November 29th, 2017

FOR IMMEDIATE RELEASEPhRMA and EFPIA Shocked and Dismayed by Japanese
Government’s Proposed Plans to Abandon Pro-Innovation
Policy Environment- Proposal Threatens Patients’ Early Access to Medicines Tokyo, Japan (November 30, 2017) — The following is a joint press release issued by
the Pharmaceutical Research and Manufacturers of America (PhRMA) and theEuropean Federation of Pharmaceutical Industries and Associations (EFPIA) after
providing testimony at the November 29 Chuikyo hearing on the proposed drug pricing
system reform package.
PhRMA and EFPIA are shocked and dismayed by the depth and breadth of cuts toinnovative products contained in the proposal. At the same time, there are still
significant opportunities for savings in the areas of LLPs and generic utilization.
The proposal is sending a clear message to both the domestic and foreign innovative
pharmaceutical industry: that Japan is “closed for business” when it comes toproviding sufficient reward for innovation to pharmaceutical companies. It will
discourage these companies from investing in the next generation of treatments andcures for Japanese and global patients.
Since 2010, the Japanese government has enacted a comprehensive program ofpro-innovation policies that have virtually eliminated delays for Japanese patients toaccess new therapies, significantly increased biopharmaceutical investments in Japan,
especially in the area of clinical trials, and helped foster the biopharmaceutical sector
as a continued growth engine for the Japanese economy. One key element of thesepro-innovation policies was the establishment of the Price Maintenance Premium(PMP), which rewards innovation and allows for pricing stability throughout the patent
life of a medicine. It also allows for a sharp drop in price and a shift to generics at theend of a medicine’s patent period. The reform proposal released by the Japanesegovernment on November 22 significantly narrows the eligibility and reduces thebenefits for this important program, threatening to reverse much of the progress
Japan has made in recent years.
Some of the potential negative consequences to Japan’s future as an innovator and toJapanese patients should the reform package be adopted in its current form include
the following:

A return of the drug lag, which means that Japanese patients will not get access tolife-saving medicines until significantly after their U.S. and EU counterparts.
R&D investment in the innovative pharmaceutical sector in Japan could plummet
and inclusion of Japan in global product development efforts could be significantly
eroded.
Cultivation of new domestic pharmaceutical companies that can succeed inforeign markets will be stunted.
The innovative pharmaceutical industry is not able to fulfill its potential as agrowth engine for the Japanese economy.

PhRMA and EFPIA are also concerned that specific elements of the draft criteria for
eligibility for the PMP call into question Japan’s commitment to fair andnon-discriminatory policies related to drug pricing and reimbursement.
PhRMA and EFPIA fully support Japan’s efforts to ensure the long-term sustainability of
its health care system and have put forward proactive policy solutions meant toaddress anomalies that have appeared over the last few years. However, data from acredible third party source (IQVIA, formerly Quintiles IMS) shows that spending on
medicines is well-controlled in Japan. Further, Japan is predicted to be the lowest
growing of all the major global pharmaceutical markets, and spending may even go
into decline in the near future. If this proposal moves forward in its current form, it will
be a strong disincentive to further invest in the Japanese market.
Patrik Jonsson, Chairman of the Japan-based Executive Committee (JBEC) of PhRMA
Japan stated: ““We are strongly concerned and disappointed with Japan stepping awayfrom its pro-innovation polices and dismayed by the huge potential impact on
Japanese patients. With this move, Japan also risks an outflow of investment tocountries that are now significantly outpacing Japan in the promulgation of meaningfulpro-innovation policies.”

Ole Molskov Bech, Chairman of EFPIA Japan stated: “It is very disturbing to see themany advances that have been made to give Japanese patients access to new drugs as
early as in the other markets being rolled back to square one. The proposed policies
are likely to make many fewer new drugs available for Japanese doctors to treat theirpatients in the best possible way. And knowing that many new drugs are actually
helping to control overall health care costs, EFPIA believes that targeting innovation forsavings in the health care budget will soon prove to be very expensive for Japan.”

About PhRMAThe Pharmaceutical Research and Manufacturers of America (PhRMA) represents the country’s
leading innovative biopharmaceutical research companies, which are devoted to discovering anddeveloping medicines that enable patients to live longer, healthier, and more productive lives.
Since 2000, PhRMA member companies have invested more than $600 billion in the search for new
treatments and cures, including an estimated $65.5 billion in 2016 alone.
About EFPIA
European Federation of Pharmaceutical Industries and Associations (EFPIA), headquartered inBrussels, the capital of Belgium, represents the pharmaceutical industry operating in Europe.
Through its direct membership of 33 national associations and 42 leading pharmaceuticalcompanies, EFPIA is the voice of 1,900 companies committed to developing and bringing newtreatments to patients around the world that will improve the quality of life.
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EFPIA JAPAN Website
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http://www.efpia.eu/For any media inquiries,
Contact at PhRMA PR Office (at Japan Counselors Inc.)
Tel: +81-3-3291-0118
Fax: 81-3-3291-0223
E-mail: phrma_pr@jc-inc.co.jp