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EFPIA Position on NHI Price system
reform based on long term view
Opinion based on drug market simulation till 2025
EFPIA Japan
April 14, 2015
1
Today’s program
EFPIA position for NHI price reform
Chair, EFPIA Japan
Dr. Carsten Brunn
Detail planning and results of drug market
simulation to 2025
Chair, EFPIA Pricing and
Economics Committee
Mr. Kuniyuki Hara
What we can learn from simulation by EFPIA
Nihon University
School of Pharmacy
Professor
Dr. Makoto Shiragami
Q&A
2
EFPIA position for
NHI price reform
EFPIA Japan
Chair, Dr. Carsten Brunn
April 14th, 2015
3
EFPIA Japan Mission
• Our Mission
– Contribute to healthcare and patients in Japan by early
introduction of innovative medicines and vaccines
• What we do to achieve our Mission
– Encourage access to the most innovative therapies in
the shortest possible time
– Support Japan in becoming a more dynamic and
attractive place in which to invest
– Be a trusted healthcare partner
4
EFPIA has been contributing Japan through
development and marketing of innovative new drugs
• EFPIA-J member companies
in Japan sales (2013)
• The number of approved
new drugs * (2011-2013)
Approved
items
* Approved
Components
Source:
IMS Japan Pharmaceutical Market
Data period:2013 Dec. MAT
©2013 IMS Health
EFPIA-J sales: EFPIA Japan figures)
Source: EFPIA Japan figures are based on data provided by
“The Central Social Insurance Medical Coundil”
|
5
Japan succeeded in eliminating the drug lag while
promoting development of innovative drug
• Drug lag
– Succeeded in eliminating drug lag by strengthening
PMDA
• Development of innovative drug
– Establish AMED to seamlessly support research from
basic to clinical application
• Early access to innovative drug
– Introduction of fixed-term conditional approval system
for regenerative medicine products
– Introduction of “Sakigake” designation system
Improvement in R&D environment including innovation
premium has boosted drug R&D in Japan
Examples of research
investment into Japan
Time
2015
Jan.
2014
Sep.
comp
any
G
B
Overview of investment
Number of drug
development project
Number of company: 15
+40%
First collaborative research agreement with
Tokyo metropolitan geriatric hospital on bioelectronics research
Contracted 2 year collaboration agreement
with Kyoto University Office of SocietyAcademia Collaboration for Innovation in
area of cardiology, oncology, hematology,
gynecology and ophthalmology in search of
new drug candidate
2014
Jun.
B
Established “Open Innovation Center” in
search of drug seeds in Japan
2014
Mar
B
Collaborative research with CiRA Kyoto
University and iHeart Japan
2014
Mar.
A
Signed memorandum for joint research with
Osaka University in cardiology drug reprofiling
2013
Nov.
S
Signed collaboration agreement with
National Cancer Center for promotion of
cancer research in Japan
2008
Nov
B
Opened up Kobe Pharma Research Institute
From press release of each company
Changes vs. 2009
+56% +64% +71%
327
Requested for
unapproved drugs
182
3
211
5
22
293
344
25
360
29
37
210
9
305
319
331
2011
2012
2013
256
179
2007
206
201
2008
2009
2010
Project # excluding RfUD
Project # of RfUD
* RfUD = Requested for unapproved drugs
7
Current pricing system is working well for patients
and controlling drug costs for Japanese government
Source：The result from
EFPIA-J and IMS joint
simulation project
Ox
LLP (b)*2
