Committee (i) <Determines analytical framework>

Preliminary consultation11

(3) [1] Preliminary consultations and [2] Consultations during analysis

 With regards to preliminary consultations/consultations during analysis, the manufacturer andthe academic analysis group shall not be in direct contact. Instead, the National Institute of
Public Health (NIPH) C2H will discuss with the manufacturer inquiring of the academic analysis
group.
 In principle, the analytical framework will be determined wherever possible in the preliminary
consultations, and analysis has to be conducted based on this framework. However, mutual
inquiries can be made when conducting the (manufacturer and academic) analysis.
 The content of consultations will be as follows:(i) Preliminary consultation• Analytical framework such as comparator, target population, pivotal studies of the target
product• Summary of main issues when conducting the (manufacturer and academic) analysis.
(ii) Consultations during analysis• New findings discovered during analysis (limited to scientific issues)
 The content of consultations will be recorded for the report to the expert committee.

12(3) [3] Role and members of the Expert Committee on Cost-Effectiveness Evaluations (Part 1)
 Discussions from the standpoint of healthcare providers and insurers will be conducted at the CSIMC General
Assembly. The expert committee will conduct technical discussions from a academic perspective.
 To ensure the neutrality and scientific validity of cost-effectiveness evaluations, the expert committee will be
involved at the following three stages:(A) Confirmation of the contents of preliminary consultation, determining analytical framework(B) Confirmation of the manufacturer analysis (whether the analysis was conducted based on the decided
analytical framework)(C) Appraisal based on the results of both the manufacturer and academic analysis
 The expert committee will not be disclosed as they will discuss using confidential information.
 Manufacturers can directly state their opinions to the expert committee and conduct the necessary discussion.
 Manufacturers who are dissatisfied with the final draft of evaluation results can submit a written complaint andstate their opinions at the expert committee.

Different roles between the CSIMC general assembly, special committee, and expert committee
CSIMC General AssemblySpecial Committee on CostEffectiveness Evaluation• Approve the rules of costeffectiveness evaluations• Approve target products,
determine price adjustments• Discuss the rules of costeffectiveness evaluations

Meeting

PublicPublicMembers• 7 members from the payer• 7 members from thehealthcare provider• 6 members from the public
interest• 10 expert members• 6 members from the payer• 6 members from thehealthcare provider• 4 members from the public
interest• 4 expert members• 2 academics

Role

Expert Committee on CostEffectiveness Evaluations• Discuss the contents of preliminary
consultation and determine analyticalframework• Discuss manufacturer analysis• Appraisal
Private• Health economist• Clinical specialist• Biostatistician/Epidemiologist• Bioethicist

13

(3) [3] Role and members of the expert committee on cost-effectiveness evaluations (Part 2)

 Because the expert committee will evaluate the results of the analysis from a technical perspective, they willconsist of expert health economists, clinicians, biostatisticians, and bioethicists.
 Conflicts of interest with manufacturers and competitors will be confirmed.
Members of the Experts Committee on Cost-Effectiveness Evaluations and their roles
Committee Members

Roles• Verifies contents of the cost-effectiveness analysis from the standpoint of healtheconomics• Health economist
Main
Committee
Members

Specialists ineach area• Biostatistician/Epidemiologist• An individual with a broad range of knowledge comprehensively confirms the validityof the analysis• Considers the scientific validity of the systematic review• Bioethicist• Conducts considerations from an ethical perspective in appraisal• Clinical specialists in each area

• Clinical specialists from each area participate according to the products to confirm
the validity of the analysis• Clinical specialist

Comparison with the other Expert Committees on Drug and Medical Device Pricing
Expert Committee
on Cost-Effectiveness Evaluations
Main
Committee
Members• Health economists• Clinical specialists• Biostatisticians/Epidemiologists• Bioethicist

4
2
2
1

Specialists ineach area

Designate clinical specialists in each area
(around 30)

Expert Committee
on Drug Pricing (Drug Pricing
Organization: DPO)
• Physicians
7• Dentists
1• Pharmacists
2• Health economists
1• Physicians
27• Dentists
1• Pharmacists
10• Health economists
4

Expert Committee
on Medical Device Pricing• Physicians• Dentists• Health economists

