Recommendationsof theEU-Japan Business Round Table
to the Leaders of the European Union and JapanTokyo, 20 April 2018

Working Party 2
Life Sciences and Biotechnologies,
Healthcare and Well-being(Final version)

Working Party Leaders:Mr. Hans-Dieter Hausner
President, Representative Director& Senior Bayer Representativefor Japan
Bayer Holding Ltd.

Mr. Osamu Nagayama
Chairman of the Board of
Directors
Chairman
Chugai Pharmaceutical Co., Ltd.

Working Party 2: Life Sciences and Biotechnologies, Healthcare and Well-being
EU-Japan BRT 2018 Recommendations Report
Page 1 of 20

List of Abbreviations
Abbreviation Meaning
ADI
ARCB
CAS
CE
CEFP
CHUIKYO
ECPA
EFPIA
EPA
ESA
EU
FSC
GCP
GDP
GLP
GMO
GMP
HTA
IEC
ISO
JIS
J-PAL
J-PMD Act
JVPA
LLPs
LS & BT
MAFF
MDD
MDR
MDSAP
METI
MHLW
MNC
MRA
MRL
NB
NHI
NVAL
PIC/S
PMDA
PMP
PPS
OALY
QMS
RMP
TPP
VICH
WP

Acceptable Daily Intake
Association of Registered Certification Bodies under J-PMD Act
Chemical Abstracts Service
Conformité Européene
Council on Economic and Fiscal Policy
Central Social Insurance Medical Council
European Crop Protection Association
European Federation of Pharmaceutical Industries and Associations
Economic Partnership Agreement
European Seed Association
European Union
Food Safety Commission
Good Clinical PracticeGood Delivery PracticeGood Laboratory Practice
Genetically Modified Organism
Good Manufacturing Practice
Health Technology Assessment
International Electro technical Commission
International Organization for Standardization
Japanese Industrial Standards
Japanese Pharmaceutical Affairs Law
Japanese Pharmaceutical and Medical Device Act
Japan Veterinary Products Association
Long-listed productsLife sciences and Biotechnologies
Ministry of Agriculture, Forestry and Fisheries
Medical Device Directive
Medical Device Regulation
Medical Device Single Audit Program Pilot
Ministry of Economy, Trade and Industry
Ministry of Health Labor and Welfare
Multinational Corporation
Mutual Recognition Agreement
Maximum Residue Limits
Notified Body
National Health Insurance
National Veterinary Assay Laboratory
Pharmaceutical Inspection Convention and Pharmaceutical Cooperation Scheme
Pharmaceutical and Medical Device Agency
Price Maintenance Premium
Plant Protection Station
Quality-adjusted life years
Quality Management System
Risk Management Plan
Trans Pacific Partnership
International Cooperation on Harmonization of TechnicalRequirements for Registration of Veterinary Medicinal ProductsWorking Party

Working Party 2: Life Sciences and Biotechnologies, Healthcare and Well-being
EU-Japan BRT 2018 Recommendations Report
Page 2 of 20

Introduction
Japan and the EU face many similar challenges, such as aging populations, shifting
demands for products and services, and rising costs in many aspects of the welfare
system. Life sciences and biotechnologies offer the possibility of technologies that will
help address these challenges.
Working Party 2 focuses on the following sectors:
 Healthcare (pharmaceuticals, medical devices etc.)
 Life Science & Industrial Chemicals
 Plant Protection & Biotechnology
 Animal Health
The recommendations of WP-2 have the clear aim to improve the innovation
capabilities of both the EU and Japan through concrete action plans in life sciences
and biotechnology. The focus is on measures that will enhance efficient healthcare
practices, food technology and supply, and biotechnology.
The conclusion of the Economic Partnership Agreement in 2017 was a majorachievement for both sides, and will bring mutual economic benefit. But under theheadline and in-principle agreements there is much work to be done to deliver the
specific improvements needed to bring our economies closer together. If the signing of
the EPA marks the end of the current phase of deregulation and harmonization, thenwe will have wasted an opportunity to maximize the benefits for our industries and our
citizens.
These once a year meetings are useful, but their value is limited without active followup between them. Our Working Party would like to see the creation of working-levelgovernment teams, on both the EU and Japan sides, to proactively monitor and drive
progress throughout the year. Membership of the teams could perhaps be based on
the EPA teams. And these teams should be tasked with developing and delivering on
a plan and timelines.
Too many of the recommendations in this report have seen too little progress for too
long. Instead of an ending, the EPA should be seen as a beginning. It should be alaunch pad: a chance to renew our commitment to removing barriers to business; achance to find new energy for strengthening our economic relationship; a chance todeliver on the recommendations in this report. Let us take those chances.
An asterisk (*) identifies “priority” recommendations.