LLP (a)*2
Gx
Others
*1 Consumption tax rate was fixed at 5% through the forecast period
*2 LLP (a) is the LLP whose Gx was launched before 2013, LLP (b) is the other LLP
Savings from Gx promotion are greater
than cost of “Innovation premium”
Balance of payment (¥Bn)
Historical
Forecasted
Gx penetration rate
w/ or w/o Gx promotion measures
70%
59%
60%
54%
48%
50%
40%
51%
53%
55%
70%
1,000
59%
500
*2
190 141
33%
40%
26%
30%
44%
48%
66%
63% 65%
Expense change of premium
and Gx penetration
25%
29%
33%
37%
40%
0
Actual Gx penetration
Forecasted Gx penetration
(based on this project results)
20%
242 248
-7
-176
-197
-500
-316
-136
-379
Forecasted Gx penetration
(using trend before 2010)*1
10%
0%
’0
3
’0
5
’0
7
’0
9
’1
1
’1
3
’1
5
’1
7
’1
9
’2
1
’2
3
’2
5
309 325
503 489
456 469 500
438
390 407
-258
-494
-1,000
’12
’1
3
-195 -228 -183
-265
-247 -244
-304 -313
-275
-363
-552 -583-585
-639
-636
-734-775
-802 -800
-807
’1 ’16 ’1 ’1 ’1 ’2 ’2 ’2
0
1
8
9
2
5
7
Expense increase by the premium
’14
’2
3
’2
4
’2
5
Expense reduction by Gx promotion measures 1)
• Without additional measures for Gx
penetration, Gx penetration rate would grow
according to the trend before 2010 and
reached at 59% in 2025
Balance of payment
Expense increase
Average impact
per year
¥365 Bn
Sum of impact
(2012-2025)
¥5,105 Bn
Expense reduction
¥⊿593 Bn
¥⊿8,298 Bn
*1 We used Gx penetration trend from 2006 to 2009
*2 We assumed Gx penetration rate will not grow in 2021 and 2022, same as this project calculation result
Source：The result from EFPIA-J
and IMS joint simulation
project
9
Innovation premium should be continued



The “innovation premium” has boosted
drug development in Japan
Drug Expenditure in Japan will be broadly
stable over the next decade, as a result of
effective generic promotion measures
Savings from this generic promotion are
greater than the costs of the “innovation
premium”
Further reward for innovation could be explored
|
10
An Unnecessary Step:
Potential Annual Price Revision
• Practical difficulties of annual revision:
– Actual market price is unlikely to be accurately
reflected for many newly marketed drugs
– Increased burden for hospitals, pharmacists and
wholesalers
– Balance between NHI drug price revision and bi-yearly
medical fee reimbursement revision could be disrupted
• Annual NHI drug price revision could weaken efforts by
pharmaceutical companies to bring innovative medicines
to Japanese patients, opening risk of new drug lag
11
Summary
Market growth (¥Tn)*1
Not considering consumption tax revision*2
Historical
Forecast
0.13%
9.3
4.5
•
0.14%
1.77%
(¥Tn)
-1.48%
9.8
10.5 10.4 10.6 10.4 10.6
10.3 10.4
10.2 10.2
10.0 10.0
9.9
4.8
4.8
4.8
4.8
4.8
4.8
5.0
1.0
1.3
1.3
1.3
5.1
4.6
4.4
4.3
1.7
1.9
2.0
0.0
0.1
0.3
0.8
3.3
3.3
3.1
2.7
2.4
2.2
2.0
1.9
1.8
1.7
1.6
0.9
1.0
1.1
1.3
1.4
1.6
1.7
1.8
1.8
1.9
0.7
0.7
0.6
0.6
0.6
0.6
0.6
0.6
0.6
’12
’13
’14
’15
’16
’17
’18
’19
’20
Original drugs
LLPs (b)
• Drug market is broadly flat if the
current pricing system continued.
1.2
4.4
4.3
1.7
1.8
1.5
1.4
1.3
1.9
2.0
1.9
2.0
0.6
0.6
0.6
0.6
0.6
’21
’22
’23
’24
’25
LLPs (a)
Generics
•
Generics will grow to 2 trillion by
2025 by various generic promotion
policies
LLP will be reduced due to price
reduction by Z2 rule and further
penetration of generics
• Innovation premium should be
continued in current form
•
Option for further reward for
innovation considered.
