Situation of Generics in Japan

Market Environment

National healthcare costs are expected to continue to climb along with the demographic aging of society and the decline in the birthrate, as well as the increasing sophistication of medical treatments. To prevent a decline in healthcare quality and reduce these costs, since 2002 the government is actively promoting expanded usage of generic drugs (GE), and, at the same time, is holding serious discussions to thoroughly reform rules with regard to how drug prices are determined.

Major History of Policies to Encourage Use of Generic Drugs

April 2002
  • Incentives introduced for doctors and pharmacists
  • Introduction of additional fees for prescriptions with generic drugs
  • Introduction of generics information fees and generic drug dispensing fees
April 2003
  • Introduction of comprehensive payment system*1 for DPCs
April 2006
  • Review of prescription forms
October 2007
  • Government set target in numerical terms for the share of generics (former ­indicator*2) of 30% or more by March 2013.
April 2008
  • Introduction of “Premiums for Generic Dispensing Systems” (addition to basic dispensing fee)
  • Review of prescription forms
  • Specification of requirements for best efforts in the use/dispensing of generics for medical health insurance institutions and medical insurance care personnel and on medical insurance pharmacies and medical health insurance pharmacists
April 2010
  • Review of “Premiums for Generic Dispensing Systems”
  • Introduction of “Premiums for Constructing Systems for Generic Use” (addition to hospital entry fees)
  • Specification of requirements for best efforts in the use of generics for medical health insurance institutions and medical insurance care personnel
April 2012
  • Review of “Premiums for Generic Dispensing Systems” and related matters
  • Review of prescription forms
  • Introduction of “Premiums for Prescribing by Generic Name”
April 2013
  • In its “Road Map for Promoting Further Usage of Generic Drugs,” the government set a target in numerical terms for the share of generics (new indicator*3) of 60% or more.
April 2014
  • Review of “Premiums for Generic Dispensing Systems”
  • Introduction of generic drug indexes for DPC function assessment
June 2015
  • In its “Economic and Fiscal Management and Reform 2015 (Honebuto Policy 2015), the government set a numerical target in numerical terms for the share of generics (new indicator*3) of 70% or more in mid-2017 and set a target of 80% or more as soon as possible between fiscal 2018 and the end of fiscal 2020.
April 2016
  • Review of “Premiums for Generic Dispensing Systems” and related matters
  • Introduction of “Premiums for outpatient generic usage”*4
June 2017
  • The government launched the amended policy of “achieving an 80% generic drug volume share by September 2020” under the Honebuto Policy 2017.
April 2018
  • Revision of remuneration for medical services and revision of drug prices
  • *1 System providing for fixed daily remuneration for hospital stays. An incentive for reducing drug costs using generics.
  • *2 Former numerical indicator share = Generics/all pharmaceutical products
  • *3 New numerical indicator share = Generics/(Originator drugs for which generic drugs exist + Generics)
  • *4 For those medical institutions that fill prescriptions internally, as a means of recognizing this generic usage system.

Changes in the Operating Environment for the Generic Industry

In part because of the effectiveness of the government’s policy to encourage the use of generic drugs, the share of generics in volume terms in Japan has risen to 65.8% as of September 2017. As a means to maintain the NHI system, the promotion of generic drug use has gained a secure position as a consistent policy tool, although the share remains low compared to the United States and Europe. Furthermore, in its “Economic and Fiscal Management and Reform 2017 (Honebuto Policy 2017),” announced in June 2017, the government has also set the generic drug utilization rate goal at 80% by September 2020, and is considering further promotional measures so as to achieve this as soon as possible. In the future, it is expected that there will be additional measures adopted to promote the usage of generic drugs.

On another front, in December 2016 the government hammered out its Basic Policy for Fundamental Reform of the Drug Pricing System, and, along these lines, in the Honebuto Policy 2017 it called for the annual actual price surveys and revisions to drug prices, and other measures. Also, in addition to thorough zero-based reform, it also gives attention to the stable supplies of generic drugs and other functions that are the responsibility of drugmakers, and to the healthy development and nurturing of the generic drug industry. Under this policy, the government will consider consolidation of generic drug price bands and draw conclusions. In addition, the government is also pursuing a structural shift to a pharmaceutical industry that is highly competitive.

Consequently, to achieve an 80% volume share, and while further looking to the future, the generic drug industry, and each generic drug company, seeks to secure a framework in which generic drugs can be sustainably provided to the country’s citizens, and to address structural shifts in the industry.

Annual Trends in National Healthcare Costs, Gross Domestic Product and National Income Ratios

Annual Trends in National Healthcare Costs, Gross Domestic Product and National Income Ratios

Long-Term Listed Drugs Share in the Patent-­Expired Market (2016)

Long-Term Listed Drugs Share in the Patent-­Expired Market (2016)

GE Volume Share Goal (Honebuto Policy 2017)

GE Volume Share Goal (Honebuto Policy 2017)
Situation of Generics in Japan
Back to Top