Working Party 2: Life Sciences and Biotechnologies, Healthcare and Well-being
EU-Japan BRT 2018 Recommendations Report
Page 3 of 20

Recommendations from both
European and Japanese industries
HEALTHCARE
WP-2 / # 01* / EJ to EJ
Progress on mutual recognition for Pharmaceuticals GMP should be further
extended
Despite the achievement of the Economic Partnership Agreement (EPA), there remain
two concerns about the Mutual Recognition Agreement (MRA) on Good Manufacturing
Practice (GMP) between the EU and Japan:(i) Products derived from human cells, including blood products and several vaccines,
are not covered by the MRA.
(ii) In the details of the MRA, there are still some grey areas where it is not clear which
products are covered and which are not.
It is recommended here that the scope of the MRA be expanded to include products
derived from human cells, and that government and industry work together to provide
greater clarity on exactly which products are covered by the agreement.
<Recent Progress>
Major progress: the previous recommendation from the pharmaceutical industry wasthat the MRA on GMP between the EU and Japan should be expanded to include
various pharmaceutical dosage forms such as ointments, injectables, sterile forms andAPIs, as well as biological products, in order to avoid redundant inspections and testing.
With the finalization of the text of the Economic Partnership Agreement between the
EU and Japan on 8 December, 2017, much of this was achieved. Overall, the industry
welcomes the finalization of the EPA and the expansion of the scope of the MRA on
GMP. However, there remain the two concerns, listed above, and in addition the proper
implementation of the agreement will be needed to make sure that industry andpatients can fully benefit from the negotiated outcomes.
<Background>In 2002, the EU and Japan introduced the MRA on the GMP of medical products, but
it covered only the then 15 EU countries and its subjects were only non-sterile oral
tablets and capsules. In April 2016, the MRA was expanded to cover all the now 28
EU countries, and expansion of subjects to other formulations of medical products was
discussed as part of the EPA agenda.
In March 2017, the EU and the US announced that they had agreed on an MRA for
GMP, and this came into effect on 1 November. Oral tablets, capsules, ointments,
injectables, API, and biological products are included in this agreement. Human
vaccines and plasma derived products are not immediately included within theoperational scope of the agreement, but their inclusion will be considered by no later
than 15 July 2022.

Working Party 2: Life Sciences and Biotechnologies, Healthcare and Well-being
EU-Japan BRT 2018 Recommendations Report
Page 4 of 20

WP-2 / # 02 / EJ to EJ
Mutual recognition should be improved for Medical Devices(i)Mutual recognition of quality management audit results for Medical Devices
should be established between EU and JapanThe EU and Japanese governments should establish a mutual recognition scheme for
Quality Management System (QMS) audit results. Japan is a member of the Medical
Device Single Audit Program Pilot (MDSAP), through which it shares QMS audit resultswith the United States, Canada, Australia and Brazil. There should be either: (i) asimilar regulatory harmonisation approach between the EU and Japan; or (ii) the EUshould also become a member of MDSAP, in order to avoid occasional QMS disputes
with the Japanese authorities when the ISO13485 evaluation report from the EU ispoor or insufficient. If the EU were to join MDSAP, the below-listed issues would be
addressed.
Although the ISO13485 audit report is now accepted in Japan for the QMS process asa result of the 2014 J-PMD Act, and the inspection burden has decreased somewhat
as a result, the QMS inspection process is still complicated and burdensome.
- For example, there is still a requirement for the Japanese original document.
Submission-related formats and standards need to be harmonized.
- In addition, there remains a requirement for a post-approval QMS inspection
application to be submitted to PMDA for each product (or product family) every
five years after approval, yet the approval dates vary by product and renewal
management is cumbersome with potential risk of an oversight. Post-approval
QMS inspection date should coincide with the renewal of marketing authorization
so as to simplify and assure proper renewal operation.
The EU industry side requests a complete harmonization by eliminating Japan’s
deviations on top of ISO13485. As a next step, mutual recognition of Medical Devices
products for lower risk classes should be introduced as soon as possible. Further
improvements are desirable when introducing a new ISO revision. If the ISO revisiondiffers per country (for example: ISO 60601 rev2 and rev3), the workload for
manufacturers is very heavy. Therefore, the introduction schedule of new ISO
standards should be harmonized, including a grace period. The EU industry side would
also like to suggest the necessity of disseminating official information on QMS
ministerial ordinances in English, for the purpose of MDSAP rationalization of
investigation pursuant to Chapter 3, Production and Marketing.
<Recent Progress>
No further progress since Japan introduced the J-PMD Act in November 2014, andjoined the Medical Device Single Audit Program Pilot (MDSAP) in 2015.
<Background>
In June 2015, the Japanese government announced it would officially join MDSAP, aninternational cooperation programme for quality assurance of medical devices by theUnited States, Canada, Australia and Brazil as members. Regulatory authorities of themember countries cooperatively evaluate QMS audit agencies and share audit results
among member countries. Medical device companies normally have to get a QMS
audit in each country, but under MDSAP a single QMS audit result is valid among all
Working Party 2: Life Sciences and Biotechnologies, Healthcare and Well-being
EU-Japan BRT 2018 Recommendations Report
Page 5 of 20

member countries: this reduces the burden on both companies and authorities.
Although there are issues to be solved to implement this programme, distribution of
medical devices will be stimulated between the member countries of MDSAP.
Based on the Medical Devices Directive (MDD) of the EU and the J-PMD Act, QMS
audit results are required for each application for a license to introduce new medical
devices into the market. In Europe, the regular annual ISO audit results can be used
for all applications during the period in which the ISO audit is valid. Although Japan
has started to accept QMS audit results at a specific manufacturing site for productswith the same generic name under certain conditions, a number of RCBs still require
submitting QMS audit results for each application.
(ii)