12
2
1• Physicians• Dentists• Pharmacists• Health economists

22
1
5
3

14

(3) [4] Academic analysis(i) Academic analysis
 Review the submitted manufacturer analysis.
 If the academic analysis group judges that a revision of the analysis is necessary from thestandpoint of scientific validity, an independent academic analysis (re-analysis) will be
conducted.
(ii) Implementing academic analyses
 The National Institute of Public Health (C2H) will lead the academic analysis. Multiple academic
analysis groups will be established, and the they will conduct the academic analyseis. The
National Institute of Public Health (C2H) will coordinate them and evaluate the results of theacademic analyses.
 The selected academic institutions will be disclosed.
 The National Institute of Public Health (C2H) will designate which academic analysis group willhandle each product, taking into consideration conflicts of interest and their capacity.
(iii) Conflicts of interest
 The products that each of the academic analysis groups are in charge of will not be disclosed
until the evaluations are complete. Contact between manufacturer and academic analysis
groups will be prohibited.
 As they will be handling confidential manufacturer information, the academic analysis groups
will be required to protect confidentiality.
 Inquiries to manufacturers will be conducted through the National Institute of Public Health(C2H), if needed.

15

(3) [5] Time schedule of the evaluation process and [6] Methodological guidelines
Standard time schedule In order to proceed cost-effectiveness evaluations without delay, set a standard time schedule for each
evaluation process.
• Manufacturer analysis
Approximately 9 months(Breakdown) • Preliminary consultation
Approximately 3 to 6 months(until analytical framework has been determined)• Manufacturer analysis based on the framework
Approximately 3 to 6 months(the total period should not exceed approximately 9 months)• Academic analysis
Approximately 3 months (approximately 6 months if a reanalysis is conducted)• Appraisal and new price determination
Approximately 3 months
 The progress of the each evaluation shall be reported periodically to the CSIMC General Assembly.
 There may be a case that manufacturers, such as small manufacturers that do not have enough capacity,
cannot finish the analysis by the deadline. If the standard period is exceeded, report the reason to the
CSIMC General Assembly.

Methodological guidelines
 The cost-effectiveness analysis has to be conducted according to the analytical guidelines.
 The interpretations of the analytical guidelines for each product will be discussed in the preliminary
consultation, if needed.
 It will also be reviewed as needed after the full-scale implementation.

16

(3) [7] Cases lacking enough data for analysis

 For products determined to be “impossible to analyze” due to lack of data, upon deliberationby the expert committee, the evaluation process may be interrupted by final approval of the
CSIMC General Assembly.
 If the evaluation process is interrupted, the CSIMC General Assembly can ask the
manufacturer to accumulate the necessary data by a predetermined deadline. If the datacannot be acquired, the CSIMC General Assembly will conduct price adjustments similar to
products with the poorest cost-effectiveness, based on deliberations by the expert committee.
 If sales of the product are suspended during analysis or if the originally planned market is
reduced considerably, the CSIMC General Assembly may discontinue the evaluation process
upon deliberation by the expert committee.
 Although the manufacturer may insist that analysis is impossible, the academic analysis groupand expert committee will analyze the product. In these cases, the expert committee will
determine the draft of price adjustments using the results of the academic analysis only.
 Upon accumulating cases where the evaluation process was interrupted or discontinued, thesewill be used to consider revision of the current evaluation system.

17

(4) [1] Verification from a scientific perspective and [3] Disclosure of evaluation

 If it is difficult to determine the ICER as a single value, the analysis results can be submitted as
an ICER with a range. For example, there are multiple data suitable for analysis.
 If the product has multiple target populations, the ICER is to be calculated for each population.
In this case, the entire new price will be determined by the weighted averages of each adjusted
price based on the ICER for each population.
 Promptly disclose the adjusted new price and the ICER as a range.
 In addition, the scientific issues including ICER values will be disclosed in a report in order todeepen scientific discussions and enhance the quality of future analyses.

The case of Drug X, indicated for Disease A and Disease B
Percentage of
population
Population A

Population B

ICER= JPY 3 million→ No adjustment

adjustment
30%(*1)
Reference value(JPY 5 million)

0% x 0.8+→ Price

ICER = JPY 6 million(*1) See slide 22 for details.

