Focus on Japan: Reimbursement decisions from January - May 2020

31/5/2020

Pricing

The highlight of the first quarter of 2020 was the bi-annual revision of National Health Insurance (NHI) prices and of medical fees, announced in March and coming into effect on April 1. Key changes included:

The impact of the revised prices was an average reduction of 4.38% of the price paid by the NHI, with large differences by product.
The repricing of 17 products, mostly due to sales having exceeded the initial estimates which the manufacturers presented at the time of the first pricing decision. Among them, Faslodex (-25%), Dupixent (-20.2%), Keytruda (-20.9%), Lixiana (-25%).
A new re-pricing rule was created to hit Xolair (-37.3%) after its approval for allergic rhinitis, a much larger indication than the earlier indication for asthma, resulted in reimbursement at a lower NHI price than asthma, and – going forward – further tweaking of the repricing of products having already been re-priced, to cut deeper.
On a positive note, three drugs could mitigate re-pricing with a post-launch premium for “true clinical effectiveness”: dapagliflozin (Forxiga), canagliflozin (Canaglu) and alirocumab (Praluent). Six others gained a premium for an additional pediatric indication.
Minor adjustments were also made to the standard values and rates (eg profit ratio) used in the cost calculation method.

[To read more about the methods used to determine reimbursement price, please click 'read more' below.]

Reimbursement

Besides price revisions and special re-pricing, the Central Social Insurance Council, known as Chuikyo, approved the reimbursement of over 30 new products from January to the end of May. These decisions are summarized below:

January: two anti-virals for HIV were approved, Dovato (dolutegravir/lamivudine) and Pifeltro (doravirine). Anti-viral drugs are usually reimbursed the moment they are approved, bypassing the quarterly listing and qualifying for the so-called Price Maintenance Premium. Both were priced by Cost Comparison Method I (standard) and Method II (no innovation).
End of April: Nine new products, in 14 product presentations, joined the NHI price list. The Cost Comparison Method was used to evaluate five products, and the Cost Calculation Method for the other four. Only two obtained a premium, at the lowest possible rate of 5%. Of these nine new products, Noxafil (MSD) will have to submit a CEA dossier (estimated peak sales are 10% above the threshold).
May 8: Remdesivir was approved to treat severely ill COVID-19 patients under an expedited review process but Gilead have not yet applied for reimbursement. Avigan (the 'national champion') was also anticipated to obtain PMDA approval for COVID-19 as an additional indication, but this wasn't the case as further trials were deemed necessary.
End of May: A larger group of 18 new products (28 product presentations) was listed. The methods used to evaluate the products for reimbursement included the Cost Comparison for nine of them, Cost Calculation for another five, Combination price for three and New Formulation for one. A premium was awarded to eight of them, including three sakigake (pioneer) premiums of 10% to Nippon Shinyaku’s DMD treatment vitolarsen, Merck Biopharma c-MET inhibitor tepotinib and Stella Pharma’s borofalan (Steboronine). Steboronine is a nuclear medicine boron compound for head & neck cancer, used in conjunction with Boron Neutron irradiation (called BNCT), a new procedure recently approved in Japan. It obtained a price of 444,215 yen per unit, a premium of 35% for Usefulness I, to which 10% for sakigake was added. Combined, the treatment with Steboronine (3 units) and the BNCT procedure will cost about 3.7 million yen but they were not retained for CEA. Cabometyx and Enhertu have to submit a CEA dossier (see further below).

Not all approved products obtained reimbursement. Eli Lilly’s glucagon nasal powder Baqsimi, approved in March 2020 and, again, Zeria’s Ferinject, an injectable iron preparation used in dialysis and approved in March 2019, was still unable to obtain reimbursement.

Regenerative medicines

Two products in regenerative medicine (Zolgensma and Nepic) were also assessed separately from the drugs above:
Zolgensma (Novartis) was evaluated through Cost Comparison versus the daily treatment cost of Biogen’s Spinraza, for the same indication of SMA but diagnosed by genetic testing, and subject to strict conditions of use. Two premiums applied: 40% for Usefulness I, plus 10% for sakigake. Because of the comparison, the Innovation premium (70-120%) did not apply. The price per patient is 167 million yen, 30% below the US public price but, with a forecast of 25 patients, the implicit budget impact is limited to 4.2 billion Yen (about 350 million Euros). CEA (H3) will be required for Zolgensma.

The Cost Comparison approach was openly criticized by members of the reimbursement committee as “not transparent” (daily treatment cost derived from the estimated regimen of Spinraza, 11 vials, without clear evidence). The controversy included the sakigake premium (Novartis obtained the designation but did not follow the usual regulatory consultations), and how a premium could be awarded when the quality of the data submitted delayed the regulatory approval. To avoid an immediate correction, and loss of face, the price stands but will be reviewed in 2022, as well as the practice of giving an automatic sakigake premium to products with the sakigake designation.

In the same batch of regenerative products, while Zolgensma was considered a drug, for pricing purposes, Nepic, autologous cultured corneal epithelium (Japan Tissue Engineering, www.jpte.co.jp) was considered a new medical device. Nepic is a combination of two elements: the reimbursement price is close to 10 million yen, plus 548,000 yen for the procedure.

Cost effectiveness analysis

In 2019, 51 new pharmaceutical products were listed on the NHI reimbursement list. Including Kymriah, classified as a regenerative medicine product, six of them have to submit a Cost-Effectiveness Analysis (CEA) dossier:

The triple combination, Trelegy (Chronic Obstructive Pulmonary Disorder, COPD)
Tisagenlecleucel (Kymriah, Acute Lymphoblastic Leukemia)
Ravulizumab (Utomiris, Paroxysmal Nocturnal Hemoglobinuria)
Another triple combination for COPD, Breztri Aerosphere. NB: no formal analysis required as it was priced in comparison to Trelegy
Vortioxetine (Trintellix, depression)
Ivabradine (Coralan, Coronary Heart Failure)

Out of over 30 new products listed this year until May, four additional CEA dossiers were required.

Posaconazole (Noxafil tablets, aspergillus and candida. NB: the injection is not subject to CEA)
Cabozantinib (Cabometyx, Renal Cell Carcinoma)
Trastuzumab deruxtecan (Enhertu, Breast Cancer),
Onamasemnogen abeparvovec (Zolgensma, Spinal Muscular Atrophy )

Final thoughts

Usually, four NHI price listings take place every year. Looking at the pipeline of new product approvals, 2020 will be another year busy with new launches. If you require any support understanding pricing, market access and reimbursement landscape in Japan, please get in touch.

Further information about the methods of evaluation for reimbursement prices in Japan: Cost Comparison Method: Reimbursement prices (“NHI prices”) are determined by applying, on the basis of daily treatment costs, the price of the closest reference product most recently listed on NHI. The “closest” is defined, in the following order, by indication, mode of action, chemical structure and route of administration (hence “Comparison”). This is the preferred method.
Cost Calculation Method: When there is no such comparator for pricing purposes, the costs of manufacturer, development, distribution and a standard rate of profit are added (hence “Cost Calculation”).
A schedule of premiums can apply (as shown in the tables above) to reward innovation or utility, and encourage the development of small indications (“Marketability”).
Finally, Foreign Price Adjustment takes into account the public prices in four countries of reference: the USA, UK, France and Germany.

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