There should be mutual recognition of Medical Devices product licenses

Mutual recognition of Medical Devices product licenses between the EU and Japan
should be introduced. Regulations of low risk class II devices are similar in the EU andJapan, and therefore mutual recognition of this category of products is possible. PMDA
and MHLW should introduce mutual recognition, taking into account the difference ofclassification of medical devices between Japan and the EU. By harmonizing QMS andclassification it should be possible to introduce new products within the same timeframe and in one process.
The EU should better communicate with the Japanese government about the new
Medical Device Regulation (MDR) implementation. The EU will pursue MDR, but notenough information is being communicated to the Japanese side.
<Recent Progress>
The PMDA’s overall performance has been improved to shorten approval times for
medical devices, but further improvement is possible. To date, in terms of mutual
recognition for product licences no progress has been seen. However, the PMDA’s
five-year Examination Acceleration Cooperation Plan is expected to be completed in2018, after which there should be a system and procedures where industry is able tocontinuously monitor the certification performance so that any improvement necessary
can be easily addressed without delay.
<Background>
The evaluation schemes between the Medical Devices Directive of the EU and J-PMD
Act are quite similar:- Evaluation schemes based on registered 3rd party bodies (Notified Bodies)- Essentially quite similar requirements- Based on ISO/IEC or JIS standard complianceWith these similarities, mutual recognition should be easy to implement.
(iii)

There should be mutual recognition of clinical trial results for Medical Devices

Mutual recognition of clinical trial results for the development of new Medical Devices
should be accelerated. This would support the availability of new products to patientsin Japan and the EU within the same timeframe and through one process; it would
shorten the “device lag”, ensure a high level of quality, and reduce the burden on
manufacturers.
Working Party 2: Life Sciences and Biotechnologies, Healthcare and Well-being
EU-Japan BRT 2018 Recommendations Report
Page 6 of 20

At present, the standards of clinical trials in the United States, EU and Japan are seen
to be almost equivalent and there are several cases where clinical trial results are
already mutually recognized between the EU and Japan. EU-Japan BRT members
request that both the EU and Japan accelerate mutual recognition of clinical trial resultsin actual operation, where the conformity is currently insufficient due to the exiting strict
conditions applied when accepting clinical evaluation reports from outside of Japan.
More specifically, Japan GCP (J-GCP) has been harmonized with ISO14155, but theEU-side requests Japan to improve the actual operation of J-GCP. The clinical trials
performed in EU countries according to ISO14155 should be easily accepted and if not
accepted, a valid explanation with a scientific background is a must. In addition, theJapanese government should prepare a clear definition for accepting and preparing
clinical trial reports.
Furthermore, we hope for early disclosure of a clear guidance for judgment on the needfor clinical studies, conditions for acceptance, etc. in order to make the actual operationof GCP smoother. Early disclosure of clinical trial-related guidance would promote theentry of overseas companies to the Japanese market. Regarding the guidance for the
preparation of the Clinical Evaluation Report, we request the Japanese Government toissue the guidance as early as possible.
It is expected that the Japanese Government will develop guidelines for effective
utilization of clinical evaluation reports soon. The EU industry side requests that theJapanese government respond with specific timelines for this action as this has beena previously listed request with no practical progress.
<Recent Progress>
While the EU moved from MDD (Medical Device Directive) to MDR (Medical Device
Regulation) in 2017, it is premature to judge whether this will lead to an equivalent levelof clinical evidence as seen in the US FDA, and may therefore accelerate the mutual
recognition of clinical trials with Japan. It is key is to closely monitor how thisprogresses under the MDR environment.
In June 2016, the EU published the fourth revision of guidance “Clinical evaluation: A
Guide for Manufacturers and Notified Bodies under Directives 93/42/EEC and90/385/EEC (MEDDEV 2.7/1 revision 4)”. The guidance focused much more on theapplicability of the clinical data rather than its origin. In general, foreign clinical data is
accepted in the EU for conformity assessment by Notified Bodies if certain criteria aremet, such as e.g. an analysis whether data generated outside the EU is transferable
to the EU population.
<Background>
Differences in the definition of GCP between Japan and the EU currently prevent thegeneral use of non-Japanese clinical trial results in the application for new medical
devices in Japan. However, foreign clinical trial data has been accepted in Japan as apart of the application dossier when: (i) standards for conducting medical device clinical
trials are set by the regulations of the country or region where the trial was performed;(ii) the standards are equivalent or surpass the Japanese medical device GCP; and(iii) the clinical trial was conducted in accordance with standards or considered to have
Working Party 2: Life Sciences and Biotechnologies, Healthcare and Well-being
EU-Japan BRT 2018 Recommendations Report
Page 7 of 20

an equivalent level of quality. Even in these cases, additional data has sometimes beenrequired with unclear reasons.
More positively, the Japanese government encourages active use of the advanceconsultation service provided by the Pharmaceuticals and Medical Devices Agency(PMDA) on individual medical device applications, to address the use of foreign clinical
trial data for the application of a device. A similar situation exists in Europe, where
there is no general ability to use Japanese clinical data but some cases where clinical
trial results acquired in Japan have been applied to the new medical device
applications in the EU.
With regards to the procedure between the United States and Japan, mutual
recognition of clinical trial results is already being practiced under the clinical trials bycomprehensive and simultaneous processes, such as “Harmonization By Doing (HBD)”
by both regulatory authorities in the United States and Japan.