• Annual price revision should be
avoided
Others
*1 LLP (a) is the LLP whose Gx was launched before 2013, LLP (b) is the other LLP
*2 Consumption tax rate was fixed at 5% through the forecast period
12
Detail planning and results of drug
market simulation to 2025
EFPIA Japan
Kuniyuki Hara
Chair, Pricing and Economics Committee
April 14, 2015
13
Introduction
Research on medical expenditure and drug expenditure
Objectives :
• To make an informed decision about allocation of budget
and NHI price system based solid data, EFPIA, in
cooperation with IMS, made forecast of ethical drug market
for next 12 years till 2025 based on current NHI price system
incorporating most updated environmental factors
14
At 2012 project,
EFPIA made forecast till 2022
CAGR (’12~’22): 1.2%
9.9
10.2 10.2
10.6 10.6
Main topics
11.3 11.1
10.9 10.9 11.2 11.1
4.4
4.5
4.5
4.6
4.8
4.9
4.6
4.8
2
2.2
1.9
3
1.7
1.6
1.5
2.0
1.0
4.4
4.4
4.5
0.9
1.2
1.2
1.6
1.6
1.8
1.8
1.8
1.7
2.7
2.6
2.5
2.3
2.2
2.1
2.0
1.8
1.0
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.8
1.9
0.8
0.8
0.8
0.9
0.9
0.9
0.9
0.9
0.9
0.9
’12
’14
’16
’18
1
’20
’22
4
(年度)
5
New drug(Ox)
LLP1(Category1) *1
LLP2(Category2)
*2
Generics(Gx)
Other
6
Assumption
Further promotion of
generic and its
penetration
Set penetration peak to
40-80% (Actual for past 2
years:33- 66%, 120% up
expected)
Policy change in
additional cut to LLP
0% additional reduction
for each NHI price revision
Expansion of special
price reduction
5% special cut at first NHI
price revision after first
generic launch
Expansion of repricing for market
expansion
0.37% market shrink
assumed for every price
revision
Number of newly
launched medicinal
entities
Set average to 40 (10%
increase from actual of
past 2 years)
Sales forecast of
newly launched
medicinal entities
Set peak quarterly sales
to 2.5 Bio yen (10 Bio yen
/year)
*1 LLP whose Gx has been launched by Mar. 2010(Prior to 2009)
*2 LLP whose GX launched after Apr. 2010 but before 2022
Source: EFPIA-IMS Project “Making Innovation Premium Permanent” (2012)
15
Method of simulation
16
Study Methodology: Introduction
EFPIA/IMS conducted a simulation study into drug expenditures
Underlying factors and assumptions
● The new premium pricing rule imposes a one-time payback (price
reduction) at the time of loss of exclusivity (LoE) to compensate for
previous exemptions.
● There are Patented Drugs that currently generate large sales that will
lose exclusivity in the coming years.
● Generic erosion has been accelerated by the political measure.
● Assumptions were made on:
− The Gx penetration ratio for newly genericized products
− New products launch estimates
− NHI drug price reduction rate
17
Study Methodology: Overall Assumptions
Sample, Market Forecast and New Drug Pricing Scheme etc. Assumptions
Category
Assumptions
Three product categories
Depending on the Gx situation
1) 1st Gx Launch until 2009
2) 1st Gx Launch from 2010-2025
3) New drugs to be launched in 2014-2025
New launches
42 NMEs each year during 2014-2017
45 NMEs each year during 2018-2025
Estimated sales for a new
product
JPY10 billion peak sales for small molecules/year
JPY 8 billion peak sales for biologics/year
Data: Extrapolation method
Based on data from IMS database; sales trend by ATC
category*
Timing of LoE
11 years after launch
Gx penetration
It is assumed by ATC that Gx penetration % after 2012.2Q is
2.25 times larger than that before 2010.2Q and erosion rate
of the mols whose peak sales over 30BnJPY assumed 1.5
times faster than other mols
Applicable drugs for premium
81% of the sales estimate of new molecules are assumed to
be covered by the premium
Price revision rate
Estimated by each product category (New product
with/without premium, LLPs, Gxs etc)
