News Release Dated June 27, 2023
Company: Japan System Techniques Co., Ltd.
Representative: Takeaki Hirabayashi, President and CEO
Stock code: 4323, Tokyo Stock Exchange, Prime Market
Contact: Toshinori Hamada, General Manager ofGeneral Affairs Department
Tel: +81-6-4560-1000

Report on Joint Research with Keio University Nakajima Research Laboratory
at the 2023 Japanese Economic Association Spring Meeting

Japan System Techniques Co., Ltd. (JAST) is announcing the report concerning results obtained at this stageof the joint research project with Keio University for increasing the use of generic drugs. The details are asper attached.
The earnings forecast to be announced on May 12, 2023 incorporates the effect of this matter on the resultsof operations for the fiscal year ending March 2024. An announcement will be made promptly if there is any
additional information that should be disclosed.

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NEWS RELEASE

June 27, 2023
Japan System Techniques Co., Ltd.

Report on Joint Research with Keio University Nakajima Research Laboratory
at the 2023 Japanese Economic Association Spring Meeting
Interim results of the joint research project of Japan System Techniques Co., Ltd. (JAST) and the Nakajima ResearchLaboratory of Keio University for increasing the use of generic drugs were announced at the 2023 spring meeting of theJapanese Economic Association (JEA).

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Summary of the Research Project

In July 2022, JAST and Keio University began a joint research project about increasing the use of generic drugs. The objective
is to devise effective methods for helping to raise the use of generic drugs (note 1) to more than 80% of all prescription drug
use in every prefecture of Japan by the end of March 2024. This is the goal of the Japanese Ministry of Health, Labour andWelfare.
(Refer to https://www.jast.jp/news/14800/)
At the 2023 spring JEA meeting, which took place on May 27 and 28, results achieved as of the current stage of the research
project were announced.

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Presentation

Heterogeneous Adoption and Supply Constraints in Generic Pharmaceuticals◼

Details

By using health insurance invoice data (note 2), this research project is examining the relationship between authorized
generics (AG, note 3) prescribed for patients and the utilization rates of generic drugs. Analysis of health insurance invoice
data for prescriptions resulted in data demonstrating that, for AG antibiotics, prescribing AGs at pharmacies raised the genericdrug utilization rate by 28.5 percentage points. Furthermore, this analysis revealed that whether or not individual pharmacies
used AG antibiotics is linked to factors involving pharmacies and patients.
In Japan, some generic drugs, which are called AG, are manufactured and sold by brand-name drug companies that also
produce branded prescription drugs. The prices are the same as for other generic drugs. Previous research showed that people
prefer AG because they believe the reliability is the same as for the equivalent brand-name drug (note 4). However, there is
uncertainty about the relationship between AG use and the utilization rate of all generic drugs. As a result, this research
project is focusing on antibiotics in Japan and examining how much the use of AG at pharmacies is influencing the utilization
rate of generic drugs.
This research project differs from previous studies by using the new approach of examining simultaneously the roles ofpatients and pharmacies regarding the use of generic drugs. Although people prefer AG, pharmacies do not always provide
the AG drugs that people want. Consequently, in order to determine the effect of AG on generic drug utilization rates, thisresearch did not solely look at the preference of people for AG. There was also a need to take into consideration the activitiesof pharmacies that provide AG. By performing an economic analysis of the behavior of patients and pharmacies, this researchdemonstrated how much AG use affects the generic drug utilization rate.
The analysis showed that the use of AG antibiotics by pharmacies raised the generic drug utilization rate by an average of
28.5 percentage points. Furthermore, the size of this increase varies from prefecture to prefecture. These differences areattributable to the characteristics of the patients who receive AG and the pharmacies that provide prescription drugs. For1

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NEWS RELEASEpharmacies, the differences are largely related to the size of pharmacies (note 5) and whether or not large pharmacy chainsare used (note 6). The results of this analysis demonstrate that the use of AG by pharmacies depends greatly on the cost of AG
and the supply chain. This provides valuable information for devising effective ways to further increase the use of genericdrugs in Japan.