PLANT PROTECTION & BIOTECHNOLOGY
WP-2 / # 03 / EJ to EJ
Legal clarity for and appropriate regulation of Plant Protection innovation,
including GM and gene-edited plants.
The EU and Japan governments should regulate agricultural technologies – including
crop protection, GM and gene-edited crops – in a science-based and proportionate
manner. They should work with industry and other stakeholders to increase trust in theregulatory science and societal acceptance. Specifically: Both the EU and Japan should advance and adhere to global harmonization on
GMO risk assessments, and support the Global Low Level Presence Initiative.
 Both the EU and Japan should provide legal clarity on the status of techniquessuch as genome editing – which are relevant not only for plant breeding – andpreferably in a harmonized manner.
We call for inclusive, fact-based platforms for dialogue, information sharing and trustbuilding in both geographies, aiming at a risk-proportionate, predictable, sciencebased and non-discriminatory treatment of new technologies.
<Recent Progress>
No major progress has been seen for this recommendation.
<Background>
In December 2017, 17 governments including Japan (but not the EU) warned that: “Ourfarmers' choice of safe tools is increasingly undermined by regulatory barriers that lacka sufficient scientific justification, and this is having substantial negative impact on the
production of, and trade in, safe food and agricultural products”.
The absence of a science-based and proportionate regulatory approach to agricultural
technologies inappropriately hinders societal acceptance and facilitates misinformation.
Examples of resulting problems:

Working Party 2: Life Sciences and Biotechnologies, Healthcare and Well-being
EU-Japan BRT 2018 Recommendations Report
Page 8 of 20

(i) EU Member States and the European Parliament objecting to EU authorization ofGM crops for import, despite EFSA’s confirmation that they are as safe asconventional crops;(ii) EU legislation imposing 90-day rodent studies on all applications for GM import,
despite the scientific consensus (upheld by EFSA and major recent Commissionfunded research projects) that these are scientifically unjustified.
(iii) In the EU, the risk assessment for a GM import authorization now takes five years
and more in most cases. This is ten times as long as foreseen. According to EU
law EFSA is obliged to “endeavour to respect a time limit of six months”.

ANIMAL HEALTH
WP-2 / # 04* / EJ to EJ
There should be mutual recognition of GMP for Animal Health products
The EU-Japan Economic Partnership Agreement should aim for mutual recognition ofEuropean and Japanese marketing authorizations for veterinary products, starting withmutual recognition of GMP certification of veterinary medicines where the GMP
requirements are similar or equivalent. Mutual recognition of GMP certification for
veterinary products between the EU and Japan is important to achieve faster deliveryof new useful products. MAFF and the European agency should accept the GMP
certification of the other party where the GMP requirements are similar or equivalent.
In future, both governments should consider mutual recognition of the EU andJapanese market authorization.
<Recent Progress>
The in-principle agreement to consider inclusions of veterinary products in the GMP
MRA is welcome, but a decision to include still needs to be made and implemented.
<Background>
Overseas production facilities that are involved in manufacturing veterinary medicinal
products imported into Japan have to be accredited by MAFF even though their GMP
status is authorized by European authorities. This process involves a large amount ofadministrative work.
An MRA on GMP for Pharmaceuticals between the EU and the US became effective
on 1 November 2017. Veterinary products are not immediately included in theoperational scope of the agreement, but they will be considered for inclusion by nolater than 15 July 2019.

HEALTHCARE
WP-2 / # 05 / EJ to E
The UK’s withdrawal from the EU should create the minimum of disruption topatients and to the pharmaceutical and cosmetic industries
With regard to Brexit, the priority of the pharmaceutical and cosmetic industries is on
minimizing disruption to patients and industry. There is a particular need forWorking Party 2: Life Sciences and Biotechnologies, Healthcare and Well-being
EU-Japan BRT 2018 Recommendations Report
Page 9 of 20

harmonization and continuity around the single regulatory system, in order to maintaina stable EU Regulatory System and smooth functioning of the European Medicines
Agency for pharmaceuticals. Similarly, there should be a single regulatory regime forcosmetics with a single evaluation of the safety of cosmetic ingredients used in
products in the EU and the UK. More specifically, the recommendations are:
 Regulation: Securing ongoing alignment, cooperation and mutual recognition
between the UK and the EU regarding the authorization, testing and surveillanceof medicines and cosmetics should be a priority outcome of the negotiations. There
should be alignment on the safety evaluation of ingredients used in cosmetics andpharmaceutical products. Any differences could undermine the credibility of the EU
and UK agencies.
 People: Providing certainty for EU and UK citizens working in the pharmaceuticaland cosmetic industries. Agree a straightforward immigration system that allows
companies to employ the best talent from around the world, and that facilitatesskilled UK and EU nationals working across Europe.
 Research: Scientific research collaboration between the UK and EU should bemaintained after the UK leaves the EU. UK/EU scientific collaboration strengthens
the EU’s global position in life sciences, attracting global life science investment to
the EU.
 Intellectual Property: Equivalent standards of IP should continue to apply in the UK
after Brexit and the existing level of strong IP incentives across the EU should bemaintained.
 Trade and Supply: Medicines and cosmetics used by patients across Europe haveintegrated supply chains, which includes the UK. The UK and the EU should
conclude a comprehensive agreement with a pharmaceuticals/cosmetics protocolthat ensures full alignment between EU and UK legislation. Any such agreement
needs to avoid causing any disruption to existing quality control arrangements andmust not disrupt the supply of medicines to patients in Europe or the UK.
<Recent Progress>
Negotiations between the EU and the UK are ongoing.
<Background>
In June 2016, the citizens of the United Kingdom voted in a referendum to leave theEuropean Union. The UK will officially leave the European Union on 29 March 2019,
although a transitional deal until the end of 2020 is probable and may mean that littlechanges until after that date.