* Anatomical Therapeutic Chemical Classification (category)
18
Assumption Development
Methodology Overview
Category
We divide drugs into 3 categories based on the launch
timings of new drugs and the 1st Gx products
2010
2014
Sales Trends
2025
Category 1
1st Gx Launch
~2009
Drugs
Launched
in the past
~2013
Category 2
1st Gx Launch
2010~2025
a
b
c
Ox
LLP
Gx
Ox
2010 2014
LLP
Gx
Ox
LLP
Gx
Ox
LLP
d
Category 3
New Drugs
to be launched in
2014~2025
12th September, 2014
e
f
2025
Gx
LLP
Ox
Gx
Ox
LLP
Gx
19
Assumption Development
a Parent Sample
a3 # of New Launches
The number of new launches is considered to reach at 45
yearly in 2025
a3
Category 3
Key
Estimate the # of new launch
Total # of approvals and estimated launches of
new products 1)
32 34
22
19
32
36
44 45 47
41
33
28
20
The # of
approved
drugs tends
to increase
Estimated # of new launches based on the
past trend
Small mols
Biologics
Actual #
2005
2007
2009
2011
2013
2015
2017
% of biologics among new approvals
1)2)
Small mols
22
Biologics
71 68 67
75
80 88 75
84
90
25
20 13 25
16
10
2009
2011
2013
27
29 32 33
2015
2017
The % of
biologics
among new
approvals
also tends to
increase
34
28
5
6
2006
-2009
2010
-2013
Estimated #
45
45
42
28
30
30
14
15
15
2014
-2017
2018
-2021
2022
-2025
※ The # of new launches and % of biologics are
considered to increase along with the past trend,
although they are assumed to peak out considering
the trend of development activities
1) Office of Pharmaceutical Industry Research News, July 2014. The # of future launches is estimated considering the actual development status
2) We calculate the % of biologics in future based on the pipeline
12th September, 2014
20
Assumption Development
b Market Forecast
b7 Estimate the sales of new launches
Key
The peak sales of new launches per molecule are ¥2.5 Bn
(small mols) and ¥2.0 Bn(biologics) at 20-qtrs after the launches
b7
Category 3
Estimate the sales of new launches
Sales (Small mols)
Sales (Biologics)
(¥Bn)
(¥Bn)
3.0
3.0
2.5
2.5
2.0
2.0
1.5
1.5
1.0
1.0
0.5
0.5
0
4
8
12
16
20
24
401)
QTR
For small mols, peak sales is set at ¥2.5 Bn
and it is achieved at 20th quarter
0
4
8
12 16 20 24
401)
QTR
For biologics, peak sales is set at ¥2.0 Bn
and it is achieved at 20th quarter
1) Sales at 40 QTR were estimated to be 79% value of collectively-averaged sales of small mols & biologics
12th September, 2014
21
Assumption Development
b Market Forecast
b3 Define Gx Erosion Curve
The model of Gx erosion curves was developed by ATC
Category
2
b3
Define Gx erosion curve
Gx erosion before 2010. 2Q (the total volume of each molecule
=100%)
50%
A
40%
30%
A
ALIMENTARY T.& METABOLISM
C
B
BLOOD & B.FORMING ORGANS
D
C
CARDIOVASCULAR SYSTEM
G
D
DERMATOLOGICALS
H
G
G.U.SYSTEM & SEX HORMONES
H
SYSTEMIC HORMONES
J
SYSTEMIC ANTI-INFECTIVES
M
K
HOSPITAL SOLUTIONS
N
L
ANTINEOPLAST+IMMUNOMODUL
R
M
MUSCULO-SKELETAL SYSTEM
S
N
NERVOUS SYSTEM
P
PARASITOLOGY
R
RESPIRATORY SYSTEM
S
SENSORY ORGANS
T
DIAGNOSTIC AGENTS
V
VARIOUS
K
L
10%
T
V
0%
0
5
10
15
20
25
30
35
40
45
50
55
Avg.
Quarters after the entry of Gx
The Gx erosion curves are estimated considering the past trends by ATC
22 3rd October, 2014
TA
B
J
20%
ATC
Code
Assumption Development
b Market Forecast
b3 Define Gx Erosion Curve
Key
The Gx penetration rate of molecules launched after
2012.2Q is considered to be 2.25 times more than before
Category
2
b3
Define Gx erosion curve
Difference of Gx erosion according to the Gx entry
timing (the total volume of each molecule =100%)
20%
Estimated Gx erosion curve by anatomical
therapeutic chemical (ATC) classification*1
100%
Gx before 2010.2Q (n=146)
Gx 2010.2Q-2012.2Q (n=24)
Gx after 2012.2Q (n=18)
80%
×2.25
×1.77
60%
10%
40%
20%
A
L
B
M
C
N
D
R
G
S
H
T
J
V
K
Avg.