0.8

Adjustment
rate

0.2

30% x 0.2

= 6% (entire adjustment rate)18

(4) [2] Special consideration (rare, pediatric, and severe diseases)(i) Principals (Reprint of slide 9)
 If the results of cost-effectiveness evaluations are used to determine reimbursement, patient accessmay become a major issue. But if price adjustments are made after listing, patient access will beless of a concern.
 Meanwhile, even if the results are used only for price adjustments, it may be a disincentive for R&D.
Restricted access cannot be denied for the following products. For these products, a special
consideration will be needed.
[1] Products for which the unit price (drug/medical device price) is high because they have a small
number of patients.
[2] Products for which the value cannot be fully assessed by ICER (QALY) To ensure the transparency of the system, specific criteria are required for determining what kindsof the products need special consideration.
(ii) Products to be given special consideration in the appraisal process
 The following products will be targeted for cost-effectiveness evaluations, but will be given special
consideration in the appraisal process and price adjustments.
• Products having at least one indication for rare diseases (i.e., designated intractable diseases,
hemophilia, and HIV infections) for which there are insufficient treatment,• Products having at least one indication for children (i.e., pediatric dosage and administration isapproved in Japan)• Anti-cancer drugs (if cancer is one of the approved indications and analysis is conducted for
population with cancer).
 Analyses including “public long-term care costs and productivity loss”, can be also submitted only ifthey were conducted based on findings in Japan. Although they will not be used for priceadjustments, the submitted results of analyses will be disclosed, and used for accumulating
experiences.

19

(5) [1] Target of price adjustments
 Target of the price adjustments will be as follows to be harmonized with the existing drug and medical device pricing system.
(i) Similar Efficacy Comparison Method (Similar Functional Classification Comparison Method) Part of premium will be targeted by price adjustments.
(ii) Cost Calculation Method
 Products with a disclosure level under 50%• For medicines, part of both the operating profit and the premium will be targeted by price adjustments. For medical
devices, part of both the operating profit and its correction will be done ([1] and [2] in the figure).
 Products with a disclosure of 50% or higher• For medicines, part of premium will be targeted by price adjustments. For medical devices, the corrected portion of theoperating profit margin will be done ([3] in the figure).
Target of price adjustments in the cost calculation method (medicines)(*1)[1] [Products with a low disclosure rate and premium]: Premium +operating profit
Total product cost (low disclosure rate)

OperatingprofitTotal product cost (low disclosure rate)
Premium (*2)

Distribution cost
Consumption tax[3] [Products with a high disclosure rate and premium]: Premium

Distribution cost

OperatingprofitDistribution cost
Consumption tax

Target of price adjustments

Total product cost (high disclosure rate)[2] [Products with a low disclosure rate and no premium]:
Operating profit

OperatingprofitTarget of price adjustments[4][products with a high disclosure rate and no premium]:Not targeted
Total product cost (high disclosure rate)

Premium

Consumption tax

OperatingprofitDistribution expenses
Consumption tax

Target of price adjustments(*1) Products with a low disclosure rate and premiums will receive price adjustments for both the premium and operating profit, based on the cost-effectiveness evaluations.
(*2) For medical devices, equivalent to the corrected portion of the operating profit margin.

20

(5) [2]-[4] Method of price adjustments according to ICER, setting reference values(threshold), and price adjustments for products requiring special consideration

 The price adjustment rate will be a determined in a stepwise manner.
 JPY 7.5 million/QALY, which is in between existing reference values (threshold) [JPY 5
million/QALY and JPY 10 million/QALY] will be newly used for price adjustments.
 The reference values for products requiring special consideration in the appraisal process shall be
JPY 7.5 million/QALY, JPY 11.25 million/QALY, and JPY 15 million/QALY based on the relationshipbetween GDP per capita and reference values in other countries.
 For products that include rare and pediatric diseases and cancer as a part of their indications,these high reference values will be used only for the population with the diseases.
 If the range of ICER straddles the reference value, the expert committee will determine a morescientifically valid adjustment rate(*).

<Standard price adjustment methods>
Rate of price adjustments

Rate of price adjustments

5 million 7.5 million 10 million
(JPY)

ICER

<Price adjustment method for products requiring
special consideration>

7.5 million

11.25 million 15 million
(JPY)

ICER

21

(5) [5] Rate of price adjustments (Part 1) With the Similar Efficacy Comparison Method (Similar Functional Classification Comparison
Method), price adjustments will be conducted for the targeted part (e.g., utility premiums) as
shown in Figure 1.
 With the Cost Calculation Method, different rates of price adjustment will be used respectively forpremium (medicines) or the corrected portion of the operating profit margin (medical devices)(Figure 1) and operating profit margin (Figure 2).

Figure 1: Rate of Price Adjustments for Premium

Figure 2: Rate of Price Adjustments for Operating Profit

Rate of price adjustments

Rate of price adjustments

1.0
0.7
0.4
0.1
5 million

7.5 million(JPY)

10 million

Premium after price adjustment= Premium prior to price adjustment ×
Rate of price adjustment

ICER

1.0
0.83
0.67
0.5
5 million

7.5 million 10 million
(JPY)

ICER

Operating profit margin after price adjustment= Operating profit margin prior to price adjustment ×
Rate of price adjustment

22

(5) [5] Rate of price adjustments (Part 2)○ To ensure the stable supply of medicines required by patients, the maximum price reduction isdetermined as follows:(i) Products with ≤ 25% premium (※)○ The rate of maximum price reduction is 10% of the entire drug and medical device price prior toadjustment(ii) Products with 25% < premium ≤ 100% (※)○ The rate of maximum price reduction is percentage of the drug and medical device price prior toadjustment, determined by the following equation.
rate of maximum price reduction ＝ (10 ＋ [premium rate (%)（※） －25] / 15) %（iii） Products with > 100% premium (※)○ The rate of maximum price reduction is 15% of the drug and medical device price prior toadjustment○

The new price shall not fall below the price corresponding to an ICER of JPY 5 million/QALY (for anticancer drugs, JPY 7.5 million/QALY).