PLANT PROTECTION & BIOTECHNOLOGY
WP-2 / # 06 / EJ to E
Regulations governing import Maximum Residue Limits (MRLs) into the EUshould be clarified so as to allow free trade of food commodities
There is potential contradiction between REGULATION (EC) NO 396/2005, whichgoverns import MRLs, and REGULATION (EC) NO 1107/2009, which governs market
authorization of plant protection products in Europe. BRT members are concerned thatthe latter regulation is influencing import MRLs, as it introduced hazard cut-off criteria
which can eliminate substances from the market. There may be cases where an import
MRL regulated under REGULATION (EC) NO 396/2005, is beyond the cut-off level
Working Party 2: Life Sciences and Biotechnologies, Healthcare and Well-being
EU-Japan BRT 2018 Recommendations Report
Page 10 of 20

established under REGULATION (EC) NO 1107/2009, and substances which havebeen assessed as safe under the first regulation might be banned by the second. The
regulations should be clarified, based on sound science, so as to facilitate free trade.
<Recent Progress>
In September 2017, 17 countries signed a joint statement on pesticide MRLs at the
11th World Trade Organization (WTO) Ministerial Conference in Buenos Aires,
Argentina. The joint statement reinforced the importance of science-based standards
under the WTO Agreement on the Application of Sanitary and Phytosanitary Measures(SPS Agreement), and recognized the increase of MRL-related issues faced by
farmers around the world. Members reiterated their support of the following: Increasing the capacity and efficiency of Codex in setting international standards
on pesticide MRLs
 Achieving greater harmonization across national and regional MRLs
 Enabling greater access to alternative pesticides and pesticides for minor-use
crops
The EU has invited its trading partners to help evaluate EU pesticide legislation. In
November 2017, the European Union notified the WTO of an invitation to all WTO
members to contribute to an evidence-based evaluation of Regulation (EC) No
1107/2009 and Regulation (EC) No 396/2005. This online survey was open until 31
December 2017, and the report is expected to be completed in early 2019. Japan’s
Ministry of Agriculture, Forestry and Fisheries (MAFF) participated in the survey.
<Background>
In the absence of necessary import MRLs, food commodities containing the residue ofthe active substance are prohibited for importation even though the said substance isapproved in the exporting country and the residue does not cause any harmful effecton human health. Excessive protection measures for food safety should be avoided inorder to facilitate international trade. The delay of review for import approval on
agricultural commodities, including the establishment of import MRLs, may limit theaccess to innovative technology in exporting markets due to trade barriers in theimporting countries.
HEALTHCARE
WP-2 / # 07* / EJ to J
Reform of the pharmaceutical pricing system should provide a stable,
predictable environment that rewards innovation
The EU-Japan BRT members call for a fresh review of the new system to find ways tostrengthen the reward for innovation, maintaining an incentive for companies todevelop new drugs and bring them rapidly to Japan and thereby giving Japanesepatients early access to the latest treatments. The changes announced in December
2017, to be introduced in April 2018, will significantly reduce the support for innovation
and risk the reopening of the “drug lag”. Patients in Japan will be negatively impacted
if that happens. Specifically, we propose that the Price Maintenance Premium (PMP)system should be expanded to cover all innovative products, including incremental
innovations, during their patent exclusive period, and implemented at the next drug
pricing system reform in April 2020. Under the new system introduced in April 2018,
Working Party 2: Life Sciences and Biotechnologies, Healthcare and Well-being
EU-Japan BRT 2018 Recommendations Report
Page 11 of 20

application of the PMP is largely dependent on the timing of launch, how the drug wasevaluated in the initial pricing, and the past record of company performance: but inmany cases these are poor ways to assess the degree of innovation of the product.
The proposal to expand the PMP is perfectly consistent with overall budget
management if savings are made elsewhere in the drug budget and the non-drug
healthcare budget.
It should be noted that a “drug lag” may not be immediately observed, as
pharmaceutical companies have already increased their investment in drug
development in Japan in recent years and such investments have long lead times. The
reopening of the “drug lag” may take several years before it becomes visible. Therefore
the EU-Japan BRT members call on the Japanese authorities to understand thissituation and to avoid further pricing system reform until the full impact of the 2018changes can be seen.

<Recent Progress>
The changes announced in 2017 and implemented on 1 April 2018 will have asignificant negative impact on the industry and on Japanese patients’ access to thelatest innovative drugs.
<Background>
The Chuikyo discussed “fundamental” drug pricing system reform over 2017, with therevised system to be implemented from April 2018. The reform announced in
December 2017 greatly disappointed the pharmaceutical industry and brings into
question Japan’s support for innovative medicines. The EU-Japan BRT members hadstrongly called for the review to lead to a system which appropriately evaluates andrewards innovation, maintaining an incentive for companies to develop new drugs andbring them rapidly to Japan and thereby giving Japanese patients early access to thelatest treatments.
The main area of disappointment has been in changes to the Price MaintenancePremium (PMP), where the criteria for qualification have been significantly narrowed.
In addition, an index has been created to rank companies based on their contribution
to new drug development, a limited and inexact measure of a company’s commitment
to bringing innovation to Japan. Companies in the top category will get 100% of thevalue of the PMP for their products, but those in the next category only 90% and thosein the third category only 80%. The proportion of companies able to qualify for the top
category will be “25% but not exceeding 30%, even if there are many companies withthe same score”.
Other changes include: Comparator pricing method I (CMI): comparison will be made to the full price, notthe “price minus PMP portion”. CMII products will be compared with “Price minus
PMP portion”. This will be reviewed again for the 2020 reform.
 New indications: quarterly reviews for any products with annual sales greater than
Y35bn (=266m euros).
 Annual repricing for products discounting beyond a certain rate (or certain value
threshold – it is still not clear), but the decision on the criteria for product selection
has been postponed.
Working Party 2: Life Sciences and Biotechnologies, Healthcare and Well-being
EU-Japan BRT 2018 Recommendations Report
Page 12 of 20