0%
0%
1
2
3
4
5
6
Quarters after the entry of Gx
• Recently, Gx penetration rate is increasing
• We consider the recent promotion of Gx and
set Gx erosion curve as 2.25 times of Gx
erosion rate before 2010.2Q
0
10
20
30
40
50
60
Quarters after the entry of Gx
• The Gx erosion curves are estimated based on
the past trends by ATC considering the recent
promotion of Gx (x2.25)
*1 The mols whose peak sales potential is over ¥30 Bn are assumed to be eroded by Gx 1.5 times faster than other mols
12th September, 2014
23
Simulation Result
Base Scenario
LLP tread
In spite of incremental sales from expired Ox, LLP sales
will not increase because of drastic decrease of LLP (a)
Revised
LLP sales trend (Tn)
Ox
Ox which will be
LLP in next year
New LLP (b)
old LLP (b)
LLP (a)
# of LOE over
20 Bn yen
0.2
0.0
3.1
0.4
0.4
2.8
0.3
0.7
2.5
0.4
0.9
2.3
0.4
0.9
2.1
0.2
1.1
2.0
0.7
0.5
0.3
0.2
0.2
0.2
1.6
1.7
1.0
1.1
1.5
1.8
1.9
1.8
1.6
1.5
1.4
1.4
’14
’15
’16
’17
’18
’19
’20
’21
’22
’23
’24
’25
5
8
8
10
6
10
6
16
11
8
4
0
Incremental
sales from
expired Ox is
4.2 Tn yen
24
Result of simulation
Base case
25
Simulation Result
Base Scenario
Market Growth
The market will grow at a CAGR of 0.52%(’13-’25), starting
at 2.96% of first 3 years (with consumption tax revision)
Market growth (¥Tn)*1
Historical
Considering consumption tax revision
Historical
Not considering consumption tax revision*2
Historical
Forecast
Forecast
0.52%
9.3
4.5
0.14%
2.96%
(¥Tn)
9.8
4.8
10.2
0.13%
-1.48%
11.0 10.9 11.1 10.9 11.1
10.8 10.9
10.6 10.6
10.5 10.4
9.3
4.9
5.0
5.0
5.1
5.0
5.2
5.3
4.9
4.6 4.5
4.6
1.8
2.0 2.1
2.0 1.9
1.8
1.7
1.9 1.9
0.6
0.6
’17
’18
0.0
0.1
0.3 0.8
1.0
1.3
1.4
1.3
3.3
3.3
3.1 2.8
2.5
2.3
2.1
0.9
1.0
1.2 1.4
1.5
1.7
0.7
0.7
0.6 0.6
0.6
’12
’13
’14
’16
’15
9.8
-1.48%
10.5 10.4 10.6 10.4 10.6
10.3 10.4
10.2 10.2
10.0 10.0
9.9
4.5
4.5
0.14%
1.77%
(¥Tn)
4.8
4.8
4.8
4.8
4.8
4.8
5.0
5.1
4.6
4.4 4.3
1.7
1.9 2.0
4.4
4.3
1.7
1.8
1.8
1.9
0.0
0.1
0.3 0.8
1.0
1.3
1.3
1.3
1.6 1.5
1.4
1.4
3.3
3.3
3.1 2.7
2.4
2.2
2.0
1.9 1.8
1.7
1.6 1.5
1.4
1.3
2.0
2.0 2.1
2.0
2.1
0.9
1.0
1.1 1.3
1.4
1.6
1.7
1.8 1.8
1.9
1.9 2.0
1.9
2.0
0.6 0.6
0.6
0.6 0.6
0.6
0.6
0.7
0.7
0.6 0.6
0.6
0.6
0.6
0.6 0.6
0.6
0.6 0.6
0.6
0.6
’19
’21
’22
’24
’25
’12
’13
’14
’16
’17
’18
’19
’21
’22
’24
’25
1.2
’20
Ox
’23
LLP (b)
LLP (a)
Gx
’15
1.2
’20
’23
Others
*1 LLP (a) is the LLP whose Gx was launched before 2013, LLP (b) is the other LLP
*2 Consumption tax rate was fixed at 5% through the forecast period
12th September, 2014
26
Simulation Result
Base Scenario
Market Composition
Gx will increase by volume and value. On the other hand,
LLP (a) will shrink due to Gx penetration and Z2 rule
Market composition (Volume base)
Historical
Market composition by each group
100%
80%
16%
Gx penetration rate
17% 16% 17% 15% 13% 14%
0%
3%
32%
15% 13%
26% 22% 19% 17%
5%
5%
7%
8% 7%
80%
60%
60%
40%
100%
30%
45% 47%
35% 38% 41% 43%
20%
0%
0%
Ox
’15
LLP (b)
’17
’19
LLP (a)
’21
Gx
’23
’25
59%
’12 ’13