Relation between the premium rate and maximum price reduction rate

Rate of maximum
price reduction

15%（※） In the case of medicines for which theprice is set by the cost-calculation
method, use the premium rate before
multiplying by the adjustment ratedepending on disclosure level.

10%

25%

100% 120%（※）

23

(5) [6] Products evaluated as “dominant” or having a low ICER value
 For products that are superior in cost-effectiveness, the prices will be raised if certain conditions are
satisfied.
(i) Effectiveness improves (or is equivalent to) with lower costs than comparator (“Dominant”)(ii) ICER is JPY 2 million/QALY or less.

Conditions for raising prices and rate of increase(i) DominantCondition [1]• Clinical studies indicate that the product issuperior (or equivalent) in effectiveness to thecomparator.

(ii) Under ICER JPY 2 million/QALY(*1)(Other conditions(*2) to be stipulated)

Condition [2]• The product is innovative, rather than just
improved. For example, a completely different
product, a different basic structure, or different
action mechanism from comparator.

Rate of price adjustment(*3)



+50%(*4)(Not to exceed 10% of
the entire price)+25%(*5)(Not to exceed 5% of the entire
price)(*1) For products with an ICER under JPY 2 million/QALY, clinical studies indicate that the product is superior (or equivalent) in effectiveness tothe comparator.
(*2) Conditions stipulated simultaneously (clinical research needs to satisfy all of the following conditions)(1) Accepted as an original paper by an academic journal given an impact factor (five-year average) of over 15.0 by Clarivate Analytics“InCites Journal Citation Reports” at the time of its acceptance or publication (this excludes review journals and young journals foundedwithin the last 10 years).
(2) The clinical study that satisfies (1) need to show statistical superiority to the comparator in the cost-effectiveness evaluation in Asian
populations, including Japanese.
(*3) Excluding operating profit.
(*4) The amount of price increase shall not exceed less than 1/2 of cost reduction per patient.
(*5) The amount of price increase shall not exceed the price corresponding to an ICER of JPY ICER 2 million/QALY.

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(5) [7] Timelines and procedures of price adjustments and (6) Building greater capacity
Timelines of price adjustments
 Conduct price adjustments based on the results of cost-effectiveness evaluations at thetime of listings (4 times per year) for new medicines and new medical devices.
 The results of the evaluation and new price after adjustment will be reported to the CSIMC
General Assembly to acquire final approval.
 Taking stocks into consideration (bought at the price prior to adjustment), a certain period
will be secured from the time of determining the new price to the time of the actual priceadjustment.

Building greater capacity
 Undertake capacity building by increasing the number of experts on cost-effectivenessevaluations.
 Specifically, to increase experts to contribute to the academic analysis, consider newly
establishing an educational program. Concurrently enhance the systems at the Ministry of
Health, Labour and Welfare and the National Institute of Public Health (C2H).

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(7) Future Investigations on Cost-effectiveness Evaluations

The Central Social Insurance Medical Council (CSIMC) established a committee for cost-effectivenessevaluations in May 2012 and promoted investigations on the most desirable application of costeffectiveness evaluation in Japan.
In order to compile this outline, issues were organized by the special committee for cost-effectivenessevaluations and the joint committee. They are based on previous discussion at the CSIMC, results of trial
introduction, inputs from academics, and opinions from relevant industries.
From this April, the new system will be initiated based on this outline, accumulating experiences on the
cost-effectiveness evaluation and substantiating the evaluation system.
Furthermore, investigations will be performed on the expansion of the selection criteria, analysis
processes, appraisal, price adjustment, and desirable utilization of the results at listing in order to make it amore efficient and highly transparent system. Such investigations will continue by taking into account of
performing appropriate pricing, the effects on the medical insurance system finances, and the necessity toensure transparency of pricing, with reference to efforts in other countries.
In addition, investigations will be performed on factors and items that should be specially taken into
account in the appraisal and price adjustment, based on analysis submitted from companies and rules inother countries.

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