Foreign Price Adjustment: the US price will still be referenced if there are
ASP/NDAC prices available.
Long Listed Products (LLPs): more rapid price reductions.
Cost Effectiveness Analysis (CEA)/Health Technology Assessment (HTA): priceadjustments on the premium part of the drug price will be made in April 2018 basedon the trial CEA analysis results.

The fundamental drug pricing system reform will make savings from both innovativeand off-patent drugs. Unless innovation is properly evaluated, it will become very hardfor the industry to continuously create new drugs to fulfil unmet medical needs. This
will not be beneficial for patients or for society.

WP-2 / # 08 / EJ to J
The 14-day prescription rule for Pharmaceuticals should be abolishedJapan should abolish the 14-day prescription rule, which has been superseded bymore recent and more robust safety measures. Should this not be possible, as aminimum the prescription limitation should be extended to 30 days and the period
shortened to 6 months, instead of the current 12 months.
<Recent Progress>
No major progress has been seen for this recommendation.
<Background>In 2015, the government’s own Regulatory Reform Council recommended abolition ofthis rule. However, in July 2016 the Chuikyo decided that the rule was necessary, andthe government subsequently announced rejection of this recommendation. In April
2017, the Regulatory Reform Council requested again the discussion of this issue at
Chuikyo. However, in December 2017, Chuikyo concluded without any discussion thatthe current rule should be maintained.
Patient access to innovative drugs is hindered by the 14-day prescription rule, which
restricts the prescription length to a maximum of 14 days for all new drugs in the firstyear after their launch. In practice this means a delay of one year in patient access to
drugs which are already in extensive use abroad. The safety of new drugs in Japan is
now underpinned by the post-marketing surveillance system, and by the introductionof a Risk Management Plan (RMP) in 2013, and hence the 14-day rule is no longer
necessary. The latest decision by the Chuikyo to maintain the status quo, without
proper discussion, was highly regrettable - BRT members continue to recommend
abolition of this rule in order to provide better patient access to innovative new drugs.

Working Party 2: Life Sciences and Biotechnologies, Healthcare and Well-being
EU-Japan BRT 2018 Recommendations Report
Page 13 of 20

WP-2 / # 09 / EJ to J
Japan should improve its environment for innovative Medical Devices(i)Japan should further sub-divide the current functional classification for Medical
Devices

Japan should further sub-divide the current functional classifications in order toimprove the reward for innovation. Currently, the various products within a functionalclass, which may have varying market prices, all have the same reimbursement price.
This results in price reductions for old products influencing the reimbursement price of
new products. In order to appropriately reward innovation in Medical Devices, thereimbursement price of new products should be set separately from the price of old
products.
The reimbursement pricing system should be revised so that it is closer to a productoriented system. When moving closer towards a more product-oriented reimbursement
system, it is sensible to allow a certain period of time prior to conclusive assessment,
as the effectiveness of new products often takes time to become apparent, and forsafety and efficacy to be adequately assessed. The results of these assessments
should also be reflected in efforts to approve the reimbursement system. Any
meaningful upgrade or improvement of a product should be properly evaluated andclassified based on a clear definition, if not categorized under a new functionalclassification. The same should also apply to next generation products with the samefunctionality.
<Recent Progress>
Minor progress. At the revision of medical service fees in 2016, the functionalclassifications were reviewed and 852 classes were set, up from 844 classes, or lessthan a 0.1% increase. The exceptional rule of the functional classification remains.
<Background>
Different from pharmaceutical pricing systems, about 280,000 Medical Devices areclassified into about 900 functional classes in Japan, and one reimbursement price isthen set for one functional class, based on structure, intended use, effectiveness etc.
(ii)

Japan should abolish the foreign price reference system for Medical Devices

The foreign price reference system for Medical Devices in Japan should be abolishedbecause: (i) the average price in Japan is already only 80 per cent of foreign prices,
according to MHLW documents; and (ii) the upper limit of the price variance between
foreign countries and Japan no longer makes sense in reality. The Japanese
government makes frequent modifications to the foreign price adjustment system, so
it should be possible to implement the recommendation stated above quickly.
<Recent Progress>
No major progress has been seen. At the medical service fee revision in 2016, thegovernment determined to lower the upper limit of reimbursement price variance
between foreign countries and Japan from the current level 1.5 times to 1.3 times.

Working Party 2: Life Sciences and Biotechnologies, Healthcare and Well-being
EU-Japan BRT 2018 Recommendations Report
Page 14 of 20

<Background>
As one of a series of medical expenditure containment policies, at the medical service
fee revision in 2016 the Japanese government determined to lower the upper limit ofreimbursement price variance between foreign countries and Japan to 1.3 times sothat the shrinkage of the price variance of medical devices can be achieved. It is
required that the reimbursement pricing system should be revised by considering thespecial characteristics in Japan, such as the necessity to support wholesalers’
distribution costs (a very important role was played by wholesalers when disaster hit
Japan) and medical institutions because the patients are highly decentralized in Japan.