65%
66%
70%
Gx penetration rate
does not grow, since
sales of new LLP
products are bigger
than other years
40%
20%
’12 ’13
48%
44%
54%
63%
’15
’17
’19
’21
’23
’25
Others
In 2025, Gx penetration will be 70% by volume (new Gx penetration definition)
12th September, 2014
27
Simulation Result
Base Scenario
Balance of Payment
The expense increase by price premium is estimated to
be lower than the expense reduction by Gx promotion
Balance of payment (¥Bn)
Historical
Forecasted
Gx penetration rate
w/ or w/o Gx promotion measures
70%
59%
60%
54%
48%
50%
40%
51%
53%
55%
70%
1,000
59%
500
*2
190 141
33%
40%
26%
30%
44%
48%
66%
63% 65%
Expense change of premium
and Gx penetration
25%
29%
33%
37%
40%
0
Actual Gx penetration
Forecasted Gx penetration
(based on this project results)
20%
Forecasted Gx penetration
(using trend before 2010)*1
10%
’05
’07
’09
’11
’13
’15
’17
’19
’21
’23
-176
-316
-136
-195 -228 -183
-265
-247 -244
-379
-494
-258
’25
-304 -313
-275
-552 -583 -585
-636
0%
’03
309 325
-7
-197
-500
242 248
503 489
456 469 500
438
390 407
-639
-363
-734 -775
-807
-1,000
’12 ’13 ’14
-802 -800
’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 ’23 ’24 ’25
Expense increase by the premium
Expense reduction by Gx promotion measures 1)
• Without additional measures for Gx
penetration, Gx penetration rate would
grow according to the trend before 2010
and reached at 59% in 2025
Balance of payment
Expense increase
Average impact
per year
¥365 Bn
Sum of impact
(2012-2025)
¥5,105 Bn
Expense reduction
¥⊿593 Bn
¥⊿8,298 Bn
*1 We used Gx penetration trend from 2006 to 2009
*2 We assumed Gx penetration rate will not grow in 2021 and 2022, same as this project calculation result
12th September, 2014
28
Results: CAGR of drug market is almost stable and
quite lower than that of medical expenditures
Estimated growth rate of ethical drug market (CAGR 0.52%) is lower
than that of medical expenditure by MHLW (CAGR 2.2%)
Medical Expenditure (upside)
Medical Expenditure (base)
Drug Cost (base)
Historical
Forecast
65.0
3.3%(2010-2025)
60.0
55.0
Market size (Tn)
2.2%(2010-2025)
50.0
45.0
40.0
35.0
10.0
CAGR 0.52%(2013-2025)
5.0
0.0
FY2010
FY2013 FY2015
FY2020
FY2025
1) MHLW Estimation of National Medical Expenditure (2010.10.25), IMS edited
2) IMS estimation of drug expenditure, 2012-2022, “Base” scenario forecast on this project
29
Results: The Simulation Predicts
A Balanced Picture
Key Issue: Drug expenditures will grow less than total national
healthcare costs
● The compound annual growth rate (CAGR) of drug costs will be
0.13% in the next 12 years (fixed tax rate at 5%), which is less
than the MHLW’s cost estimate of 2.2% growth in healthcare
costs
● The ethical drug market will reach 10.4 trillion yen in 2025 from
9.8 trillion yen in 2013
● The expense increase by price premium is estimated to be lower
than the expense reduction by Gx promotion
● The share of patented drugs will stabilize and LLP market share
will shrink.