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Upcoming Activities

The results of this research project are the result of the unique business practice in Japan of selling AG and other generic drugs
at the same prices. Research in two areas will be performed to further raise the generic drug utilization rate. First is factors
involving pharmacy and patient AG use to learn more about the causes and effects. Second is the relationship between
government drug price policies and the policy for additional payments to pharmacies for using generic drugs.
Furthermore, due to the fact that the use of AG significantly affects how pharmacies are managed in all areas of Japan, thisresearch project will seek ideas that are beneficial for insurance organizations and activities nationwide that help people remain
in good health.

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The Future Co-Creation Laboratory of JASTThe Future Co-Creation Laboratory of JAST is a medical big data business with the mission of using the digitaltransformation of health care backed by medical big data (invoice data, health check-up data and other data) to solve
issues at healthcare facilities and insurance companies and organizations. This laboratory will continue to analyze
information obtained from research activities in order to raise the value of JAST’s data and create more ways to solve
the issues of customers.
Operations of The Future Co-Creation Laboratory also contribute to accomplishing Sustainable Development Goals
number three, good health and well-being, and nine, industry, innovation and infrastructure. These activities include theuse of medical big data to enable people to stay healthy and the use of alliances with the academic sector for joint
research and the development of products.

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Profile of Ryo Nakajima

Ryo Nakajima (Contact for more information *Redirected to an external website: https://sites.google.com/view/ryonakajima-lab/supervisor/)
Professor, Department of Economics, Keio University
Background:
1994:

Graduated from Department of Economics of Agriculture and Forestry, Faculty of Agriculture, Kyoto University

2004:

Completed the doctoral course in Department of Economics, New York University (Ph.D. in Economics)

Professor Ryo Nakajima specializes in applied econometrics and was awarded the Ishikawa Prize of the Japan Economic
Association in 2018. His research focuses on empirical analysis of social interactions, examining with data the mechanisms
by which people influence each other through channels beyond the market and the external economies that emerge fromthese interactions.

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NEWS RELEASE■The Japanese Economic Association website
https://www.jeaweb.org/C00
Note 1: Generic drugs are prescription drugs produced and sold after the patent of a prescription drug (brand name drug) has
expired. Generic drugs have the same amount of effective ingredients and the same efficacy as those of the brandname drug (Source: Ministry of Health, Labour and Welfare).
Note 2: Health insurance invoice data
When an individual receives a medical treatment covered by insurance, the healthcare institution sends an invoicelisting the procedures and amounts due to the insurance company or organization. For medical and dental care, aninvoice listing the procedures and amounts due is sent. For pharmacies, an invoice listing the drugs supplied andamounts due is sent. For nurses visiting individuals at home, an invoice listing home nursing care services and amounts
due is sent. One invoice for each patient and individual healthcare institution is prepared every month. Invoices contain
information about the reasons that individuals received medical care, the cost of the care and other items. JAST
converts this information into a database for subsequent utilization.
Note 3: Authorized generics are generic drugs produced with the permission of the original manufacturer by using the same
ingredients and production method as those used for the original prescription drug.
Note 4: Aljoscha Janssen, Generic and Branded Pharmaceutical Pricing: Competition Under Switching Costs*, The
Economic Journal, Volume 133, Issue 653, July 2023, Pages 1937–1967,
https://doi.org/10.1093/ej/uead021
Note 5: Defined as the total number of prescriptions at each pharmacy.
Note 6: Group pharmacies in Basic Dispensing Fee 3 are defined as pharmacy chains.

Inquiries
The Future Co-Creation Laboratory, Japan System Techniques Co., Ltd.

Contact for more information (redirected to an external website): https://www.jastlab.jast.jp/contact/
Website of The Future Co-Creation Laboratory: https://www.jastlab.jast.jp/3