WP-2 / # 10* / EJ to J
Health Technology Assessment (HTA) should be introduced with caution so thatit does not become a barrier to patient access(i) As the Japanese drug pricing system already incorporates the concept of HTA,
Cost Effectiveness Analysis (CEA) HTA for Pharmaceuticals should be introduced
cautiously and only after thorough evaluation of its necessity.


If CEA/HTA is to be introduced in Japan, it should be positioned as being
supplemental, based on the current drug pricing system.
Assessment should not be based on a single measure such as the Incremental
Cost Effectiveness Ratio (ICER), since this does not reflect the full value of a
medicine and is highly dependent on the assumptions made. Ethical and societal
considerations should have more weight in final results.
All stakeholders, including experts from industry, should fully participate in thediscussion of CEA to ensure that the experiences and failures of other countries
are duly evaluated before introduction.

<Recent Progress>
Some grounds for concern. The results of the trial introduction of HTA as applied in
April 2018 suggest it is just another cost-containment tool. The shape of the permanentsystem remains unclear.
<Background>
Seven pharmaceutical products underwent trial assessment for cost effectiveness from2016, and were repriced based on this assessment in April 2018. Originally, the trial
introduction should have ended and full implementation to start from April 2018.
However, there were many troubles in the process and it was decided to continue thetrial introduction and postpone full implementation to the end of FY 2018.
The need for caution in the introduction of any HTA system is because: In Japan, the NHI drug pricing system already includes the concept of HTA.
Additional clinical benefits of new medicines are evaluated from multiple angles
such as efficacy and safety. If the benefits are recognized, they are rewarded withprice premiums.
 None of countries that have introduced Cost Effectiveness Assessment HTA has
such detailed drug pricing rules as Japan’s. Those other countries use the resultof Cost Effectiveness Assessment to judge the appropriateness of prices
requested by pharmaceutical companies. In Japan this is unnecessary as the priceWorking Party 2: Life Sciences and Biotechnologies, Healthcare and Well-being
EU-Japan BRT 2018 Recommendations Report
Page 15 of 20



(ii)

is not simply requested by the company but is calculated using the government’s
mechanism.
Total drug expenditure in Japan is already sufficiently well-controlled by the current
pricing system.
HTA for Medical Devices should be introduced with caution

Japan should be cautious in the introduction of HTA (health technology assessment)
systems for Medical Devices, taking into account the following factors:- QALY, a sort of HTA evaluation index for pharmaceutical products, cannot beapplied for evaluation of medical devices- users’ skills and techniques of each medical device can affect the evaluation- medical devices have a shorter improvement cycle than pharmaceuticals
It is important that HTA systems do not hinder the creation of innovative products,
delay the listing for medical insurance reimbursement, or impose an excessive burden
on the industry (e.g. development of databases or human resources). Such outcomes
would delay patient access to cutting-edge medical technologies. To avoid this, there
should be a clear distinction and balance between “assessment” and “appraisal”. There
should be no inappropriate use of the ICER measure, with pre-determined thresholds
and pricing controls.
<Recent Progress>
Five medical device products have been under trial assessment of cost effectivenesssince 2016. Detail method of application of the results is under discussion at Chuikyo.
<Background>
In April 2016, the Japanese government launched a trial HTA system that included
assessment of some Medical Devices.

PLANT PROTECTION & BIOTECHNOLOGY
WP-2 / # 11* / EJ to J
Review times for Plant Protection & Biotechnology products should beshortened
The introduction of parallel review by MAFF (Ministry of Agriculture, Forestry and
Fisheries) and the FSC (Food Safety Commission) in 2016 offers the potential for amajor improvement in the time taken to review and approve new products. The priority
is now to assess if the new process is working as intended in practice.
There may be other possible ways to shorten review times: Further harmonization of the dossier on human safety and acceptance ofsummaries in English.
 Opportunistic use of the evaluation results from foreign countries in order to reduce
the resource burden on the Japanese authorities.
<Recent Progress>
There was major progress in 2016, with the introduction of parallel review by MAFF
and the other authorities responsible for risk assessment (MHLW, the FSC and theWorking Party 2: Life Sciences and Biotechnologies, Healthcare and Well-being
EU-Japan BRT 2018 Recommendations Report
Page 16 of 20

Ministry of the Environment). This has the potential to reduce the registration processby 150 days, but it will take time to see if the expected improvement is realized.
<Background>
Delivering novel and safe Plant Protection products and seeds is very important if theneeds of the growing world population for high quality foods and feeds are to be met.
While R&D-intensive companies are continuously and heavily investing in newtechnologies, the innovation will not contribute to the food production without
governmental approval. Therefore, early market access of novel Plant Protection
products is crucially important not only for R&D companies but also for farmers who
have to be competitive on their agricultural production, as well as consumers whose
living is dependent on the sustainability of food production. The delay of market accessof novel products will cause technology gaps, resulting in unnecessary disadvantage
to farmers due to the limited access to innovative products which are safer and more
effective.
If it works as planned, the new approval system should bring Japan much closer tointernational best practice, with an expected average approval time of 21 to 27 months(versus 27 to 36 months before the 2016 change). However, in the US and Korea thetime taken for review is 18 to 24 months, so it may be possible to make further progress.