● Gx market share will increase to 59% by 2017 and 70% by 2025 in
new index even with the premium pricing system.
30
Conclusion: EFPIA Proposes More Rewarding Innovation
including Making The Current Rule Permanent
Key Point: The premium pricing rule facilitates innovation
without increasing total drug expenditures
● Current pricing system is working well for patients and controlling
drug costs for Japanese government
● The current rule facilitates earlier and larger investments in drug
development in Japan
● The current rule is designed to pay back premium benefits at LoE,
and the simulation predicts that this system will work in a very
balanced way
● This rule will also be instrumental in moderating total drug
expenditures while reducing LLP market share and increasing Gx
penetration
● To encourage innovation, secure access, and contain the increase
of costs, we strongly recommend that the current rule should be
institutionalized in addition to more rewarding innovation.
31
Additional simulation results
 Importance of innovation premium
 Expansion scenario and shrink scenario for drug market
32
In case innovation premium discontinued, it may shrink the
innovative pharmaceutical market by around 10% in 2025
Market growth （trillion yen）*1
Actual
Forecast
(兆円)
12
11
10.5
10.2
9.8
10
9.9
10.2
9.8
10.1
9.3
10.4
9.9
10.6
10.1
10.4
10.6
10.3
10.4
10.0
9.9
10.1
9.8
Continuation of
innovation
10.0
premium
9.8
9.5
9.5 Innovation
premium
discontinued
after 2016
9
Market shrink by
4.8 trillion yen
from 2016 to 2025
accumulative
1
0
’12
’13
’15
’17
’19
’21
’23
’25
*1 consumption tax is fixed at 5% for entire forecast period
33
Simulation Result
Scenario Analysis
Market Growth
Revised
The market will be ¥11.7 Tn in 2025 by high scenario.
On the other hand, it will be ¥8.7 Tn by low scenario
Market growth (according to the scenarios)
(¥Tn)
12
11.7
11
10.7
10.2
9.8
10
10.6
10.4
10.9
10.6
11.4
11.0
11.4
10.5
10.4
10.9
10.5
11.1
10.2
11.7
10.9
10.1
12.0
11.1
9.9
9.3
11.8
10.8
9.7
12.0
10.9
9.3
9
11.7
11.7
+1.3Tn
10.5 10.4
9.1
-1.7Tn
8.7
8
High Scenario
Base scenario
1
Low scenario
0
’1
2
’1
3
34 3rd October, 2014
’1
4
’1
5
’1
6
’1
7
’1
8
’1
9
’2
0
’2
1
’2
2
’2
3
’2
4
’2
5
Investment environment of Japan
35
The attractiveness of Japanese drug market (mid 2000)
Higher pressure for ROI of pharma (conceptual)
Development
Preclinical
Post marketing
Clinical
Launch
Growth
Mature
Decline
Sales
Profit
•
Investment accelerated by change in
policies such as improvement in
clinical trial environment, shorten
time for approval review,
introduction of innovation premium
Launch
0
Higher
Development
cost
NHI price
revision
EPPV//14 days rule
PMS
Longer
Development
Period
Shorter
/Generics
duration for
data protection
Time
36
Good balance between early payback of R&D investment
and smooth transition to Gx after patent expiration
Before innovation premium
After innovation premium
Sales
Expire of patent
Smooth transition to Gx
Earlier payback
of investment
Re-investment
to R&D of
innovative drugs
And un-approved
drug
Launch
Patent period
Gx
Launch
Time
37
Balance between early payback of R&D investment and
smooth transition to Gx after patent expiration (losing
balance)
Before innovation premium
After innovation premium
Sales
Narrowing
Innovation premium?
Annual price
revision after 2016?