Working Party 2: Life Sciences and Biotechnologies, Healthcare and Well-being
EU-Japan BRT 2018 Recommendations Report
Page 17 of 20

Recommendations from European industry
HEALTHCARE
WP-2 / # 12 / E to J
Requirements for Japanese versions of the clinical trial protocol andinvestigators brochure should be relaxed
In Japan, the clinical trial protocol and investigator’s brochure is required in Japanese,and translation from English is therefore required for clinical trial notification in Japan.
This raises the cost and delays the timelines for clinical trials in Japan.
The acceptance of English-only materials for global clinical trials performed in Japan
would require further English language education of Japanese regulators. However, if
applications could be made in English-only, it would substantially accelerate the process
and make innovative drugs available earlier to patients in Japan.
<Recent Progress>
In January 2018, both EFPIA and PhRMA submitted documents to the Cabinet Office’s
Regulatory Reform Promotion Council, requesting the acceptance of English language
documents for certain Post Marketing Surveillance (PMS) activities (e.g. database) andclinical trial reports. Discussions between the two associations and the government
are ongoing about the acceptance of English documents.
<Background>
The requirement for translation from the original English version for clinical trial
notification of global trials in Japan is considered to be a cause of delay to the start ofpatients’ enrolment in Japan.

LIFE SCIENCE & INDUSTRIAL CHEMICALSWP-2 / # 13 / E to J
English translations for issued regulations
METI (Ministry of Economy, Trade and Industry) & MHLW (Ministry of Health, Labourand Welfare) should provide English translations for issued regulations.
<Recent Progress>
No major progress has been seen for this recommendation.
<Background>
Currently, METI and MHLW provide English translations of issued regulations only inlimited cases. This holds true for new laws, enforcement ordinances, enforcement
regulations, official notices, guidelines and similar communication published by theministries. Consequently, to ensure regulatory compliance, companies with activities
outside Japan need to translate by themselves such regulations to be able to aligninternally with non-Japanese-speaking stakeholders. This results not only in additional
Working Party 2: Life Sciences and Biotechnologies, Healthcare and Well-being
EU-Japan BRT 2018 Recommendations Report
Page 18 of 20

efforts in each company, but also creates a risk of differing interpretations by eachcompany based on their own translations.
In other Asian countries, such as Korea, regulating authorities provide English
translations at the same time as, or shortly after, announcements in the local language.
Japan should adopt a similar approach, thereby ensuring consistent compliance withregulations and enhancing Japan’s presence in the global marketplace.

WP-2 / # 14 / E to J
Provide a reference to CAS numbers in regulations for Chemical substances
METI and MHLW regulations should refer to Chemical Abstracts Service (CAS)numbers in addition to chemical compound names.
<Recent Progress>
No major progress has been seen for this recommendation..
<Background>
CAS provides a unique identifier for chemical substances and is nowadays used bymost companies in their internal processes to ensure regulatory compliance. However,
the regulations in Japan currently only list the names of concerned chemical
substances without indicating respective CAS numbers. These include the Poisonousand Deleterious Substance Control Law (PDSCL), the Industrial Safety and Health Law(ISHL) and the Pollutant Release and Transfer Register (PRTR).
As a result, in order to assess the relevance of any new regulation, each company
needs to individually map CAS numbers to the chemicals listed in publishedregulations. This results not only in additional efforts by each company, but also
induces risk of differing interpretations by each company and consequently varying
degrees of regulatory compliance.
It has become standard for authorities in the EU and US to indicate CAS numbers in
issued regulations. Also in other Asian countries, such as Korea, China and Taiwan,
regulating authorities already reference CAS numbers in their announcements. Japan
should adopt the global practice of indicating CAS numbers in issued regulations toensure swift and accurate internal alignment of concerned companies.

WP-2 / # 15 / E to J
Align naming requirements for product labels of chemicals with the names usedin Japanese law
MHLW should revise PDSCL labelling requirements to indicate chemicals inaccordance with the naming used in Japanese law.
<Recent Progress>
No major progress has been seen for this recommendation.

Working Party 2: Life Sciences and Biotechnologies, Healthcare and Well-being
EU-Japan BRT 2018 Recommendations Report
Page 19 of 20

<Background>
Japanese law regulates chemical substances mostly by chemical group and only in
exceptional cases by specific name. Regulations such as ISHL and PRTR require thatlabels for products containing chemical substances name these substances “asregulated by the Japanese law”. However, only the PDSCL requires that labels of
products containing related chemical substances always state the specific names of
the included chemical substances. From a user perspective, it is easier to work withdescriptions such as “Organic Cyanide Compound” (chemical group name) than “2Methyl-6-oxo-1,6-dihydro-3,4'-bipyridine-5-carbonitrile” (specific name of the chemical
substance). Discrepancies between naming in Japanese regulations and productlabelling requirements creates a risk that substances are used without a clear
understanding of the regulations they relate to.
Japan should renew the PDSCL so that product labels must list contained chemicals
in the naming “as regulated by the Japanese law” instead of “by specific chemical
substance name”. This would allow users to quickly assess the toxicity and regulatory
relevance of the materials they handle.

(Document ends)

Working Party 2: Life Sciences and Biotechnologies, Healthcare and Well-being
EU-Japan BRT 2018 Recommendations Report
Page 20 of 20