Continuation of “Trial” of
innovation premium
Price reduction
for LLPs
Delay in payback
By 14 days rurl
Ox
Launc
h
Further promotion
of generics
Delay in payback
Reduced payback amount
Lower predictability
Patent period
Gx
launch
Reduced payback amount
Time
38
Summary
Market growth (¥Tn)*1
Not considering consumption tax revision*2
Historical
Forecast
0.13%
9.3
4.5
•
0.14%
1.77%
(¥Tn)
-1.48%
9.8
10.5 10.4 10.6 10.4 10.6
10.3 10.4
10.2 10.2
10.0 10.0
9.9
4.8
4.8
4.8
4.8
4.8
4.8
5.0
1.0
1.3
1.3
1.3
5.1
4.6
4.4
4.3
1.7
1.9
2.0
0.0
0.1
0.3
0.8
3.3
3.3
3.1
2.7
2.4
2.2
2.0
1.9
1.8
1.7
1.6
0.9
1.0
1.1
1.3
1.4
1.6
1.7
1.8
1.8
1.9
0.7
0.7
0.6
0.6
0.6
0.6
0.6
0.6
0.6
’12
’13
’14
’15
’16
’17
’18
’19
’20
Original drugs
LLPs (b)
• Drug market is broadly flat if the
current pricing system continued.
1.2
4.4
4.3
1.7
1.8
1.5
1.4
1.3
1.9
2.0
1.9
2.0
0.6
0.6
0.6
0.6
0.6
’21
’22
’23
’24
’25
LLPs (a)
Generics
•
Generics will grow to 2 trillion by
2025 by various generic promotion
policies
LLP will be reduced due to price
reduction by Z2 rule and further
penetration of generics
• Innovation premium should be
continued in current form
•
Option for further reward for
innovation considered.
• Annual price revision should be
avoided
Others
*1 LLP (a) is the LLP whose Gx was launched before 2013, LLP (b) is the other LLP
*2 Consumption tax rate was fixed at 5% through the forecast period
39
End
40
About “EFPIA/IMS joint
market simulation”
Professor Makoto Shiragami
School of Pharmacy, Nihon University
If we summarize the result of simulation
• If we summarize the data by 2 year term since the market
repeats cycle of shrinking in the NHI price revision year and
expanding the next year
Simulation of market share
Market growth
20
15
10
5
0
Total market
Ox
LLP
Gx
Other
Ox
LLP
Gx
Other
We can find out the following
• Drug market total and new drugs market will hit peak at 2018-2021 and will
start decrease
• Share of LLP will decrease and it hit its lowest in 2020-2021 and then it will
increase
• Gx will continue to increase and in 2024-2025, it will reach 1.6 times than that
of 2014-2015.
• Share of new drug will gradually decrease
• LLP will decrease its share to 2020-2021 but will increase later
• Share of Gx will increase drastically
• Reason for increase in LLP is due to some blockbuster drugs becoming LLP. If we
consider after 5-10 years of this simulation, LLP market will decrease rapidly.
Validity of this simulation
• The simulation is based on following
assumptions
• No major change in pricing and reimbursement
system
• Fewer development of blockbuster drugs
• Penetration of Gx
• There is possibility that simulation may lose
validity if these assumptions become
inapplicable
Factors to be considered about
assumptions (1)
• Following policy changes have been in discussion. Not
all may be introduced but all of each will shrink the
market
• Overall market: change in frequency of NHI price revision,
exclusion of OTC similar drug from reimbursement
• New drugs: Introduction of HTA, discontinuation of or change
in qualification for innovation premium
• LLPs: Expansion of Z2, Introduction of reference pricing
system to LLP
• Gx: Price decrease on Gx
Factors to be considered about
assumptions (2)
• Market will be affected by trends of Biological products and
Biosimilars
• Major part of new drugs will be biological products. Are there any
possibility that they will become bigger products than expected?
• There may be possibility that sales of LLP biological products market
will not decrease depending on the acceptance of biosimilars.
• Whether penetration and expansion of Gx use will continue
• Not many additional measures left to further accelerate use of Gx
• Whether Gx can win confidence from medical practitioners
• Acceptance of biosimilars
In summary
• Expansion of new drug market will provide funds
for further new drug development and accelerate
introduction of promising new drugs from foreign
countries
• The fund, at least part of, generated by switching of
LLPs to Gx or price reduction should be allocated to
new drugs
• But we need to give consideration how to realize it
• Institutionalization of innovation premium can be a
method but it needs good explanation how the
purpose can be achieved by that.